Concerns Grow Over Integrity of U.S. Economic Data Collection

U.S. policymakers are expressing growing concerns about the reliability of key economic data that informs Federal Reserve decisions on interest rates and economic policy. Several factors are contributing to these concerns, including declining response rates to government surveys, pandemic-related seasonal anomalies, and long-standing budget constraints that have made data collection increasingly challenging.

Government agencies responsible for economic data collection have experienced staff reductions through early retirements, deferred resignations, and normal attrition. These staffing challenges have led to increased reliance on statistical estimates rather than direct data collection, potentially affecting the accuracy of important economic benchmarks, particularly inflation readings from the Labor Department.

Federal Reserve Chair Jerome H. Powell has expressed concern about potential declines in the quality of U.S. economic statistics, stating that while current data remains sufficient for understanding the economy, the trend is worrisome. The Trump administration has proposed changes to major economic benchmarks it considers flawed, including potential modifications to how economic growth is measured.

The administration’s proposed budget for the upcoming fiscal year includes an 8% reduction to the Bureau of Labor Statistics’ $700 million budget, a move that economists warn could further compromise data quality. These developments could have significant implications for economic decision-making at both the policy and business levels.

David Wilcox, a senior fellow at the Peterson Institute for International Economics, emphasized the critical importance of reliable economic data, describing it as a vital component of social infrastructure that guides decision-making across the country. He noted that without accurate information, economic decisions become less well-founded.

The White House has defended the integrity of federal jobs data, attributing strong job growth to Trump’s economic policies. However, recent developments have raised concerns among economists, including the BLS reducing the number of surveyed outlets for the consumer price index due to staffing shortages, which could increase volatility in certain components of inflation measurements.

Other changes include the discontinuation of wholesale pricing data calculations for hundreds of products in the producer price index and the disbanding of technical advisory committees that previously supported government data development.

Democratic lawmakers have expressed alarm about these developments, warning that inaccurate or incomplete inflation data could have widespread economic consequences, affecting everything from Social Security cost-of-living adjustments to wage negotiations in collective bargaining agreements.

Federal Reserve officials maintain that they have sufficient tools to understand economic trends despite data collection challenges. San Francisco Fed President Mary Daly noted that while data collection limitations have existed for years, they haven’t prevented accurate tracking of economic trends.

Public trust in federal statistics remains relatively high compared to overall trust in the federal government, with about 70% of Americans expressing at least some confidence in federal statistics according to recent polling data.

However, some economists remain concerned about the long-term implications of budget cuts and staffing challenges at key statistical agencies. Mark Zandi, chief economist at Moody’s Analytics, noted that data quality appears to be deteriorating at a time when accurate economic information is particularly crucial due to significant policy changes in trade, immigration, and other areas.

— news from The Washington Post

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Why some fear government data on the U.S. economy is losing integrity

U.S. policymakers are increasingly anxious about the integrity of certain government benchmarks, the crucial data points that help the Federal Reserve assess the economy’s health and guide interest rate decisions.

The problems have led staff at certain agencies to rely more on statistical estimates than hard data, potentially fueling volatility in benchmarks, particularly for inflation readings from the Labor Department. Falling response rates to government surveys, coupled with pandemic-driven seasonal quirks and long-standing budget strains, have made it harder to collect and analyze reliable data — including for an employment report due Thursday. Agencies have also shed staff through early retirements, deferred resignations and normal attrition.

Any erosion in the integrity of government data could complicate policymakers’ view of the economy, which is undergoing major policy changes from across-the-board tariff increases to strains in the labor market due to a loss of immigrants. Last week, Federal Reserve Chair Jerome H. Powell warned lawmakers he didn’t want to see a decline in U.S. gold-standard statistics.

“I would not want anyone to think the data have deteriorated to a point where it’s difficult for us to understand the economy,” Powell said during congressional testimony. “But the direction of travel is concerning.”

The Trump administration is also pushing to overhaul major benchmarks it calls flawed. In March, Commerce Secretary Howard Lutnick called for a change in the way economic growth is measured, though that idea has yet to move forward. At the same time, the president’s budget for the fiscal year that begins Oct. 1 proposes slashing the Bureau of Labor Statistics’ roughly $700 million budget by about 8 percent, a cut economists warn could further hobble the agency.

