Adriana D Kugler: The challenges facing economic measurement and creative solutions

Thank you for your generous introduction, Ellen. I am delighted to be here with the National Association for Business Economics (NABE), and, in particular, I am pleased to be speaking at a conference covering an issue that is close to my heart and on which I have spent many years working: economic measurement.

When Federal Reserve officials tell audiences that their judgments are data dependent, some skeptics perhaps presume that monetary policy is already on a path set in stone. But most in this room likely know what I mean when I talk about data dependence. I am a member of the Federal Open Market Committee (FOMC), which, of course, pursues a dual mandate of maximum employment and stable prices. When I say I am data dependent, that means I am considering the totality of the data - the full range of economic indicators that provide a sense of where the labor market, economic activity, financial conditions, and inflation have been and where they might be going. Policymakers must have high-quality and accurate data to understand the economy and set the correct policy.

The truth is that it is not just the Fed that needs data. Consumers, businesses, investors, and others have access to more information than ever before when making decisions. It is incumbent on economists, private- and public-sector data collectors, and others to ensure that available data are carefully collected, accurately measured, and clearly presented, and that data collection and measurement efforts are further enhanced and continue to improve.

To be sure, data collection and economic measurement can be challenging, and different types of data face pros and cons, which is why I take an expansive approach to using data, as I will explain a bit later. But I will begin by highlighting a few challenges to economic measurement. I will then provide some examples of how those challenges might be addressed. I will also provide examples of how nontraditional data generated by the private sector can help provide additional angles from which to view aspects of the economy that may not be clear in data produced by government statistical agencies. Finally, I will offer some examples of how, in recent years, our statistical agencies have adapted and innovated, sometimes by incorporating private-sector data to address specific measurement challenges I have in mind. To be clear, my interest in nontraditional data is not a critique of the statistical agencies. To the contrary, official data are critically important to policymakers, researchers, and the public. Rather, I view public and private data as being complementary and helping to provide a more complete picture of the economy.