
By Jeff Cox
This week’s inflation data will be huge for markets, and not just for the numbers.
Beneath the Bureau of Labor Statistics’ reports on consumer and producer prices will be simmering questions over the data’s validity.
Those concerns have accelerated as budget cutbacks have forced the agency to change the way it collects data. On top of that, President Donald Trump’s decision to fire the BLS commissioner after the July nonfarm payrolls release raised worries that the bureau could be politicized.
Doubt over the accuracy and integrity of the data is a serious issue considering how much BLS work is used to formulate policy, calculate Social Security payments and inform any number of other political and economic decisions.
“I feel like this data that is coming out is getting much less reliable, and this has been building for a long time,” DoubleLine CEO Jeffery Gundlach said last week on CNBC.
Staffing and funding is one issue. Trump’s decision earlier this month to fire Erika McEntarfer as the BLS chief is another.
The move “has raised questions about whether and by how much the quality of official data produced by official U.S. government agencies could be compromised,” Morgan Stanley economist Michael Gapen said in a note. “Official U.S. data has never been perfect, but has been of high quality, compiled impartially, and useful in the setting of policy.”
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