In October, the US failed to deliver one of its most closely watched economic reports: the monthly jobs data. The blackout has deepened doubts over whether the world’s largest economy can still produce reliable data, even once the releases resume.
The delay, caused by the government shutdown that began last week, has left investors, policymakers, and analysts flying semi-blind. It is the first time since 2013 that the Bureau of Labor Statistics (BLS) has failed to publish monthly employment figures. During the 2018-2019 partial shutdown, the Labor Department remained funded. This time, it has gone dark.
Some say the blackout is compounding a deeper problem: the erosion of America’s statistical backbone. According to Marta Khomyn, lecturer in finance and data analytics at the University of Adelaide. Americans already live in the post-truth world and the country might now be entering what she calls ‘the era of post-truth statistics’.
Hundreds of US datasets and more than 8,000 government webpages have vanished because the staff maintaining them were fired under the new administration. “These datasets, which taxpayers funded and researchers rely on, are now endangered,” Khomyn said.
Hedge funds to the rescue
The issue has now started to attract attention beyond academia. “We’ve had hedge-fund managers from both Europe and the US reach out for help,” said Lena Bohman, a founding member of the Data Rescue Project, a collective of academics working to preserve federal information. Members of the project are noting rising concern in markets about the reliability of government data.
“Collecting and maintaining open datasets requires armies of statisticians, surveyors, and developers. But many of those specialists have been laid off, Bohman told Investment Officer. “So far, the greatest loss has been in the staff who facilitate dataset creation and access, rather than datasets being outright deleted,” she said. “But there have been examples of this too.”
The BLS has halted its restricted-access program for vetted researchers using sensitive data like school and medical records. At the same time, slow contract renewals for cloud storage are threatening additional government datasets. “The damage to longitudinal datasets is only just beginning,” Bohman said. “As staff are cut, less and less data will be collected.”
Downward spiral
A warning about the fragility of America’s data infrastructure was already sounding before the elections in November. In July 2024, the American Statistical Association said the integrity of federal statistics was increasingly at risk, citing shrinking budgets, falling survey response rates and the potential for political interference.
The report likened the country’s statistical system to infrastructure “vital but often ignored until something goes wrong,” and warned of a “downward spiral” if nothing changes.
Political intervention from the current administration has added to the strain on America’s data infrastructure. In August, President Trump dismissed BLS Commissioner Erika McEntarfer after a weak jobs report, accusing her of “faking” the numbers. Her proposed successor, E.J. Antoni, a conservative economist, saw his nomination withdrawn last week amid criticism of his partisan record and dubious online posts.
The White House said the president remains “committed to fixing the longstanding failures at the BLS that have undermined the public’s trust in critical economic data.”
Alternative data fills the void, for now
Private sources now fill the void. Payroll processor ADP estimated the economy lost 32,000 private-sector jobs last month, with cuts in construction, manufacturing and finance. According to data from Challenger, Gray & Christmas U.S. employers announced 54,064 job cuts in September.
Goldman Sachs, using partial state data, estimated jobless claims edged up to 224,000, still near historic lows. The Chicago Fed’s new unemployment model put the jobless rate at 4.3 percent in September, according to Reuters.
For market participants, these indicators help but don’t replace official numbers. As ING’s research team put it in a note to clients, relying on such figures is like “reading the tea leaves.”
“While private sources like ADP, Homebase and LinkedIn provide some alternatives, they lack the methodological rigor and transparency of official data,” said Wiersma. “They are useful for gauging short-term sentiment but fall short as a basis for strategic asset allocation.”
Jakob Vijverberg, head of asset allocation at Aegon Asset Management, said the few decent alternatives for employment data offer limited coverage. “For inflation and growth figures, there are hardly any reliable private alternatives, partly due to the scale and complexity of the underlying data and surveys,” he said.
The long-term impact
Few investors expect the shutdown to have a lasting impact unless it drags on. “Economic data are mainly relevant for identifying long-term trends. Short-term fluctuations matter less and can even be distracting,” Vijverberg said. “In that sense, it may even be positive that investors are temporarily forced to take a step back from the daily noise.”
Still, he acknowledged that the quality of economic data had already been declining. Vijverberg attributes that partly due to falling survey response rates in the US,” and warned that “the erosion of institutions in the US, such as the increasing pressure on the BLS and the central bank, will have a larger negative impact, especially during times of crisis.”
“The longer the uncertainty persists, the more likely more meaningful portfolio changes could materialize,” said Laura Cooper, head of macro credit at Nuveen. “This is particularly challenging given the Fed’s current data-dependent approach to future policy decisions.”