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Remarks to the World Congress May 12, 2008 Role of Official Statistics in a Modern Society: A U.S. Perspective Keith Hall Commissioner Bureau of Labor Statistics What the future should bring • The importance of services in our domestic and international economy • Challenges and gaps in the measurement of services in the U.S. economy: Past, Present and Future • Globalization and future measurement challenges Services as a percent of U.S. GDP, 1960-2007 65 59% 60 55 50 41.4% 45 40 35 30 1960 1968 1976 1984 1992 2000 U.S. trade relative to GDP, 1960-2007 35 28.9% 30 25 20 15 9.5% 10 5 0 1960 1968 1976 1984 1992 2000 The growth in U.S. service sector employment as a share of total U.S. employment 100 90 80 70 60 62.4 64.1 67.5 1949 1959 1969 72.2 83.9 77.7 81 1989 1999 2007 50 40 30 20 10 0 1979 Change in payroll employment during recessions, 1953-2001 53-54 57-58 60-61 69-70 73-75 80-80 81-82 90-91 00-01 1,000 500 0 -500 -1,000 -1,500 -2,000 -2,500 -3,000 Total nonfarm Goods producing Service providing Import Penetration Ratio for Manufacturing and Exchange Rate Movements (1975-2006) 30% 140 120 25% 100 20% 80 15% 60 10% 40 5% 20 0% 0 1979 1984 IPR 1989 1994 Trade Weghted Exchange Rate 1999 2004 • The Growing Contribution of Non-Manufacturing Industries to U.S. Productivity: Private Business MFP Contribution of Non-manufacturing • There 19901995 19952000 20002005 0.5 1.3 1.8 0.2 0.7 1.2 still may be measurement problems for many industries, especially in finance, health care, education and construction. • New data have been coming on line and the situation may be improving. What the future should bring • The importance of services in our domestic and international economy • Challenges and gaps in the measurement of services in the U.S. economy: Past, Present and Future • Globalization and future measurement challenges Price indexes for domestically produced services • Coverage of domestically produced, in-scope services in the BLS Producer Price Program has been a real success story, although even today, significant gaps in coverage remain. In-scope services output covered by PPI, 2001 to 2007 100 90 80 70 60 50 40 30 20 10 0 52.7 53.4 56.1 58.8 2001 2002 2003 2004 76.3 76.8 77.4 2005Jul 2006 2007 64.5 2005Jan Percent of in-scope services output covered Coverage of services • Sectors with little or no coverage – – – – Educational services Arts, Entertainment, and Recreation Management of Companies and Enterprises Other Services (Repair and Maintenance) • Significant gaps within covered sectors – Health Care and Social Assistance (office of dentists, continuing care retirement communities, freestanding ambulatory surgical and emergency centers ) – Finance and Insurance (credit card issuing and reinsurance) – Professional services (computer systems design, research and development) – Administrative and Support Services (telemarketing bureaus) Depth of Coverage of Services • Service industry coverage: – 571 service industries – PPI publishes indexes representing : • 100 service industries • 125 retail and wholesale trade industries • Planned increase in coverage of Wholesale Trade – PPI publishes 2 aggregate indexes for merchant wholesale trade – We plan to publish 18 wholesale trade 4 digit NAICS industries on a post-stratified basis • International coverage of services: – We don’t have this as percent of output, just whether or not each country has service industry indexes – wait for Bonnie’s email FYI: CPI Services • Measurement objective – average change over time in the prices paid by urban consumers for a market basket of consumer purchased services. • Weight of services in the CPI ALL ITEMS Services 100.000 58.731 • Price change CPI services vs. commodities 1998 – 2007 Services + 37.7% Commodities + 20.3% What the future should bring • The importance of services in our domestic and international economy • Challenges and gaps in the measurement of services in the U.S. economy: Past, Present and Future • Globalization and future measurement challenges Future challenges • Capturing global movements of production and labor • Capturing price changes when production shifts from being domestic to foreign sourced. • The increasingly blurred distinction between Wholesale Trade and Manufacturing resulting from globalization trends