The US Will Miss Having Reliable Data
Economists warn about the dangers of weakening the government’s statistical agencies.
- By
- May 08, 2025
- CBR - Public Policy
To understand the importance of reliable data to economic policymaking, think about driving without an accurate speedometer. Knowing when to press on the brakes and when to push down on the accelerator, and how firmly to do either one, is much trickier if a driver is not sure exactly how fast they are going. For the people who help guide economic policy, reliable, timely, and reasonably accurate economic statistics play an analogous role.
Nonetheless, the United States has recently taken steps to pare its infrastructure for economic data collection and analysis, including shuttering the Bureau of Economic Analysis Advisory Committee and the Federal Economic Statistics Advisory Committee. A panel of economists polled in March by Chicago Booth’s Kent A. Clark Center for Global Markets expressed broad concern about how eroding the government’s data-collection resources might affect the quality of American economic information—and the decisions based on it.
To understand their consternation, consider the experience of British policymakers, whose jobs in recent years have been made ever trickier by the absence of solid data. The Office for National Statistics, which compiles most British official data, has enjoyed a generally well-deserved reputation for producing good data for many years, but since the pandemic, and in some cases before it, many of its core products have become less reliable.
The Labour Force Survey, for example, has been regarded as the gold standard when it comes to barometers of the state of the British job market. But a falling response rate to its surveys of workers has seriously diminished its usefulness, forcing the ONS to use more assumptions and imputed data when calculating the number of employed people, the unemployment rate, and the share of the population who are economically inactive. The result has been official job market statistics that appear, on many measures, to be simply incorrect.
Bank of England policymakers, for whom the rate of wage growth is a key concern when it comes to judging the future path of inflation, have complained many times over the past few years that the ONS official wage growth series is increasingly hard to square with real-time information from tax authorities, with surveys of corporate pay setting, and with advertised wage rates from recruitment websites.
The problems may well go deeper. In March, the publication of trade data and producer-price-inflation figures was delayed after the ONS discovered problems.
Government-provided data give a level playing field to companies and investors.
All this has made economic policymaking materially harder—an outcome the US and its leaders may soon be facing as well.
The economists polled by the Clark Center were clear about the risks the US is courting with its recent moves. Asked whether “the termination of the Federal Economic Statistics Advisory Council and shrinking staff at the core US statistical agencies will lead to a substantial reduction in the reliability of government economic data,” 94 percent of respondents (weighted by confidence) either agreed or strongly agreed.
As Booth’s Chad Syverson—a former member of the now-disbanded Census Scientific Advisory Committee—put it, “The statistical agencies do amazing work with very limited resources. The advisory committees allowed the agencies to obtain volunteer expertise in a number of different technical areas. What a loss.”
The respondents were nearly unanimous in affirming that “the quality of economic policy-making will be substantially impaired by reduced funding for the core US statistical agencies,” and 90 percent either agreed or strongly agreed that “the ability of businesses to forecast and plan will be substantially impaired by lower quality economic data,” suggesting that less reliable statistics won’t just be a problem for policymakers.
There are, of course, alternative data series available alongside official statistics. Financial markets, for example, eagerly await not only official releases such as nonfarm payrolls and industrial production but also data released by the private sector, such as the monthly purchasing manager indices, various consumer confidence readings, and sales figures for industry trade associations.
But these alternatives are usually best thought of as complementary to official data rather than as substitutes. Official data, which often involve long time series and well-understood compilation methods, have the virtue of being widely trusted. What is more, government-provided data give a level playing field to companies and investors, who all receive them at the same time.
The availability of good data is a necessary part of sound economic decision-making and is something that will be missed if it is allowed to degrade. Policymakers in Britain, stuck trying to steer a safe course for their economy without a clear view of whether it needs gas or the brake, might well agree.
Duncan Weldon is an economist, journalist, and author who regularly writes for the Financial Times, the New Statesman, and other publications. This is an edited version of a column that ran on the Clark Center for Global Markets’ website.
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