President’s 2016 budget would fund data on export prices and poverty measures

A few weeks ago President Obama presented his fiscal year 2016 budget request to Congress. That budget proposes $632.7 million in funding for BLS, an increase of $40.5 million over our fiscal year 2015 funding. The 2016 budget proposes new funding to help BLS meet some important data needs. I have asked David Friedman, the acting Associate Commissioner for Prices and Living Conditions, to explain how we plan to use the proposed funding to improve prices and consumer spending information.

The President’s 2016 budget asks Congress to restore funding that would let BLS continue producing and publishing export price indexes. These indexes measure the price change of goods and services U.S. firms sell to foreign buyers. In fiscal year 2014, we announced plans to stop publishing export price indexes because of reduced funding. However, before we carried out the planned cuts, the Administration looked for and found other temporary funding sources. This money is only enough to produce and publish export price indexes until September 30, 2015. This budget proposal would allow us to continue producing and publishing export price indexes in fiscal year 2016 and beyond.

BLS publishes import and export price indexes, and both are critical for understanding how our nation’s economy connects to the world economy. Export price indexes help policymakers and businesses understand trends in trade balances and how well U.S. firms compete in international markets. The Bureau of Economic Analysis uses export price indexes to estimate real Gross Domestic Product, which measures all the goods and services the nation produces. BLS measures of productivity and costs also rely on export price indexes. A recent Beyond the Numbers article showed that no other data sources are substitutes for export price indexes.

The President’s 2016 budget also proposes funds for BLS to produce spending measures that would help the U.S. Census Bureau measure poverty more accurately. Poverty measures are essential for understanding hardship and prosperity in our economy. Other federal agencies use these measures to improve conditions for the poor. The official U.S. poverty measure began in the 1960s and has not changed substantially since then. Many observers have criticized the measure for several flaws. In particular, it does not account for many government aid programs. The alternative poverty measures the Census Bureau would produce from BLS spending data would not replace the official measure; instead they would provide a broader view of hardship. If Congress funds this proposal, it would allow us to:

1. Release consumer spending data more quickly to help the Census Bureau produce alternative poverty measures each year.
2. Add questions to the Consumer Expenditure Survey on topics such as school breakfasts and lunches and help paying for home heating and other household expenses.
3. Continue research to improve how federal agencies measure poverty.

If Congress funds the BLS proposal in the coming year, it would allow us to strengthen our partnership with the Census Bureau on this important national issue. Without the funding, our ability to be a full participant in development and maintenance of the supplemental poverty measure is not possible.