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 Department of Labor (DOL). 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 Powell warned lawmakers he didn't want to see a decline in U.S. gold-standard statistics.
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