Caveat! Some unrecognized pitfalls in Census economic data and the Input-Output Accounts

Abstract

The structure of many consumer goods industries has radically changed over the past several decades as U.S. manufacturers transferred finished goods production offshore. The statistical system used by the economic Censuses and the Input-Output Accounts, based on an earlier industry structure, improperly allocates the sales values and/or margins of these finished goods imports among foreign manufacturers, U.S. manufacturers, U.S. wholesalers and U.S. retailers. Researchers seem unaware that the familiar indexes of economic performance derived from these sources are often distorted and biased in predictable directions. This article illustrates the problem and suggests appropriate changes in the statistical system.