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Commentary: Driving With No Speedometer

Imagine if someone removed the speedometer from your car and then put limits on how fast or slow you could drive. That's what 11 House members are doing with legislation which would prohibit the Census Bureau from any data collection except for the decennial headcount of Americans.


The impact of the bill, ""HR 1638"":http://beta.congress.gov/bill/113th-congress/house-bill/1638/text, would be to eviscerate and effectively eliminate the monthly employment situation report that produces, among other things, the unemployment rate as well as a host of other bits of data about the economy. The sponsors of the bill must believe that if we don't count unemployment it won't exist.

Rep. Jeff Duncan (R-South Carolina) along with Reps. Jason Chaffetz (R-Utah), Andy Harris (R-Maryland), Walter B. Jones Jr. (R-North Carolina), Raul R. Labrador (R-Idaho), Thomas Massie (R-KentuckyY), Stevan Pearce (R-New Mexico), Bill Posey (R-Florida), Reid J. Ribble (R-Wisconsin), Steve Southerland II (R-Florida) and Steve Stockman (R-Texas) introduced the ""Census Reform Act of 2013,"" a bill Duncan was so proud of that it initially wasn't on his ""website's"":http://jeffduncan.house.gov/ list of bills for which he is the primary sponsor.

The legislation comes at a time when the Census Bureau is particularly vulnerable: Not only has the president proposed reducing funding, but Congress--through Rep. Paul Ryan's budget--would cut it 13 percent further. And the bureau doesn't have a director to complain. There is also no secretary or deputy secretary at the Commerce Department, which oversees the bureau and would generally press its case to Congress.

The Census Bureau conducts the ""Current Population Survey,"" also known as the ""household survey,"" one of two surveys which make up the highly anticipated Employment Situation report issued on the first Friday of each month. (The other survey is the ""establishment survey,"" officially called ""Current Employment Statistics,"" which measures payroll jobs.)

The household survey collects data from 60,000 households to determine the employment status of the over-16 population. The survey results allow the Bureau of Labor Statistics to determine unemployment rates by, among other things, age, race, gender, education status, and veteran status. The results are extrapolated to all 110 million households to produce the unemployment rate as well as a host of other data.

Duncan argued privacy in defending the legislation.

""These surveys amount to legalized government harassment,"" he said in a statement issued by his office. ""Right now the Census Bureau can ask citizens very invasive questions, and if they don't respond, the government shows up at their door and threatens them with a fine. Americans are fed up with these mandatory census surveys and they're asking us to stop the harassment.""

He said also there are other ways to gather the information necessary to produce not only the employment data but other reports, such as gross domestic product, retail sales, new home sales, residential construction, and housing permits and starts, to name just a few.

""As a former small business owner, I recognize that some economic data gathering is beneficial. However, it should be voluntary, industry driven, and not mandated by the government under penalty of law,"" Duncan said.


""I'm confident in our ability to develop innovative ways to gather information without harassing people, invading their privacy, or threatening them with fines. Americans are tired of too much government meddling in their daily lives,"" he continued.

A few months ago, when the unemployment rate unexpectedly dropped below 8.0 percent in a critically timed report just before Election Day--even as job creation was weak--conspiracy theorists immediately swarmed cable TV to declare the numbers had been manipulated. Without any survey data to support the report, the administration could have chosen any number, just as it could use any figures for any of the other of dozens of economic reports issued each month--reports on which businesses rely for critical decisions.

Oh, and it's not just businesses. Census reports are not only broken down by state, county, and city, but by congressional district, giving Rep. Duncan information about the people he represents through the American Community Survey conducted by--guess who?--the Census Bureau.

Try guessing how fast you're driving.

A brief note:

Mainstream media missed two very important economic data elements in the last week that could have significant long term implications.

On Monday, the Bureau of Economic Analysis (BEA) issued its monthly report on ""personal income and consumption"":http://dsnews.comarticles/slow-wage-growth-holds-down-march-personal-income-2013-04-29, showing a 0.2 percent month-over-month increase in spending, twice what economists had expected. Sounded like good news, right?

Consumers can buy goods or services. Buying goods means retailers have to order the goods from a manufacturer, the goods have to be transported , shelves stocked, etc.--in other words, creating an infrastructure. Services don't require the same support. In March, according to BEA, spending on goods actually dropped; the entire increase in consumption was attributable to an increase in spending on services.

Tuesday, lost behind the headlines of a continued increase in home prices reported in the ""Case-Shiller Home Price Index"":http://dsnews.comarticles/case-shiller-indices-post-strongest-gain-since-2006-2013-04-30, the Census Bureau reported the nation's ""homeownership rate"":http://dsnews.comarticles/homeownership-rate-at-8-year-low-2013-04-30 dropped to its lowest level in 18 years, and the number of households owning homes fell for the first time in two years.

To the extent the trend continues, builders, realtors, lenders, and servicers could all be affected. We don't yet know the reasons for the declines, but other data points to a shift to multifamily and away from single-family housing. We could be seeing an ""echo effect"" of the foreclosure crisis as children of those affected by foreclosures themselves become reluctant to buy. On the other hand, those potential buyers could be saving for a larger down payment.


Not much on the economic calendar for the week of May 6.

The Federal Reserve will report Tuesday on consumer credit outstanding (non-real estate credit) for March, which will provide insight on whether the elimination of the payroll tax holiday sent consumers scurrying back to credit cards. The continued uptick in auto sales suggests term loans--financing car purchases--could increase.

The Bureau of Labor Statistics issues on Tuesday its monthly Job Openings and Labor Turnover Survey report for March--the ins and outs of what had been a very disappointing employment report. What's been lost in the focus on the unemployment report is the increase in hiring: 51.98 million in the 12 months through February of this year, up from 50.33 million in the previous 12 months and 48.9 million in the 12 months before that.

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About Author: Mark Lieberman

Mark Lieberman is the former Senior Economist at Fox Business Network. He is now Managing Director and Senior Economist at Economics Analytics Research. He can be heard each Friday on The Morning Briefing on POTUS on Sirius-XM Radio 124.

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