Sophisticated private sources could provide a fuller picture of the state of the economy. But the government is not even trying to use them.
The digitization of everyday life has inundated us with more economic data than ever. And yet, government statistics on real economic conditions seem to be growing ever less reliable. Doubts began spreading even before President Donald Trump fired the commissioner of the Bureau of Labor Statistics. For years now, response rates to surveys that are at the heart of the official statistics have been dropping. Data-gathering agencies release key metrics long after the fact, and they are chronically underfunded.
This situation is unsustainable. Business decisions about hiring, firing, and investment depend on knowledge of what’s happening in the wider economy. So do the choices made by policy makers in the White House and at the Federal Reserve. An incredible range of sophisticated private sources—including real-time payroll data, online transaction records, and consumer-spending databases—offer alternative sources of fine-grained, up-to-the-minute data that could, under the right conditions, be used to supplement a survey-based approach and provide a more dynamic and accurate picture of the state of the economy. The problem is that the government is not even trying to use them.
