An economist told business and financial journalists Saturday to beware of aggregated data because sometimes it hides important trends.
“Companies are increasingly managing and mining data to augment government sources,” said Scott Anderson, chief economist of Bank of the West. “What I see happening is a blurring of the lines between traditional government economic data and market, strategic planning and risk management.”
Anderson and Steve Landefeld, director of the Bureau of Economic Analysis, discussed how to dig deeper into government and company data to get a better picture for how the U.S. economy is operating at the Society of American Business Editors and Writers annual conference, being held at Arizona State University.
Landefeld said the BEA uses electronic data complied from a variety of sources as opposed to getting information from individuals through surveys.
“We hope to pick up data more from economic transactions than from asking the individual,” Landefeld said. “There are biases present in household surveys.”
Landefeld broke down specific aspects of the components of GDP, such as foreign owned assets in the U.S. and encouraged the use of comparisons to give context to data.
Landefield said these foreign investment assets equate to about $25 trillion, which is a huge amount in nominal dollars but not when compared to the percentage of U.S. net worth.
“It’s nothing to panic about,” Landefield said.
Anderson discussed how government data, especially GDP, is central to economic forecasting.
“During the government shutdown, we were twiddling our thumbs for a few weeks,” Anderson said.
Anderson said a real GDP gap still remains.
“It tells me were still below our economic potential,” Anderson said. “There’s a lot of excess slack in the labor market and deflationary pressures are very real.”
Anderson said there is increasing demand for granularity of data as policy makers, banking executives, and corporate boards want access to detailed parts of macroeconomic data.
“Our dependence on data is going to be more important compared to the past,” Anderson said.
Alex Dixon is a senior at the UNC-Chapel Hill School of Journalism and Mass Communication attending the SABEW conference on a Talking Biz News scholarship.
