Bad data II
By Matthew Goldstein
Bad data continues to confound the U.S. government in its measurement of the economy, with the Federal Reserve Bank of New York noting it too has been a victim.
In the Fed’s most recent report on outstanding consumer debt, the nation’s central bank said it recently discovered it had been underestimating the total dollar amount of student loan debt for a number of years. In the report, the NY Fed said some of the under-counting may have stemmed from the methodology used by one of its vendors.
The Fed said it has fixed the problem, which was a significant one. The Fed says it may have been under-estimating outstanding student loan debt by some $290 billion.
But don’t worry, the Fed indicates there’s nothing wrong with its other data collection. And on that front, the Fed said overall consumer debt at the end of the third-quarter declined by $60 billion to $11.66 trillion.
Let’s hope the Fed hasn’t been under-counting outstanding home loans and credit card debt either.
Here is the Fed’s student loan debt correction:
Revisions to Student Loan and Total Debt Balances
From the inception of the FRBNY Consumer Credit Panel, we have frequently compared the aggregate
balances reported on our sample of consumer credit reports to other publicly available sources of data. For most
categories of consumer debt, our aggregate figures are close to other public estimates and/or we are able to
understand the differences we observe. However, we came to realize that our aggregate reported student loan
balance was at the low end of the substantial range of publicly available sources.
After several months of discussions with our vendor, we have now come to understand the source of this difference.
The revisions to the data are fairly substantial: as of our August report, 2011Q2 student loan balances were
reported at $550 billion. We now estimate that student loans outstanding in that quarter (2011Q2) amounted to
$845 billion, $290 billion or 53.7% higher than we reported earlier.