Macro Signposts | 13 August 2025

U.S. Economic Data: Reliability Is Crucial

After heavy revisions to the July payroll report led President Trump to fire the Bureau of Labor Statistics (BLS) commissioner, questions about the quality and reliability of U.S. data have intensified. In our view, the U.S. still sets the global standard for economic data collection, even after recent changes to the Consumer Price Index (CPI) samples.

However, underlying all the recent headlines are real issues faced by the U.S. statistics agencies, in general but especially the BLS. Chronic underfunding has limited its ability to modernize data collection and aggregation amid rapid economic and technological change. Without needed upgrades, declining response rates and sample sizes threaten to reduce data precision, making it more volatile and less reliable. This, in turn, could erode investor confidence and lead to higher risk premiums across U.S. assets over time. It also raises concerns for monetary policy, since the BLS publishes the inflation and unemployment data that guide the Federal Reserve in its dual mandate.

What we think the BLS needs is another bipartisan effort akin to the Boskin Commission in 1996 - this time focusing on shoring up data quality instead of adjusting the CPI calculation. This, plus additional funding, could go a long way to increase data quality and the BLS's credibility as an independent bipartisan institution.

The BLS struggles without adequate funding
After President Trump dismissed BLS Commissioner Erika McEntarfer, many people raised concerns about potential politicization of the agency's data. Bipartisan groups of economists have issued public statements emphasizing the importance of data quality and an independent, apolitical process. We couldn't agree more. U.S. data should be the government's best effort to publish statistics that reflect the true state of the economy, with no political influence from any direction.

Having said that, we also believe President Trump's action does shine a light on notable problems at the BLS, where the core challenge isn't political interference, but a chronic lack of resources. Over multiple administrations, stagnant congressional funding has limited the agency's ability to modernize its sampling and statistical procedures. At the same time, the real wage costs of hiring and retaining a highly technical workforce to conduct surveys and collect data have risen. BLS commissioners appointed under both Presidents Obama and Trump have warned that frozen funding has limited the agency's ability to implement important digital transformations that would better align it with the changing realities of consumer preferences and business operations.

We see three key consequences of this chronic underfunding:

These issues aren't new - response rates have been declining for more than a decade - but the pace of economic transformations since the pandemic has exacerbated the problems. These issues also aren't unique to the U.S. - the U.K. government, for example, has also been struggling with data collection and quality in recent years, due in part to limited resources being spread too thin.

In 2023, the office of the inspector general of the U.S. Department of Labor issued a report on ways the BLS could adapt to these new realities. The report included several recommendations, such as conducting a study to identify bias in imputed data, establishing thresholds beyond which data quality becomes unreliable, and improving transparency. The BLS has responded to some of these recommendations: Its website offers increased transparency into CPI survey imputation, for example. However, employment surveys continue to suffer from an outdated birth-death model and an inability to capture changing immigration trends in real time, along with limited and declining surveyor resources.

Recent developments: more cuts, more strain
More recent government actions have further challenged the BLS. The latest federal budget calls for a $56 million nominal cut to the BLS's 2026 budget.1 

These cuts prompted the BLS to announce a reduction in sample sizes for key surveys, including the CPI. The agency has stopped collecting CPI price data in three cities and an additional 15% of the overall CPI basket. The BLS had also expected to reduce the sample of the household employment survey, but was able to temporarily maintain it by shifting spending.

The BLS also faces a leadership change following the ousting of Commissioner McEntarfer. President Trump has nominated E.J. Antoni, an economist at the Heritage Foundation, for the role - triggering a new flurry of headlines. Any nominee must be confirmed by the full Senate, but before that vote can take place, the nominee must first earn every Republican vote in the Senate Committee on Health, Education, Labor and Pensions - something that's not a given, in our view.

Of note, other statistical agencies such as the Bureau of Economic Analysis (BEA) and the Census Bureau have discontinued certain datasets. And actions by the Department of Government Efficiency (DOGE) have reduced Census Bureau staffing by roughly 1,300 employees (through deferred resignations, voluntary separations, or early retirement) in recent months, according to a census union representative.

Addressing problems at the BLS
The solution to these problems is straightforward: The BLS needs more funding. Without additional resources, even relatively simple modernization projects - such as consolidating the 24 different statistical agencies, moving to online surveys, greater use of AI efficiencies, and purchasing private sector data - are impossible to implement.

Any modernization project requires upfront investment to create and run parallel surveys to ensure data continuity - something Congress has seemed reluctant to do, even if funding such initiatives could ultimately save money over time while providing greater confidence in the integrity of key data series. A little funding could go a long way. While the Trump administration and many members of Congress have increased focus on reducing government spending, the BLS's 2025 fiscal year outlays were just 0.01% of total federal government spending.

Interpreting the July payroll survey revisions
The Trump administration has focused on the large July payroll revision in particular as a sign of deeper data quality issues. We aren't so sure. As with most things in economics and statistics, the answer is more nuanced. First-month response rates are generally down from pre-pandemic levels, but weren't notably low in May and June. The final release response rate for May (the month with a large revision) was actually high. The revisions appear to have been driven largely by late, not low, responses, particularly from state and local government entities and small businesses that may be facing complex and challenging economic conditions in 2025.

Taking a step back, two-month revisions occur because the BLS allows firms and government organizations to send responses for two months after the initial cutoff date. Any statistical agency must balance between timeliness and data precision, and the BLS does this by generating a very timely advance release without always having a full sample. Once a fuller sample is acquired, it revises the data. The first release response rate is currently around 67% (down from around 75% pre-pandemic), while the final release response rate remains around 94%.

The July revisions were largely due to slow state and local government reporting (46% of the total revisions) as well as small and midsize firms in the trade, leisure, and professional services industries - which all contributed to the overall revisions, and were more exposed to rising costs of tariffs.

Revisions historically tend to be higher around economic turning points (such as recessions or expansions), as firms struggling with economic conditions don't always report to the BLS promptly.

CPI sample reductions
More worrisome than the revisions, in our view, is the BLS needing to cut sample sizes due to resource constraints. The announced 15% reduction in the CPI survey sample collection is particularly worrisome, as CPI is the price index used for U.S. Treasury Inflation-Protected Securities (TIPS) as well as Social Security cost-of-living adjustments; CPI is also the source data for much of the personal consumption expenditures (PCE) data, which the Fed uses to gauge progress toward its price stability mandate.

To be sure, we expect the overall impact of the 15% reduction to be modest. The standard error of any survey is the inverse of the square root of the sample size. In other words, reducing the sample by 15% should increase the standard error by 8.7%. The current standard error in the 1-month change of CPI (according to the BLS) is 0.03%, or 3 basis points (bps). The increase in the standard error will lift that level up to 0.0326%, or 3.26 bps. However, this could be only the first in a series of cuts that the BLS may be forced to make without additional funding.

Bottom line
President Trump's firing of the BLS commissioner has brought long-standing issues of funding and modernization to the forefront. Given rising concerns about politicization of economic data, we believe the need for an independent, bipartisan review to restore trust in the agency and invest in the future of U.S. economic data is needed now more than ever. The BLS's key challenges could be solved with a commitment to providing adequate resources.

We strongly believe U.S. economic data remains the best in the world. But it may take decisive action from Congress and the Trump administration to keep it that way.

1 FY 2026 Congressional Budget Justification, Bureau of Labor Statistics (U.S. Department of Labor)

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