With the economy at a turning point, investors, traders and the media -- not to mention economists -- are looking closely at data published by the three federal agencies responsible for economic statistics: the Bureau of Labor Statistics, the Bureau of Economic Analysis and the Census Bureau. The hope is the numbers will be better than they have been in recent months or quarters signaling a recovery, or at least a turning point.

They won’t be disappointed.

That’s not an assertion the economy has turned, or a prediction. The numbers will be “better” because of a reversal of some cutbacks in federal funding which forced the agencies to trim programs.

The first glimpse at the revived data programs came two weeks ago when the BLS resumed coverage of 65 smaller Metropolitan Statistical Areas dropped over a year ago (and highlighted by FOX Business). BLS had to abandon publication of data on employment, unemployment and industry jobs.

As a result of the same cuts, BLS had to scrap a plan to update its housing database used to determine housing costs included in the monthly consumer price index. BLS has been using 1990 census data for its measure for housing costs which is the largest single component of the CPI. In short, according to one BLS official, “we did not include anything built after 1990” just as housing was experiencing perhaps its greatest “bubble” in history. 

Technically, home prices are themselves not part of CPI, explaining in part why the housing component of CPI was not reflecting the rapid run-up in home prices. In developing the housing piece of CPI, BLS statisticians develop “owner’s equivalent rent” [OER], which attempts to determine what the owner of a home would pay as rent for a similar residence. To be sure, the increase in home prices resulting in higher mortgages would mean higher monthly “rent” payments.

When FOX Business wrote 15 months ago about the cutback in funding for the federal statistical agencies, economist Dean Baker suggested one reason for the elimination of funding might have been the concern a better-funded, more current measure might show higher inflation.

There is a chance the updated census data will show a faster increase in housing costs, feeding into concerns about inflation, just as the Federal Reserve considers unwinding its easy-money policies designed to stimulate the economy.

Baker, a year ago, stopped short of suggesting the numbers were being manipulated for political purposes, but in testimony before the Congressional Joint Economic Committee last week, William Eddy, chair of the Committee on National Statistics of the National Research Center noted another case in which they were. Eddy, a professor of statistics at Carnegie Mellon University cited a recent report of his committee which “documents the firing of the director of the Bureau of Justice Statistics in 2005 because the director refused to alter a statistical press release to suit the policy view of departmental officials.”

The BLS is not the only agency to get better funding.

The Census Bureau has received funds to allow it to expand its quarterly report on the service sector, a key report since the service sector accounts for more than 80% of jobs in the country.

According to Rep. Kevin Baker (R-Texas), the ranking Republican House member of the JEC, the expansion of the report is critical citing the “need to ensure that federal economic statistics fully reflect the growing importance of service industries and exports to GDP.”

Census has also petitioned for funds for its LED report -- Longitudinal Employer-Household Dynamics program. It was the data from that program which was able to determine the number of people working in Minnesota and where they came from following a tragic bridge collapse and enable local officials to quickly adjust and adapt.

The National Association for Business Economics had noted a year ago the budget cuts resulted in the loss of indicators, not merely the elimination of planned improvements in the data.

BEA, when the budget cuts were imposed, had to change its method of surveying the operations of multi-national corporations and eliminate its survey of new, direct investment in U.S. companies by foreign companies.

BEA is also seeking funds to develop statistics on energy pricing by industry, a key initiative – but that funding is under threat as budget proposals wend their way through Congress.

In the recent JEC hearing, Rep. Carolyn Maloney (D-N.Y.) underscored the need for the data.

“I cannot stress enough how heavily policy makers on this committee and at all levels of government rely on the data,” she said “The data enable us to evaluate whether or not a policy is achieving the goals we intended.”

The Federal Reserve, too, has stepped into the fray, announcing plans to accelerate its Survey of Consumer Finances, usually conducted on a three year cycle. The Fed announced Monday it “will soon begin a statistical study of household finances to update data collected at the outset of the economic downturn that began in late 2007.”

The Fed will try to re-interview participants in the 2007 survey, explaining “given the serious financial and economic problems of the past two years, this special study will gather a detailed picture of the effects of those events on households and their finances.”

The numbers might not show hoped-for improvement, but with increased funding, they may be better.

Mark Lieberman is the senior economist for the FOX Business Network. Prior to joining FOX, he served as first vice president and manager of economic analysis and research at Washington Mutual in New York. Before that, he served as senior vice president at Dime Savings Bank of New York (which was later acquired by Washington Mutual), where he specialized in credit and risk management. He is a member of the Executive Committee of the New York Association for Business Economics. He has a degree in Economics from the Wharton School of the University of Pennsylvania.