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duction statistics. An Annual Economic Survey program has been conducted by ESCS for the past four years but needs considerably more development to provide the regular flow of establishment data needed.
One of the gaps in the economic data for establishments is the lack of data on the division of expenses and income between farmers and nonfarm firms that contract with them for commodity production. These data will be needed from the improved establishment data program to estimate who receives the income from farming as discussed earlier in this section.
Two other sector accounts that provide important information on the farm sector are the balance sheet and the productivity accounts. A priority need for improving the balance sheet is to separate the business and household sectors so that capital accounts include only the business sector.
Recommendations for improvement in the productivity accounts will be forthcoming from a current evaluation of these accounts. This study is being conducted by the Economic Statistics Committee of the American Agricultural Economics Association and ESCS.
Continued concern about economic equity and viability for the farming sector requires improved economic indicators for the sector. A comprehensive study should be made of the indicators used for this purpose (parity, cost of production, income and price indexes) and other indicators that might be developed. More adequate measures to determine the place of farmers on the economic ladder are needed. Concepts of parity of income and measures of return on equity capital should be evaluated.
A final major data gap in economic indicators and sector accounts are the other industries in the food and fiber sectors. A more complete program of data on costs, incomes, capital investments and economic performance of these industries should be developed. A program started by ESCS to measure operating margins of food wholesale and retail firms should be continued. Rural Community and Demographic Data
The third major part of the agricultural data system is data on the people and communities in nonmetropolitan areas. This includes people living on farms but also about four times as many who live in these rural areas but not on farms.
This part of the data system has been less developed than supply, use and price data or the sector accounts. The available demographic data has
come from the decennial censuses of population and housing and more recently from the annual housing survey and an expanded program of current population surveys. New demographic surveys including the authorized mid-decade statistical effort for population and housing data will close more of the data gaps on rural people. Planning for existing and new demographic surveys should include identification of data needs for the rural population and related target subgroups.
Rural community data is even more difficult to find and is a major problem for programmatic decisions of the Federal, State and local governments. Data on availability and needs for sewer, water, health and transportation services are greatly needed to target loan and grant programs and evaluate their effectiveness.
Other rural people and community data needs include educational services, employment opportunities and important causes of community change. A significant amount of concept and development work needs to be done for development of an adequate data system on rural people and communities. Organizational Issues
Responsibility for the agricultural data system is pretty well concentrated in ESCS, the statistical and analytical agency for USDA, and in the Agriculture Division of the Census Bureau. However, like other parts of the Federal statistical system, there is enough decentralization to require periodic examination of roles and responsibilities.
A task force should be formed to conduct a comprehensive evaluation and make recommendations and plans for improving the agricultural data system. The task force is needed to examine the many concept and data gap problems identified in this chapter and develop a long-range plan for correcting these problems. An Interagency Committee on Agricultural Statistics should be formed to guide the work of the task force and react to ideas and recommendations developed by the task force. The interagency committee is needed to ensure inclusion of all relevant topics and concerns in the task force study. The committee can also help bring a breadth of perspectives and increased objectivity to the deliberations.
One of the organizational issues that should be examined by the task force is the conduct of statistical work by program agencies in USDA. The main areas for examination are the foreign commodity statistics program of the Foreign Agricultural Service and the market and price statistics programs of the Agricultural Marketing Service. Consideration
Although the intent of the Census of Agriculture is to survey all farm operations, it is difficult in practice to identify all operations, especially very small ones. The degree of incompleteness in the Census of Agriculture has been measured by comparing aggregate results with data from SRS sample survey programs. Although this is helpful, a far better procedure would be to use a land area sample frame to make the census more complete by collecting data from a sample of farms that have not completed a mailed census questionnaire. This procedure should probably be used to achieve completeness at the State level although county-level measurement might be considered in States with large proportions of small farms.
should be given to whether the quality, timeliness, efficiency, or effectiveness of these programs would be significantly improved by transferring them to the statistical center for USDA. Needs for more joint planning or resource competition between these programs and the statistical programs conducted by ESCS should be considered. Any possible lack of objectivity in these statistical programs or influence from policymakers should be identified.
