BLS DAILY REPORT, TUESDAY, APRIL 22, 1997: RELEASED TODAY: The U.S. Import Price Index decreased 1.4 percent in March. The decline followed decreases of 0.8 percent and 0.3 percent in February and January, respectively, and was led by a further sharp drop in petroleum prices. The U.S. Export Price Index was unchanged in March after gaining 0.2 percent in the previous month .... Federal Reserve Board Governor Alice Rivlin proposed that policymakers turn to a temporary solution as a way to break the impasse in the negotiations over changing the cost-of-living adjustment formulas used to increase many federal benefit programs, including Social Security and personal income brackets. In remarks following a speech to a forum sponsored by the Employment Policy Foundation, Rivlin urged members of Congress and the Clinton administration to try a "temporary fix" that would involve trimming the COLA formulas by 0.4 percentage point a year for five years. "Have it sunset in five years and then see where we are" in terms of efforts by BLS to address measurement problems, Rivlin said. She stressed that BLS should be given the resources to step up its research on CPI improvements, which has been ongoing the last several years. Rivlin explained that she would not want COLA formulas to be trimmed by the full 1.1 percentage points recommended by the Boskin commission ....Rivlin said: "We need to make sure to take a conservative estimate" of any CPI overstatement ....For its part, the BLS continues to disagree with the magnitude of the Boskin commission's findings and has begun publishing an experimental CPI that will address the so-called "substitution bias" ....Historical data from the experimental CPI showed that the index rose 0.25 percentage point less using a geometric mean method of calculating price change rather than the current arithmetic mean ....(Daily Labor Report, page A-5)_____Rivlin called for a temporary and arbitrary cut in a key measure of inflation, which could shave millions of dollars from government benefit payments. Rivlin said politicians should discount the CPI by about 0.4 percentage point (Washington Times, page B7). DUE OUT TOMORROW: Productivity by Industry, 1995
