As evidenced by the steady stream of survey results each week, surveys are an important part of the economist's toolkit. In "Surveying the Economic Landscape," featured in the second-quarter issue of EconSouth, Atlanta Fed senior economic analyst Nick Parker explores some of the important economic data captured by surveys throughout the Federal Reserve System.
"Much of what we know about our nation's economy comes from one survey or another," Parker writes. Consider, for example, the employment situation report. Produced each month by the U.S. Bureau of Labor Statistics, the report contains data from two surveys. Other closely watched surveys include the Institute of Supply Management's Manufacturing Survey and the U.S. Census Bureau's retail sales report.
These surveys help economists and others better understand current and projected economic conditions, "but they don't paint a complete picture," Parker notes. To help complete that picture, the Federal Reserve Banks and the Board of Governors have created surveys of their own. These efforts are based on an understanding that the quality of data can influence the effectiveness of monetary policy. The Fed's surveys can fill gaps in the existing data, provide more current information, or employ qualitative methods to provide more detail.
The Atlanta Fed's Business Inflation Expectations (BIE) survey is one example. The monthly survey, introduced in 2011, filled a gap in the data on inflation expectations by measuring those of Southeast businesses. This information is particularly important because firms' inflation expectations "factor into companies' pricing and wage decisions, which ultimately influence overall price levels," Parker explains. "Thus, if accurately measured, they could prove to be a leading indicator of inflation."
To read more about the Fed's use of surveys in tracking the economy, see the full article in the second-quarter edition of EconSouth, now available online and in print.