Up, Down, All Around: It’s Hard to Figure : Plenty of economic statistics--but which ones to believe?

The latest government unemployment figures show the jobless rate in California is rising at a faster clip than the rest of the nation. But economists believe the state’s actual employment picture is far worse than the numbers are telling us. They worry that the U.S. Labor Department may be vastly underestimating jobs losses in California.

Who to believe? That question has been under debate as economists and state agencies pore over statistics that show wide discrepancies between federal and state employment data.

Faulty economic reporting may be the reason the breadth and depth of this recession have eluded accurate diagnosis. Other extraordinary forces, such as the credit crunch, are at work too. But misleading data has a widespread negative effect, crippling state and federal policy-making and budget projections.

There is an emerging consensus among number-crunchers that the federal statistical system needs to be refined to provide more timely and accurate information.

The Labor Department reported Friday that the nation’s unemployment remain unchanged at a five-year high of 7.1% in January. In California the jobless rate rose to 8.1%, from 7.7% in December. The government’s survey of households showed 173,000 Californians lost their jobs in January.

At the same time, a separate monthly survey, based on payroll information, showed an increase in California jobs of 41,000, adjusted for normal seasonal trends such as temporary holiday workers; that same payroll survey showed a national job loss of 91,000.

The data is confusing. In January, 1991, and through most of last year, the government was reporting based on payroll data that California was faring better in the jobs area than the rest of the nation. Subsequent adjustments to the data by the California Department of Finance showed that the state in fact was faring poorly.

Federal and state data both showed that California employment peaked at 12.95 million in the summer of 1990. By the following June, 140,000 Californians were out of work, according to the Labor Department. But state payroll tax filings put job losses at 557,000 jobs. What a difference!

The U.S. Commerce Department similarly showed a 1.8% drop in sales in California for the first 11 months of 1991 from the year before. State sales tax collections showed a 4.5% decline. In another example, the state Department of Finance reported a $8-billion decline in personal income in the first quarter of 1991 from the previous three months. The federal data showed income held about even.

For months, the statistics have seemed to contradict economic reality, undermining consumer confidence, which has plummeted to a 12-year low. Economists find the federal statistical base shaky at best. Government cutbacks during the 1980s took their toll on information gathering at a time of profound economic and demographic changes. President Bush’s chief economic adviser, Michael J. Boskin, needs support in his quest for a bigger statistical budget. The system obviously needs help.

If we cannot monitor--and measure rather precisely--the nation’s economic pulse, how are we to figure out a solution?