DOGE layoffs may have compromised the accuracy of government data

CNN

4 days ago

The Consumer Price Index is more than just the most widely used inflation gauge and a measurement of Americans' purchasing power.
Its robust data plays a key role in the US economy's trajectory as well as monthly mortgage payments, Social Security checks, financial aid packages, business contracts, pay negotiations and curiosity salves for those who wonder what Kevin McCallister's $19.83 grocery bill in 'Home Alone' might cost today.
However, this gold standard piece of economic data has become a little less precise recently: The Bureau of Labor Statistics posted a notice on Wednesday stating that it stopped collecting data in three not-so-small cities (Lincoln, Nebraska; Buffalo, New York; and Provo, Utah) and increased 'imputations' for certain items (a statistical technique that, when boiled down to very rough terms, essentially means more educated guesses).
The BLS notice states that the collection reductions 'may increase the volatility of subnational or item-specific indexes' and are expected to have 'minimal impact' on the overall index.
The Trump administration's drastic cutbacks of government spending and the federal workforce have economists, researchers and statisticians sounding the alarm that the reliability and accuracy of economic data could become a casualty to those efforts.
'The BLS's need to infer more data points due to personnel and funding constraints is deeply concerning,' Gregory Daco, EY-Parthenon's chief economist, told CNN. 'It raises legitimate questions about the reliability and timeliness of critical economic indicators.'
While statistical agencies often have protocols to maintain data quality during short disruptions, any sustained underfunding could 'degrade the foundational data used for policymaking, market analysis and business planning,' he said.
BLS officials did not respond to questions posed by CNN and instead referred to the notice and related links on response rates and collections.
In the early days of President Donald Trump's second term in office, federal websites went dark and data disappeared as the newly formed Department of Government Efficiency set its sights on streamlining the government. That further heightened concerns as to whether the nation's statistical infrastructure — which already has been in a precarious state in terms of funding, response rates and public trust — was at risk of crumbling.
Trump's fiscal 2026 budget proposal includes an 8% reduction to BLS funding and staffing.
To what extent the CPI reductions are a sign of what's to come remains to be seen; but the immediate impacts to inflation readings could be minimal for now, Alan Detmeister, a UBS senior economist who previously helmed the Fed's Wages and Prices section, told CNN.
'Their statement said that this will have little impact on the aggregate index, which is quite possible; but up to this point, they have not put out enough information that we would need to really evaluate — we don't have any numbers on how [the reductions] are distributed, except for a few locations they stopped sampling,' he said.
The reductions likely won't affect the long-run increases or decreases in inflation and, because of that, don't seem to be politically motivated, he added.
'What it does mean is that since they're using fewer observations, there's likely to be a little bit more noise in the monthly CPI data,' he said. 'How much more noise? We don't really know.'
Detmeister flagged the imputations anomalies in a note to clients earlier this week, noting that the share of imputed prices jumped 15% in March (the highest level since the pandemic rattled the economy in April 2020), and then surged even more in April, by 29%.
It's not yet clear whether the CPI has become less reliable, but what is certain is that any weirdness or hitches in the data is happening at a bad time, he added.
'Any time you're using fewer observations, it creates a bit of an issue; the real concern is if these types of surprises continue to occur, and the number of observations continues to be reduced,' he said. 'And if you see it occurring in other statistics as well, it just makes our view of what's going on in the economy slightly worse.'
He added: 'We're really scrutinizing all the price data every month to see if there are impacts of the tariffs coming through; so, the timing isn't ideal.'
The CPI for May will be released Wednesday next week.