Numbers Crunch Leaves Many Firms in a Bind

By ROBERT A. ROSENBLATT and PATRICK LEE

Jan. 13, 1996 12 AM PT

TIMES STAFF WRITERS

WASHINGTON —

The torrent of government economic data has slowed to a trickle because of the budget impasse and punishing snowstorms, leaving businesses from banks to airlines high and dry, groping for other numbers to guide their way.

Without figures from Washington, “you are shooting in the dark, trying to analyze what is going on in the economy” said John Wilson, Bank of America’s chief economist. “We have no current data on two-thirds of the economy, what the consumer is doing.” Wilson figures he has only 10% of the numbers he normally can depend on as chairman of the bank’s interest rate committee.

Reports are just starting to come out now: On Thursday, the Federal Reserve Board reported on November’s consumer debt. The reports show that consumer borrowing grew at a slower-than-expected pace during the month. Total consumer installment credit rose $8.6 billion to $1.014 trillion, the Fed said.

The federal statistical agencies, long noted for their independence and technical expertise, are determined to catch up with the information shortfall.

The Commerce Department on Thursday announced a new schedule for release of data. It includes several combined reports to bring the system up to date.

For example, personal income and consumer spending figures for October and November will be issued Jan. 23. The report on durable goods, a crucial measure of orders and inventories, will be presented next month with the figures for both November and December.

The Bureau of Labor Statistics said all reports scheduled for this month have been postponed. A new schedule will be announced next week covering both the missed reports from December and those postponed from January.

In the meantime, important data remain missing: December employment, monthly tallies on wholesale prices and the consumer cost of living, surveys of housing starts and business inventories, and figures on personal income.

For some, the suspension of government data doesn’t amount to much.

“We look at the price of oil and the price of natural gas,” said Mike Libbey, a spokesman for Chevron Corp. in San Francisco. “Those are the primary economic statistics we depend on. . . . Everything else is in last place.”

And for some critics, the interruption of data merely confirms its unreliability.

“A lot of . . . money managers and financial analysts have been a little leery of some of the numbers to begin with, and a process like this could push them into looking for better data elsewhere,” said John Karevoll, financial editor at DataQuick Financial Systems in La Jolla. “The government numbers have been losing credibility, and this doesn’t help.”

The normally steady stream of government numbers has been stanched by the partial shutdown of the federal government and aggravated by this week’s snowstorms.

The lack of timely data could affect a wide range of businesses:

* airlines, which normally base their fare structures in part on projections of personal income. David Swierenga, chief economist with the Air Transport Assn. in Washington, said he is “interested in people’s incomes primarily because there are two drivers for demand for air travel: One is the prices that airlines charge, and the other is how much money are people making.”

* banks and brokerages, which depend on daily economic indicators to guide investment decisions. They are falling back on other information, including anecdotal evidence from clients.

“It’s hell on us,” said David Hensley, regional economist with the brokerage firm Salomon Bros. in New York. His firm and others have been unable to verify the accuracy of economic forecasts with actual data.

“People just don’t have such a good grounding any longer about where the economy stands,” he said. “The markets are moving more on rumor and much less on information.”

* real estate professionals, who monitor interest rate trends, income and employment data.

* mortgage lenders, who are unable to revise lending criteria without accurate statistics on the secondary mortgage market.

Most important, the economy’s overseers at the Fed will be handicapped at the next meeting of the policy-setting Open Market Committee on Jan. 30, at which they will decide whether to change interest rates.

They won’t have the single most important figure: the gross domestic product, a measure of the total economic activity in the country, originally scheduled for release on Jan. 26 but now postponed until the week of Feb. 19.

The dearth of data comes at a particularly bad time: A nervous stock market is at stratospheric levels, the president and congressional Republicans are squabbling over the best way to balance the U.S. budget, and retailers are fretting over a disappointing holiday season.

The lack of data leads to “uncertainty in the financial markets,” agreed Loren Houchen, senior economist and corporate planner at Great Western Bank. With the markets already worried that there might be a resurgence in inflation and about the federal budget impasse, the missing reports “compound the concerns for investors,” Houchen said.

For those eager consumers of numbers in the financial world, “the only good news is that we’re not unique,” said Richard B. Berner, chief economist with Mellon Bank. “The uniform absence of this information is the great leveler.”

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Delayed Data

Key national economic statistics that have been delayed:

Statistic: Gross domestic product, third-quarter revision

Original release date(s): Dec. 19

New release date(s): Jan. 19

Statistic: Gross domestic product, fourth quarter

Original release date(s): Jan. 26

New release date(s): Mid-February

Statistic: Employment, December

Original release date(s): Week of Jan.1

New release date(s): Week of Jan. 22