US trimming collection of consumer price data, raising reliability fears

Business Standard

05-06-2025

The Bureau of Labour Statistics stated that the cuts would have 'minimal impact' on estimates of the overall inflation rate, though they could "increase the volatility" of more detailed measures
NYT
The Bureau of Labour Statistics is cutting back its collection of data on consumer prices, raising questions about the reliability of federal economic statistics under President Trump.
Every month, a small army of government workers visits stores and other businesses across the country to check prices of eggs, underwear, haircuts, and tens of thousands of other goods and services. The data collected is the basis for the inflation measures that determine cost-of-living increases in union contracts and Social Security benefits and that guide policymakers at the Federal Reserve when they set interest rates, among other applications.
The agency said the cuts would have 'minimal impact' on estimates of the overall inflation rate, though they could 'increase the volatility' of more detailed measures, such as price indexes for individual categories or regions.
But economists said the cuts were the latest blow to a statistical system that was already struggling to maintain the quality of its data in the face of tight budgets and declining response rates to government surveys.
Those issues predate the Trump administration. In a major report last year, the American Statistical Association warned that the reliability of economic data and other government statistics was in jeopardy.
But those concerns have grown since Mr. Trump returned to office. In March, Howard Lutnick, the commerce secretary, suggested that he planned to change the way the government calculated gross domestic product. The administration also disbanded several advisory committees that provided input on statistical issues. And numerous government data sets were taken offline early in Mr. Trump's term, although most have been restored.
But many are worried about a gradual erosion in the quality of government data. Mr. Trump has proposed further budget cuts at the statistical agencies, and his freeze on federal hiring, combined with the buyouts he offered early in his term, has led to increased staff attrition. In May, the Bureau of Labour Statistics said it was discontinuing publication of some data on wholesale prices.
The cuts in the consumer price data could be another example of that erosion. Jed Kolko, who oversaw economic statistics at the Commerce Department during the Biden administration, said the pullback in data collection was 'collateral damage rather than intentional harm, but still damage.'
'This isn't the moment when we want our read on inflation to get fuzzier,' Mr. Kolko wrote in a text message.
Any loss in reliability could be a particular problem for policymakers at the Fed, who use inflation data — as well as government statistics on unemployment, consumer spending and other areas of the economy — to decide how to set interest rates. Ryan Sweet, chief U.S. economist for Oxford Economics, said the bureau's announcement was 'very concerning.'
William Beach, who led the Bureau of Labour Statistics during Mr. Trump's first term, said there was also a longer-run concern. If the public loses faith in government data, people and businesses will be less likely to provide the information the agencies rely on — further eroding the quality of the data.
'It has to be gold standard — everything you produce has to be that way,' he said. 'When you start to work around cost issues or personnel issues or political issues from the White House, the numbers begin to suffer and trust drops.'