From The New York Post, 6/29/04:
http://www.nypost.com/business/26522.htm
MYSTERY BEHIND LATE RELEASE OF PPI DATA
By JOHN CRUDELE
June 29, 2004 --
ONLY a dedicated cynic and a devout pain like me probably would bring
this up, but how can the U.S. Labor Department expect people to
believe statistics like the producer price index if the number is
saturated in mystery?
The Labor Department's Bureau of Labor Statistics delayed release of
the wholesale inflation number -- the PPI -- by half a week recently
because, according to a press release, it needed to "resolve
unexpected difficulties in calculating the index."
A government agency doesn't produce a very important economic
statistic on a timely basis and that's their best explanation?
This is the same economic series that was delayed for months in early
2004.
And it's a number that will prove important when the Federal Reserve
meets today and tomorrow to decide if interest rates should be raised.
Keep in mind that billions of dollars are wagered each day on whether
inflation is increasing or falling.
And remember that the PPI is one of the most visible gauges of this --
watched all over the world.
Not only is the number important to the Fed, but it's also key to the
presidential election if only because it can change the economy by
forcing financial markets to make borrowing costs more expensive.
"The BLS expresses its apologies to those who experience any problems
as a result of this delay," the Labor Department said on its Web site.
When the PPI was finally released it showed an increase of 0.8 percent
in May, the biggest jump since March 2003.
If you take out food and energy prices the increase was 0.3 percent.
That the media didn't seem to care about this delay was as astounding
as the government's ineptitude.
So let me be one voice of indignation.
(Pound fist on desk) We need to know what's going on!
I called the Labor Department between the time the PPI was delayed and
its eventual release.
I got a little fuller explanation but one that was still completely
unacceptable.
Brian Catron, a BLS economist who works on the PPI data, says the
number was delayed because "there was a calculation issue."
What exactly does that mean?
Does Catron mean that the PPI's jump, as originally calculated, was
too large for the financial markets to handle?
"You are implying that we are manipulating the number," Catron shot
back when I asked.
"I'm not going to dignify that with a response."
OK, don't respond.
I'm still wondering if that was the case.
But here are some other things you might want to know.
Catron assured me that the "mistake" that caused the PPI's delay had
to do with the quality of the data that were provided by
manufacturers.
And he contended that Labor Department higher-ups had not seen the
original number before it was pulled, so only lowly bureaucrats
decided to rejigger the data.
The raw data, Catron told me days before the PPI finally came out,
didn't pass a quality assurance test.
Prices -- as they stood on the day they were originally supposed to be
released -- just weren't "appropriate" for public viewing.
A little editing and they apparently become appropriate.
Which makes me wonder: shouldn't someone be keeping an eye on the
stat-amagicians?
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Keep your eye on those Bush Labor Department job statistics, folks.
Now you see 'em, now you don't. Kinda strange, eh?
Harry
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