The second major organizational issue that should be examined by the task force is the role and relationship of the Census Bureau and ESCS. Many times the questions start with why there is a need for both in the agricultural data system. But the more correct questions are how they are each serving the broad economic and social data needs of the agricultural data system and what opportunities there are to develop more complimentary and cooperative roles for meeting the data needs.
Comparison of the data needs with the strengths and capabilities of each agency justifies a continued role for both. Census has the most capability to provide the data needed on rural people and communities, on the other industries in the food and fiber sector, and improved economic structure and control data on the farm sector. ESCS has the most capability to furnish very current and timely data on supply, use, and price of farm commodities. Who should be responsible for other data needs and whether the overlapping programs for the farm sector can be more compatible are questions that need to be resolved. One final issue is the cooperation between the agencies in development and maintenance of sampling frames for the farm sector and other food and fiber industries.
New survey methods for agricultural statistics should continue to be researched and implemented where possible. Many of the recent research efforts have gone into use of satellites and remote sensing. The major payoff from this new approach is probably in improved foreign crop production data. Use of producer and consumer panels needs to receive more research attention.
Agriculture Handbook No. 365, Major Statistical Series of the U.S. Department of Agriculture: How They Are Constructed and Used, is a fairly comprehensive documentation of most of the existing agricultural statistics. The 11 volumes of this handbook should be updated and include more detail on all agricultural and rural statistics programs. Other efforts underway in USDA to document and provide general access to computer readable data bases should continue. A central point for locating and learning about agricultural and rural statistics has been under development by ESCS. This should prove to be a valuable service to other users of agricultural statistics.
Methods and Procedures Issues
This topic covers a variety of miscellaneous issues in agricultural statistics that need attention. The most recent major effort by the statistics unit of ESCS for improving the quality of their statistics is development and maintenance of a master list frame of farm operators and other establishments from which data are needed. More controlled and more efficient sampling can be done by ESCS when this list is fully operational. As resources are made available, this list frame should be used to conduct more probability surveys. low-response mail surveys still used for some programs have an unknown statistical error and an unmeasured response bias.
A few other issues affect agriculture statistics just as they do other statistical programs. Statutory protection of data collected for statistical and research purposes is needed. The Freedom of Information Act as well as increased auditing and regulatory activity in government make it necessary to have this authority to hold data confidential. The timeliness of release for some agriculture statistics can be improved. Some data definitions, table formats, and presentation can be improved to make statistics more comparable and useful.
Chapter 2. CONSTRUCTION STATISTICS
Construction is one of the Nation's largest and most volatile industries. Construction statistics are used for (1) short-term analyses and projections of the impact of construction activity on the economy for fiscal and monetary policymaking, (2) long-term analyses of living conditions and economic growth for developing policies associated with obtaining adequate housing and capital investment, and (3) analyses of construction markets by contractors, labor unions and suppliers of construction materials.
Construction statistics are closely related to other areas covered in the Framework-housing, mortgage financing, and overall economic activity. These are discussed in the chapters on housing and community development, financial statistics, and the economic accounts. Hence, this chapter is brief, covering only those topics that do not fit conveniently into those related chapters. In order to make a full assessment of the needs for and recommendations regarding construction statistics it is essential to review these related chapters.
Statistical Programs Statistics on construction activity are primarily collected and distributed by the Census Bureau. The Census construction statistics are collected monthly, quarterly, annually, and quinquennially.
The quinquennial census of construction industries covers receipts, expenses, capital outlays, and so forth, of construction contractors, operative builders, land subdividers and developers. These data are published by industry and state.
The above data are based on survey information on building permits, contract awards, housing and other construction starts, housing sales and completions, construction expenditures, and operations of the construction industry. For the measures of construction put in place, these data are supplemented with statistical estimating procedures. The single family housing price index is based on a statistical regression analysis that adjusts for the changing structural characteristics of new housing. Construction cost indexes used to deflate other types of construction activity to constant dollars are obtained from other Federal agencies and private industry.