These challenges could have real-world consequences beyond Washington. From Wall Street trading floors to Main Street boardrooms, government benchmarks are vital to businesses, investors and consumers making decisions about hiring, spending and borrowing.

“The statistical system is under acute stress at the moment,” said David Wilcox, a senior fellow at the Peterson Institute for International Economics and the director of U.S. economic research at Bloomberg Economics. “These data are a critical piece of the social infrastructure, and they guide decision-making by Washington policymakers, businesses and households across the country. Without reliable data, decision-making becomes less well founded.”

The White House defended the integrity of federal jobs data and credited President Donald Trump’s policies for strong job growth.

“Baseless attempts to undermine confidence in BLS data does not change the fact President Trump’s pro-growth economic agenda has created more than half a million jobs since he took office — job growth that will accelerate once Congress passes historic tax relief in the One Big Beautiful Bill,” said Taylor Rogers, a spokeswoman.

An administration official noted that the Bureau of Labor Statistics has long acknowledged its challenges, which predate the pandemic. Over the past decade, budget constraints have forced the agency to scale back key activities such as in-person visits, follow-ups, field training and travel — steps that are essential for data quality. The official also pointed out that the Labor Department protected BLS field staff from an offer for deferred resignation to safeguard its core mission, and that the current BLS commissioner was appointed by President Joe Biden.

Economists say recent developments have only deepened their concerns. Last month, the BLS said it is surveying fewer outlets for the consumer price index — the most widely used benchmark for inflation — because of staffing shortages in certain cities. While officials said that shouldn’t affect the overall CPI, they acknowledged it could increase volatility in some of its components.

Separately, the BLS had previously said it would reduce the number of households sampled for a survey that underpins the official unemployment rate and other labor-market indicators, before walking back the plan.

Still, other little-noticed changes are proceeding, such as the bureau’s discontinuing the calculation and publishing of wholesale pricing data on hundreds of products in the producer price index. And the Trump administration has disbanded a pair of technical advisory committees that helped the government develop its data.

Collectively, the moves have alarmed Democrats on Capitol Hill. A group of nine Senate Democrats, led by Sen. Ruben Gallego (Arizona), warned of significant consequences if inflation data is inaccurate or incomplete — data that influences everything from cost-of-living adjustments for tens of millions of Social Security recipients to wage increases in collective bargaining agreements.

“This is not a minor administrative adjustment,” the lawmakers wrote in a letter to the heads of the Labor Department and BLS. “Any erosion in its accuracy could reverberate across the entire U.S. economy.”

A spokeswoman for Gallego said the group has not yet received a response.

Federal Reserve officials, for their part, say they have the tools they need to understand the economy.

San Francisco Fed President Mary Daly said that while the integrity of economic data has faced challenges over the years — from budget cuts to falling survey response rates, including during the pandemic — those limitations have not prevented the central bank from accurately tracking the economy’s underlying trends. “We have so many sources of information that we have ways of checking, so I feel comfortable with the data so far,” she said in an interview, noting that data collectors have been “extraordinarily innovative.”

“If we went down a path that we discounted the value of having publicly collected data that we’ve long relied on, then I would be worried,” she added. “But I have no information that that’s the path we’re actually on.”

Polls suggest the public has more trust in the accuracy of federal statistics, such as the unemployment rate, than in the federal government overall. A national poll of about 1,000 adults conducted by survey research firm SSRS found that roughly 70 percent had at least some confidence in federal statistics, compared with 51 percent who said the same about the federal government overall.

Some economists are less sanguine.

Mark Zandi, chief economist at Moody’s Analytics, said the quality of U.S. economic data is becoming increasingly shaky just as the country faces major shifts from trade, immigration and other policy changes — a time when better investment in data is needed.

Among multiple worrying trends, he pointed to the combined 95,000 downward revisions, announced last month, to job gains in April and March, an outsize number of revisions that could be at least partly driven by ongoing strains at the Labor Department.

“There’s no smoking gun, yet, but there is smoke,” he said.

Keith Hall, who was BLS commissioner during the George W. Bush and Obama administrations, said the agency had been chronically underfunded for years even though its budget is tiny by government standards.

“If you’re worried about the quality of the data and issues with data accuracy, a place like BLS needs to spend a little more money, not less money,” he said. “Cutting their budget is the wrong way to go.”

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