By IndraStra Business News Desk
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| Cover Image Attribute: Image by TheInvestorPost from Pixabay |
The reliability of U.S. economic data, long regarded as the gold standard among developed economies, is under scrutiny as federal statistical agencies face unprecedented challenges. A combination of declining survey participation, severe staff reductions, and budget constraints has raised doubts about the accuracy of critical economic indicators such as the Consumer Price Index (CPI), Producer Price Index (PPI), and labor market reports. These issues, compounded by a lack of urgency from authorities, threaten the ability of policymakers, businesses, and investors to make informed decisions in an already complex economic environment. The consequences of this erosion could ripple across financial markets, monetary policy, and public trust in government institutions.
For decades, U.S. economic data has been a cornerstone of decision-making. The Bureau of Labor Statistics (BLS), the primary agency responsible for labor market and inflation data, conducts extensive surveys, collecting approximately 100,000 prices monthly to produce the CPI, with about two-thirds of this data gathered through in-person visits. This meticulous process has earned the agency’s outputs a reputation for precision. However, recent developments have cast a shadow over this legacy. A Reuters poll conducted from July 11-24, 2025, revealed that 89 of 100 top policy experts, including Nobel Laureates, former policymakers, and economists from leading institutions, expressed concern about the quality of official U.S. economic data. Of these, 41 were “very concerned,” particularly about future data releases.
The root of these concerns lies in a confluence of operational and political pressures. The BLS has faced significant staff reductions, with estimates indicating a headcount drop of at least 15% as part of broader federal workforce cuts. Since President Donald Trump took office in January 2025, the federal civilian workforce has decreased by nearly 260,000, from 2.3 million to just over 2 million by April’s end. These reductions, driven by a White House cost-cutting initiative, have included firings, resignations, early retirements, and a hiring freeze. The BLS, along with other agencies like the Bureau of Economic Analysis and the Census Bureau, has also seen budget cuts, further straining resources. A BLS spokesperson acknowledged these challenges, stating, “Response rates to most federal surveys have been declining for many years .... In addition to outreach efforts focused on encouraging households and businesses to participate in our surveys, BLS is exploring ways to overcome response rate and limited resource challenges.”
The impact of these constraints is already evident. The BLS announced it would cease calculating and publishing approximately 350 components of the PPI, an indicator of inflation before goods reach consumers, starting next month. Additionally, the agency has reduced the scope of its CPI data collection, halting efforts in cities like Buffalo, New York, Lincoln, Nebraska, and Provo, Utah, and scaling back sample collection nationwide. According to a BLS statement, “These actions have minimal impact on the overall all-items CPI, but they may increase the volatility of subnational or item-specific indexes.” However, UBS economists, led by Alan Detmeister, warned in a report obtained by Bloomberg, “The reduced number of price quotes will likely reduce the reliability of the CPI as a measure of inflation and increase the volatility in the monthly CPI prints.” This increased volatility could complicate the work of bond traders, businesses, and federal programs like SNAP and Social Security, which rely on the CPI for adjustments.
The timing of these cutbacks is particularly problematic. Investors and policymakers are grappling with the economic implications of President Trump’s tariffs, which Federal Reserve Chair Jerome Powell has been monitoring for their potential to exacerbate already-elevated price pressures. Powell warned last month that cutbacks could degrade key economic surveys, a concern echoed by 66 of 98 economists in the Reuters poll, who said deteriorating statistics could impair Fed policymaking. Steve Dean, chief investment officer at Compound Planning and a former Fed researcher, emphasized the stakes: “Any reduction in the quality and reliability, and therefore the confidence, in that data makes the Fed’s job harder. This is crucial in the current environment when investors are trying to gauge the balance between inflation and employment and how that will lead the Fed to act.”
The Federal Reserve relies on a range of data, including the personal-consumption expenditures (PCE) price index, to guide its monetary policy decisions. However, the PCE is compiled from data collected by federal statistical agencies, meaning any degradation in their output could indirectly affect the Fed’s assessments. Steven Englander, head of global G-10 FX research at Standard Chartered, noted inconsistencies between the BLS’s monthly jobs report and a quarterly employment reading, suggesting that methodological issues may already be skewing data. Englander told MarketWatch that more accurate data might have altered the Fed’s 2023 rate hikes or prompted earlier rate cuts in 2024. Last year’s revelation that the U.S. economy added 818,000 fewer jobs than initially reported between spring 2023 and spring 2024 further illustrates the potential for significant revisions, which can erode confidence in real-time data.
Beyond operational challenges, political pressures add another layer of complexity. A separate Reuters survey indicated that 70% of economists are concerned about the Fed’s independence amid Trump’s public criticisms of Powell. Erica Groshen, BLS commissioner from 2013-2017, expressed alarm about the administration’s changes, stating, “Another very big risk is all of the current administration’s changes will make civil service employees more like political appointees .... I can’t name any senator or congressperson who is a champion for federal statistics and has made supporting these agencies an important part of their agenda going forward.” The disbandment of two BLS advisory panels in March 2025, as noted by Jed Kolko, former Under Secretary for Economic Affairs at the Department of Commerce, has further depleted the expertise available to the agency. A March survey by the Chicago Booth School of Business found that academic economists overwhelmingly believed these cutbacks would lead to a “substantial reduction in the reliability of government economic data.”
The lack of political prioritization is a recurring theme. More than 80% of respondents in the Reuters poll (71 of 87) said authorities were not treating the issue of data accuracy with sufficient urgency. Karen Dynan, a Harvard professor and former U.S. assistant secretary of the Treasury, stated, “Major statistical agency ... budgets are not adequate to support ongoing production of the wide range of high-quality statistics they have traditionally released. Policymakers are not prioritizing the issue enough to ensure the U.S. maintains its status as having the best statistical system in the world.” Ethan Harris, former head of global economic research at Bank of America, added, “People take statistical agencies for granted. So they’re easy to cut because there’s no lobby or special interest group that’s powerful enough to protect them. I don’t see any improvement going forward.”
The implications extend beyond domestic borders. Michael Brown, a senior research strategist at Pepperstone, noted that concerns about data accuracy are not unique to the U.S., citing similar issues in the U.K. He told MarketWatch, “Frankly, it’s a huge issue. Every market participant and policymaker (both monetary & fiscal) is relying on data being accurate in order to make the most effective decisions that they can. If one has to question the figures that are being received, then it will clearly lead to those decisions being less effective.” Eric Pachman, chief analytics officer at Bancreek Capital Advisors, captured the market’s unease, stating, “This is a problem that we all kind of know
about, but we just kind of ignore it and move forward because perception is reality in this market.” The erosion of U.S. economic data quality is not an abstract issue—it carries tangible risks. Inaccurate or volatile data could lead to misinformed policy decisions, mispriced financial assets, and misallocated resources across the economy. The BLS’s efforts to mitigate these challenges through outreach and alternative methods are commendable but may not suffice without adequate funding and staffing. The absence of a strong political advocate for federal statistics, coupled with ongoing budget pressures, suggests that these issues may persist. As the U.S. navigates a complex economic landscape marked by tariff policies and shifting monetary priorities, the need for reliable data has never been greater. Yet, without concerted action to address these challenges, the nation risks undermining the very foundation of its economic decision-making, leaving policymakers, businesses, and investors to operate in an increasingly uncertain environment.
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