The Bureau of Labor Statistics (BLS) conducts periodic studies to determine the labor, materials and overhead costs and construction time required for various types of construction. These studies have been conducted roughly in five to ten-year cycles for single-family housing, private multi-family housing, public housing, college housing, nursing homes, hospitals, schools, highways, sewers, civil works, Federal office buildings and commercial office buildings. The BLS also collects monthly data on payrolls and employment in the construction industry and wholesale price indexes of construction materials.
The Department of Labor completed the initial phase of a new system for developing short, medium and long-term projections of employment on construction projects in 1978, and the full implementation of the program is planned for 1980. This Construction Manpower Demand System provides forecasts of the demand for approximately 30 construction craft occupations plus on-site technical and professional personnel for about 35 types of construction in local areas, States, Federal regions and the Nation. The forecasts are developed monthly for the first year of the projections, quarterly for the second year, and annually for the next three
Monthly data and annual summaries and benchmarks are published in a series of construction reports for (1) value of new construction put in place in current and constant dollars for all types of private and public construction, (2) housing starts and completions, and new one-family homes sold and for sale, (3) housing authorized by building permits and public contracts, and demolitions at the local area level, and (4) mobile home placements (conducted for the Department of Housing and Urban Development).
A quarterly sales price index for new one family houses sold is developed. Annual information is provided on the value of residential repairs, additions, alterations and replacements (data are collected quarterly but tabulated annually).
years. Longer-term projections of ten and more years will be made for some energy-related construction sectors.
Uses and Users
State and Local Area Statistics, occasionally offer suggestions to improve the construction statistics program. Special studies have been made for improving construction statistics. For example, the Cabinet Committee on Construction prepared such a report in 1970 on a wide range of topics, compensation, industrial relations, prices, finance, employment, existing structures, output and industry statistics. More recently, the Gross National Product Data Improvement Project recommended several improvements for measuring construction activity in current and constant dollars (see chapter on economic accounts).
Major Data Gaps and Recommendations
The most prominent data problems with construction statistics are the inadequacy of construction cost indexes, lack of measures of nonresidential maintenance and repair construction, weaknesses in the measures of single-family construction put in place and of residential repairs and alterations, and lack of information on dealer inventories of mobile homes and of capacity in the construction industry.
Data on construction activity are used by Federal, State and local government agencies and private organizations for economic analysis, projections and policymaking. The Council of Economic Advisors; the Federal Reserve Board; the Departments of the Treasury, Housing and Urban Development, Labor, and Commerce; the Federal Home Loan Bank Board; and the Federal and Government National Mortgage Associations use the data in determining fiscal, monetary, employment, and regional economic development policies for the financing of construction to stabilize the economy, to assess the needs for new private and public capital investments, and to help in achieving the goal of providing adequate housing (see the chapter on housing and community development for housing goals). The House Banking, Finance and Urban Affairs and Senate Banking and Urban Affairs Committees, Joint Economic Committee, and Congressional Budget Office use these data in evaluating the need for new legislation in similar areas.
The Department of Labor uses the construction data and projections for providing a better match between job vacancies and workers in its employment service and training programs. Within the Department of Commerce, the Bureau of Economic Analysis uses the construction put in place figures in developing estimates of the gross national product and the construction labor and materials studies in preparing input-output tables (see economic accounts chapter). Also, the Commerce Department's Industry and Trade Administration prepares Construction Review, a monthly publication which summarizes a wide range of construction statistics.
In the private sector, construction statistics are used by manufacturers and distributors of construction products for company planning and marketing. Trade associations, labor unions, and financial organizations use these data to analyze market trends, negotiate wage agreements, advise on investments, and recommend legislation.
Construction Cost Indexes
It has long been recognized that the construction cost indexes used to deflate the bulk of construction expenditures are not representative of actual material, labor and overhead costs. Based on previous analyses, these indexes tend to overstate the increase in construction costs due to inflation and consequently lead to an understatement of the estimated volume of construction in constant dollars.
