Pieces of Eight: News Bulletins from the Eighth Federal Reserve District

Exploring Price Stability

Does price stability contribute to long-term economic growth? That's the question more than 100 economists from around the world discussed at the St. Louis Fed's twentieth annual Economic Policy Conference, held Oct. 26-27 at the Bank.

The conference featured seven papers on the topic, as well as discussions of them by other economists.

The proceedings from this fall's conference will be published in the Review this spring. If you would like a copy when it becomes available, or if you would like a copy of last year's conference issue, please call Debbie Dawe of our Public Affairs Office at (314) 444-8809.

Franklin Gets a Face Lift

He hasn't had a thing done to his appearance in nearly 70 years, but Ben Franklin, whose face graces the $100 bill, will be spruced up and sent out to banks nationwide in early 1996.

The currency redesign is far from just cosmetic, according to the Treasury Department, which will issue modified versions of other denominations in later years. The real reason for the change is to stem counterfeiting efforts, which have become increasingly sophisticated, thanks to technological improvements, such as color copiers, printers and scanners. While retaining the same basic size, color and texture, the redesigned notes will feature a larger portrait that is placed off-center, a watermark and ink that changes from green to black when viewed from different angles. The old series will continue to be honored at full face value, with the new series phased in as notes are returned to the Fed.

Because the currency redesign is the first major one since 1928, the St. Louis Fed distributed information about the new features and held educational seminars for bankers in November.

Do Data Deceive?

With a seemingly never-ending string of indicators out there, tracking economic data can be difficult. And the job's made even tougher when you consider, as two recent issues of National Economic Trends encourage us to, that the numbers cannot always be taken at face value.

In the August issue of NET, St. Louis Fed economist Alton Gilbert addresses the problem of data revisions. Because economic statistics like payroll employment are often revised quite substantially, data for the most recent months can be misleading. "Given the size of these revisions, how can you use an indicator like payroll employment to gauge trends in the economy?"

Gilbert asks. Gilbert says a safer course is to derive an economic outlook from more than just the latest numbers, which are based on incomplete information.

Fed economist Donald Allen, writing in the September issue of NET, says a similar problem occurs when data have not been seasonally adjusted. According to Allen, weather, scheduled plant shutdowns and holiday periods all can cause production indexes to skitter.

Factoring out the seasonal fluctuations by using statistical models captures a clearer picture of the economy's health, Allen says, even if it creates less-than perfect estimates. "Most economists believe such imprecision is a reasonable sacrifice to reveal underlying trends in the data," he says.

For a copy of either issue of NET, or any of our other statistical publications, call Debbie Dawe of our Public Affairs Office at (314) 444-8809.

District Leads Nation in Income Growth