The US Consumer Price Index (CPI) is more than just the most widely used inflation indicator and an American purchasing power measurement.
His data play a key role in the trajectory of the US economy, as well as monthly mortgage payments, social security checks, financial aid packages, commercial contracts, wage negotiations and even to satisfy the curiosity of those who would cost today the $ 19.83 supermarket account of Kevin McCallister in “forgot about me”.
However, this gold standard of economic data has become a little less accurate recently: the Department of Labor Statistics (BLS) published a warning on Wednesday (4) informing that interrupted data collection in three not so small cities (Lincoln, Nebraska; Buffalo, New York; and Provo, Utah) and increased “imputations” for certain items (a statistical technique that, in simplified terms,, in simplified terms, in terms of simplified terms, It means essentially more educated estimates).
BLS warning states that “reductions in collection” may increase the volatility of subnational or specific item indices “and must have a” minimum impact “on the overall index.
Trump government’s drastic cuts on governmental spending and federal workforce have made economists, researchers and statistics sound the alarm that the reliability and accuracy of economic data can become victims of these efforts.
“The need for BLS to infer more databases due to personnel and financing restrictions is deeply worrying,” Gregory Daco, chief economist at Ey-Parthenon, told CNN International. “This raises legitimate questions about the reliability and punctuality of critical economic indicators.”
Although statistical agencies often have protocols to maintain data quality during short interruptions, any sustained sub -finance could “degrade the fundamental data used for policy formulation, market analysis and business planning,” he said.
BLS employees did not answer the questions asked by CNN International And instead, they referred to the warning and related links on response rates and collections.
In the early days of President Donald Trump’s second term, federal websites were down and data disappeared when the recent graduate focused on the simplification of the government.
This further increased concerns about whether the country’s statistical infrastructure – which was already in a precarious state in terms of financing, response rates and public trust – was at risk of crumbling.
Includes an 8% reduction in financing and BLS staff.
To what extent the CPI reductions are a sign of what is coming is yet to be seen; but immediate impacts on inflation readings can be minimal for now, he said to CNN International Alan Detmeister, Senior Economist at UBS who previously headed the Federal Reserve (Fed) salaries and prices section.
“His statement said that this will have little impact on the aggregate index, which is quite possible; but so far, they have not disclosed enough information that we would need to really evaluate – we don’t have numbers about how [as reduções] They are distributed except for some places where they have stopped collecting samples, “he said.
Reductions will probably not affect long -term increases or decreases in inflation, so they do not seem to have political motivation, he added.
“What this means is that, as they are using less observations, there will probably be a little more noise in CPI’s monthly data,” he said. “The more noise we don’t really know.”
Detmeister highlighted the anomalies of imputations in a note to customers earlier this week, noting that the imputed price portion increased 15% in March (the highest level since the pandemic shook the economy in April 2020), and then rose even more in April at 29%.
It is still unclear whether the CPI has become less reliable, but what is certain is that any strangeness or data problem is happening at a bad time, he added.
“Whenever you use less observations, this creates a small problem; the real concern is whether these types of surprises continue to occur, and the number of observations remains reduced,” he said.
“And if you see this happening in other statistics as well, it just makes our view of what is happening in the economy slightly worse.”
He added, “We are really thoroughly examining all price data every month to see if there are impacts of tariffs arising; so the moment is not ideal.”