This problem exists for approximately 70% of all new construction-multifamily housing, industrial, commercial, educational and other nonresidential buildings, public utilities, and civil works. An essential weakness of these indexes is that they are based on pricing hypothetical structures of certain physical characteristics which were specified at some time in the past rather than of actual structures currently under construction. They also are inadequately adjusted for productivity change in the construction industry.
Advisory Committees There are no continuing advisory groups charged primarily with reviewing the construction statistics program. The advisory committees to the Census Bureau, for example, the American Statistical Association and the American Economic Association advisory committees and the Advisory Committee on
These indexes typically are provided by private organizations. Unfortunately, little information is available on the methodology for preparing the indexes. The Census Bureau presently is developing its own construction cost index for multifamily housing. It is planned for use around 1980. This will be consistent with the indexes for single family housing (Census Bureau) and highway construction
(Federal Highway Administration) which are satisfactory.
The Census Bureau and the Bureau of Labor Statistics should engage in a joint research and development project to provide more reliable construction cost indexes for nonresidential construction. These should be developed initially for nonresidential buildings, and subsequently for electric power plants, sewer and water facilities, and other nonbuilding structures.
In addition to the conceptual aspects of the research, an examination should be made of the appropriate vehicles to obtain the necesssary statistical information. For example, the BLS studies on labor and materials requirements for new construction and the Census data on characteristics of nonresidential buildings are primary sources of such information. These data sources should be reviewed for necessary improvements regarding the representativeness of the sampled projects, adequacy of the coverage of different types of construction, and frequency of the surveys. The BLS and Census data collection programs should also be integrated to avoid duplication.
Nonresidential Maintenance and Repair Construction
Substantial sums are spent on the maintenance and repair of nonresidential structures-roughly estimated at over $20 billion annually. In addition, these outlays are being bolstered by modifications to existing structures to conserve energy. However, there are no directly collected data on these expenditures.
Estimates of expenditures for nonresidential maintenance and repair construction should be collected in the quinquennial economic censuses. These data would be provided in the census of construction industries for the work done by construction contractors, and in the other economic censuses for work done under contract and by force account employees.
Single Family Residential Construction
Estimates of monthly construction put in place for single-family housing are developed indirectly by multiplying the number of housing units under construction from data on housing starts by unit construction costs from building permit data. The housing start data are adjusted for the estimated proportion of the building constructed each month and the unit cost estimates are adjusted for undervaluation in the building permit data and for architectural and engineering expenses. The adjustment factors for the building permit data and
architectural and engineering work are based on studies conducted in 1956, which now are considerably out of date. Adjustment factors for the proportion of housing starts constructed each month are based on 1970-72 patterns; prior to 1978, they also reflected 1956 experience.
The Census Bureau should conduct a monthly survey that provides direct measures of the value put in place of single-family construction, analogous to the ongoing monthly survey for measuring multifamily residential construction.
Alternatively, the Census Bureau should update the adjustment factors used for the unit costs and construction time every 5 years. In developing these factors, consideration should be given to using the BLS studies on labor and materials requirements for new construction and the Census surveys of housing sales and completions.
Residential Repairs and Alterations
The Census Bureau's survey of expenditures for residential repairs, additions, alterations and replacements has relatively high sampling errors. In addition, due to the lack of quarterly tabulations of these data (collected quarterly but tabulated annually), estimates of the outlays for additions, alterations and replacements are extrapolated from annual levels for the quarterly gross national product estimates of fixed investment.
The Census Bureau should increase the sample of the survey of residential repairs, additions, alterations and replacements to significantly reduce the sampling error, and tabulate these data quarterly in time for use in preparing the gross national product estimate released 75 days after the quarter. Consideration also should be given to merging this survey with the Bureau of Labor Statistics' Continuing Consumer Expenditure Survey.
Dealer Inventories of Mobile Homes
A major consideration in short-term demand forecasts is the status of inventories. Thus, if inventories are low relative to sales, future output tends to be strengthened; concomitantly, if inventories are relatively high, this tends to depress future output.
Unsold new homes are one form of inventory, and for conventionally-built single-family houses, monthly data on new homes for sale are available. Comparable information of mobile home dealer stocks of new mobile homes is not provided. Consequently, current market information affecting