Some of America's Most Important Economic Data Is Decaying

SPEAKER_2 (0:02)

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Joe Weisenthal (0:18)

Hello, and welcome to another episode of the Odd Lots podcast. I'm Joe Weisenthal.

Tracy Alloway (0:22)

And I'm Tracy Alloway.

Joe Weisenthal (0:24)

Tracy, I've said this a bunch of times, and we've sort of danced around this issue on the podcast before, but I've said this a bunch of times. I'm sort of fascinated by the degree to which we sort of take numbers on the screen for granted. Like, you know, we look at a price of a stock and it exists on the screen. It's like, where did that come from? How did that get there? Or like the first Friday of the month, the jobs data flashes on the screen and we just start talking about what the data said, what the unemployment rate was, etc. But we don't really talk enough about what had to happen behind the scenes to get that number to the screen.

Tracy Alloway (0:57)

Right. I find this really interesting as well because obviously there's the data collection portion of this. Like, you have to go out and talk to people for certain surveys, certain data points, but also there are so many qualitative and subjective adjustments that you can make to that data. So, for instance, with CPI, I didn't know that CPI weightings are, like, different depending on what city you're in. So, for instance, like, food at home could matter a lot more in, I don't know, Minneapolis compared to Chicago. It's really interesting. And there's also qualitative adjustments. So, if your fridge gets Wi-Fi connectivity, then that gets incorporated into the price as well. So, it's really interesting.

Joe Weisenthal (1:41)

It's super interesting. And, like, I have, you know, this is the issue. We don't talk about data collection, but it's obviously some of the most interesting stuff there is, because, of course, you know, things like food at home in one city should be different than another city if you really want to collect a basket. And so, it means that what you have is some of the most interesting economics work being done anywhere in a realm that virtually gets no attention. And when we talk about data collection, you know, you hear it a lot in politics, right? Surveys have gotten, you know, no one answers the phone. It's, you know, it's harder and harder to do high-quality surveys. I think you've written about this, like, response rates and just the actual cost of collection of all this data is on the rise.

Tracy Alloway (2:23)

Yeah, so I have a bunch of thoughts on this. I'll just say, talking about the economic data might be timely as well because we know that Trump doesn't really respect, I guess, a lot of official economic data. And he's also trying to cut back on costs or funding of a bunch of different government programs. So it's clear that entities like the Bureau of Labor Statistics could potentially be in the crosshairs here. But you're right, response rates, lower response rates have been happening for a long time. And it's really easy to look up just how bad things have gotten. If you look at the BLS website, for instance, look at response rates on the housing portion of CPI, that's gone from about 70% back in 2015 to just 57% now. Response rates on JOLTS have gone from I think 67% to just 30%. So that's pretty amazing. And the other interesting thing here is it's not just a US problem. There's no US exceptionalism here. You see the same pattern in other economies like the UK and New Zealand. And actually in the UK just last month, the Office of National Statistics said it wasn't going to publish PPI because of a data quality issue. And also trade data had a problem because of errors in the data provided by HM Revenue and Customs. And now there's a task force to look at all of these mistakes and data problems at the ONS. So something that goes beyond the US here.

Joe Weisenthal (3:55)

This is a really big deal, especially when you just consider how much economic activity is based on being able to look at high quality data and make decisions from it, obviously in the market, but also in just sort of the quote, real economy, et cetera. Anyway, without further ado, we really do have the perfect guest, someone who knows a lot about how the sausage is made and why making the sausage is getting more expensive. We are gonna be speaking to Bill Beach. He was most recently the commissioner of the BLS, and he knows all about this. He was the 15th commissioner at the BLS, does research affiliated with the Economic Policy Innovation Center, and he is gonna talk to us about all of these issues. Bill, thank you so much for coming on Odd Lots.