Betrayed by the Census Bureau

By Jock O’Connell

This commentary might conceivably have taken the form of one of those Dear Diary entries in which the aggrieved party lays out just how badly he or she was betrayed by someone they had come to trust implicitly.

Now I appreciate the story of disappointment I’m about to relate is not in the same category as that time Santa failed to leave a Lionel electric train set under the Christmas tree despite a firm promise made just days earlier at the Porteous, Mitchell and Braun department store. But it still hurts deeply when an institution I had long held to be the gold standard of reliability and accuracy has let me down in a mighty big way.

My saga of woe began this past March 27 when the U.S. Census Bureau’s Foreign Trade Division, the collector, disseminator, and overall minder of the nation’s official international trade statistics, released data for the month of January. After surveying the national figures and the numbers for California, I turned to the data on maritime trade.

And there, Dear Diary, I spied a number so egregiously out-of-place that I choked on my double espresso.

Specifically, what I found was that the Ports of Los Angeles and Long Beach had in January reportedly received shipment of containers bearing 1,446,444 metric tons of a commodity opaquely described as “Articles of Natural or Cultivated Pearls, Precious/Semiprecious Stones” or HS Code 7116.

Was this worth crying over spilled coffee? Darn right! For one thing, it was the single heaviest containerized import commodity the two ports handled in January, alone accounting for 38.1% of all containerized import tonnage through San Pedro Bay that month. Second, it was an import trade through the two ports that normally amounted to no more than two or three hundred kilos per month. In fact, January’s tonnage was roughly seven times greater than the combined weight of all imports of HS 7116 from China through both ports over the previous ten years.

Third, the corresponding import value was consistent with the values declared in more normal months.

What was going on?

Now it might seem that the most likely possibility was the sort of fat-finger error you or I might make. Someone at Census had evidently mistyped the numbers and produced this astonishing anomaly. Adding to this likelihood was that the apparent error came during a period in which the Census Bureau, along with much of the Federal government, was trying to get back up to speed after having been shut down for 35 days. Doubtless in the haste to catch up – this was the second trade data release of the month – a human had erred.

But Census isn’t human. It’s a statistical machine of enormous complexity and grave responsibility. Its numbers are closely watched by armies of analysts and investors. Billions or even trillions of dollars move based on the figures Census reports. For that reason, it has computer safeguards, programs that scour the numbers and red-flag anomalies much less gross than this one for human review. Perhaps the programs worked, but the humans were too busy to notice. Whatever the cause, the outsized import figure was distressing.

I quickly caused this matter to be brought to the attention of the relevant folks at the Census Bureau’s Foreign Trade Division and was duly informed that an individual had been assigned to investigate the matter. “Your request was assigned control number 3197. The results of said inquiry should be passed along within 60 days.”

The clock began to tick, but the pages of the calendar did not exactly fly by. Time slowed. I waited and pondered the issue. Impatient brooding led to speculation, which in turn gave rise to conspiracy mongering. Being of a mind to occasionally reject Ockham’s razor, I weighed other reasons why 1,446,444 metric tons of Chinese baubles might have turned up on the shores of San Pedro Bay in January.

To be sure, as William of Ockham wrote back in the 14th century, “entia non sunt multiplicanda praeter necessitatem,” but isn’t it more fun to look for the more devilishly complicated answer? Think Rube Goldberg. Could outright chicanery be involved?

In the fullness of time, Census did cough up a concession of error but no explanation. Nor did it indicate how extensive the correction might be. The erroneous data would be amended at an appropriate juncture in the future, I was advised. Nothing more to see here. Please move on.

But hold on. Let’s not walk away.

The error wasn’t confined to LA and Long Beach. The January numbers from Census showed that the Ports of New York/New Jersey, Seattle, Tacoma, Charleston, Houston, and even Boston all saw very sizable jumps that month in imports of HS 7116 from China. Nationally, some 1,888,815 metric tons of these gems reportedly arrived from China in that single month, up from a grand total of just 22,541 metric tons that China had exported to the U.S. over the entire preceding decade.

To a trade economist and, presumably, to maritime industry officials, this is an alarming fumble. This one anomaly at Census significantly threw off the official U.S. data for containerized imports from China in January. Even worse, the reluctance of Census bureaucrats to promptly amend the statistics has skewed the YTD numbers, at least through August. In tonnage terms, we have officially imported a great deal more from China so far this year than we really did. Amidst a mutually enervating trade war between the U.S. and China, the policymaking implications of continuing to publish bogus import statistics cannot be cavalierly swept under a bureaucratic rug.

I calculate that, nationally, Census likely overstated containerized imports from China in January by approximately 1,888,306 metric tons – the difference between the volume of HS 7116 imports reported in that month and the more typical 509 metric tons imported during the preceding January. This would have the effect of lowering the volume of all January containerized imports from China to 5,511,447 metric tons from the officially reported 7,399,752 metric tons, or by 25.5%.

Exhibit A displays the national variance between what Census reported and what would have been the expected volume of HS 7116 imports from China based on historical norms.

And because the San Pedro Bay ports accounted for 76.6% of the alleged imports, the skewing of their trade numbers was even more extreme. As Exhibit B shows, Census may ultimately have to lower the volume of containerized import tonnage from China through the two ports in January by as much as 35.3%, to 2,645,861 metric tons from the originally reported 4,092,104 metric tons.

Someone has some explaining to do.

The commentary, views, and opinions expressed by Jock O’Connell are his own and do not reflect the views or positions of the Pacific Merchant Shipping Association. PMSA does not endorse, support, or make any representations regarding the content provided by any third party commentator.