6.132 Reporting margins of error. A U.S. News & World Report article from July 17, 2014, reported Commerce Department estimates of changes in the construction industry:
Construction fell 9.3 percent last month to a seasonally adjusted annual rate of 893,000 homes.
If we turn to the original Commerce Department report (released the same day), it states:
Privately owned housing starts in June were at a seasonally adjusted annual rate of 893,000. This is 9.3 percent (10.3%) below the revised May estimate of 985,000.
(a) The 10.3% figure is the margin of error based on a 90% level of confidence. Given that fact, what is the 90% confidence interval for the percent change in housing starts from May to June?
(b) Explain why a credible media report should state:
The Commerce Department has no evidence that privately owned housing starts rose or fell in June from the previous month.