7 months ago
Washington, do we have a data problem?
Investing.com -- Recent large downward revisions to U.S. job growth and increased use of imputed data in consumer price index calculations have prompted questions over the reliability of official statistics, Bank of America (BofA) economists say, though they argue the data remain “best in class.”
The Bureau of Labor Statistics last week revised May and June nonfarm payrolls down by 258,000, the largest outside the pandemic in level terms. Adjusted for labor market size, the revisions amount to 0.2% of employment and have generally fallen within a 90% confidence interval.
BofA noted that by the third payroll release, response rates are typically above 90% and in line with pre-pandemic levels, suggesting the final readings remain a strong indicator of economic activity.
“Revisions are a nature of sample-based estimates and the goal to be timely,” a team led by Aditya Bhave said, adding that falling survey response rates contribute to the need for revisions but do not materially erode accuracy.
The economists flagged an open question over what may be causing a negative bias in revisions, pointing to possible influences from seasonal factors post-pandemic or low response rates.
Concerns over CPI data have also grown as the BLS has increased the share of “different cell” imputations—where missing prices are substituted with data from other regions or related items—following suspended collections in some cities and a 15% sample reduction elsewhere.
The bank notes that BLS testing found minimal distortion from these changes, estimating any additional standard error impact at just 1-2 basis points on monthly headline CPI.
Alternative datasets, such as ADP payroll figures or proprietary credit card spending measures, can offer useful cross-checks but are “no replacement for the official statistics,” the economists said.
Looking ahead, BofA forecasts July core CPI to rise 0.31% month-on-month, pushing the annual rate to 3.1% from 2.9%, with tariffs likely driving faster goods price increases despite lower vehicle prices.
It expects the Fed to face at least a third dissent at its September meeting if it holds rates steady, following the White House’s nomination of Stephen Miran as a temporary governor.
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