Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Every month, the US government releases a lot of data
Speaker 2: to the public.
Speaker 1: The unemployment rate four point two for shit, a CPI
Speaker 1: report with a two handle two point nine percent year
Speaker 1: over year.
Speaker 3: It's a big day for the markets.
Speaker 4: We get the release of the September jobs report.
Speaker 2: From inflation numbers to unemployment rates, it's the kind of
Speaker 2: data that's meant to give a snapshot of how the
Speaker 2: country is doing economically. When that data gets released, it
Speaker 2: can move markets. Politicians use it to tout their progress
Speaker 2: or criticize their opponents. The Federal Reserve keeps tabs on
Speaker 2: it as it sets interest rates, and local governments use
Speaker 2: it to assess things like how much new housing.
Speaker 1: They might need.
Speaker 3: You can't make good decisions with how good data. Like
Speaker 3: when you're thinking about what you're going to wear, most
Speaker 3: people check the weather.
Speaker 2: That's Bloomberg editor Molly Smith. She's spent the past six
Speaker 2: months looking into the agencies that collect this data. She
Speaker 2: says they're under threat. Agencies like the Bureau of Labor
Speaker 2: Statistics and the Census Bureau are already struggling to operate
Speaker 2: with limited funding, and looming ahead is President elect Donald
Speaker 2: Trump's promise to slash federal bureaucracy and find cuts across agencies.
Speaker 2: It's left some government workers wondering whether they'll be able
Speaker 2: to provide those accurate, timely weather reports, or if that
Speaker 2: underfunded data collection could send people into thunderstorms without an umbrella.
Speaker 3: Statistical agencies from the federal government are funded by Congress,
Speaker 3: and there are people at every step who are looking
Speaker 3: to cut.
Speaker 2: Today on the show What's at Stake if the government
Speaker 2: scales back its investment in good data from Bloomberg's Washington Bureau.
Speaker 2: This is the Big Take DC podcast. I'm salaiamosen to
Speaker 2: get a handle on how the economy is doing at
Speaker 2: any given moment. The US government tries to collect data
Speaker 2: through things like the current Population Survey.
Speaker 3: A lot of people colloquially refer to it as the
Speaker 3: household survey in the Jobs Report.
Speaker 2: That survey is run by the Bureau of Labor Statistics
Speaker 2: or BLS, one of the main agencies in charge of
Speaker 2: data collection for the government.
Speaker 3: This is where we get the unemployment rate, the labor
Speaker 3: force participation rate, information about households broken down by race, gender, age,
Speaker 3: disability status, veteran status, you name it.
Speaker 2: The BLS gets that data by contacting a representative sample
Speaker 2: of the population and then weights those results to reflect
Speaker 2: the broader population. The trouble is that sample is at
Speaker 2: risk of getting smaller, and one key reason for that
Speaker 2: is how much money the BLS has to conduct those surveys.
Speaker 3: The BLS commissioner announced back in June that they were
Speaker 3: going to have to cut the sample size, and that
Speaker 3: was really a very historic step and alerted a lot
Speaker 3: of people to just have how serious these budgetary issues are.
Speaker 2: Since twenty ten, the BLS's budget has fallen by almost
Speaker 2: twenty percent when adjusted for inflation, and those trends are
Speaker 2: playing out at other agencies like the Census Bureau and
Speaker 2: the Bureau of Economic Analysis. A six million dollars boost
Speaker 2: from a stopgap spending bill that Congress passed in September
Speaker 2: staved off immediate cuts to the survey sample size of
Speaker 2: sixty thousand households, but the bureaus will need more money
Speaker 2: in twenty twenty five, and beyond money that could be
Speaker 2: hard to come by. Bloomberg's Mollie Smith says that budget
Speaker 2: cuts coupled with other issues that agencies face, like lower
Speaker 2: response rates on surveys could lead to bad data.
Speaker 3: It makes it perhaps less representative of the population you're
Speaker 3: trying to capture. If there are patterns between who answers
Speaker 3: and who doesn't, that also can introduce bias into the data,
Speaker 3: and that really raises a lot of data integrity questions.
Speaker 2: And bad data can have big consequences. Mollie cited an
Speaker 2: example from two thousand and eight, at the height of
Speaker 2: the financial crisis.
Speaker 3: When the FED was trying to understand what was happening
Speaker 3: to the economy in real time, it seemed like they
Speaker 3: were pretty unaware of just the extent to which the
Speaker 3: economy was contracting.
Speaker 2: In January of two thousand and nine, the Bureau of
Speaker 2: Economic Analysis initially estimated that gross GDP in the US
Speaker 2: shrank by three point eight percent from the third to
Speaker 2: the fourth quarter of two thousand and eight. In twenty eleven,
Speaker 2: it revised that number to eight point nine percent, but
Speaker 2: that was after the Federal Reserve had looked at those
Speaker 2: initial numbers and decided not to cut rates.
Speaker 3: They didn't really seem to see a huge threat to
Speaker 3: the financial system at the time. That just wasn't clear
Speaker 3: to them.
Speaker 2: Another example occurred in the early months of the pandemic.
Speaker 2: When response rates dipped dramatically.
Speaker 1: In April of twenty twenty, the bureau vastly underestimated the
Speaker 1: number of people who were unemployed.
Speaker 2: That's William Beach, who was Commissioner of the BLS at
Speaker 2: the time.
Speaker 1: Same thing with prices. We really didn't know what the
Speaker 1: inflation rate was, and so we got a good vision
Speaker 1: of what it would mean in the future. If our
Speaker 1: regular surveys during normal times had really bad response rates,
Speaker 1: we would be making policy in the dark. We would
Speaker 1: not making informed decisions, and that's a good prescription for
Speaker 1: making policy mistakes that could have great consequences for the economy.
Speaker 2: Beach says the BLS has struggled with response rates for
Speaker 2: decades now. He says that people just aren't as willing
Speaker 2: to pick up the phone or let a census officer
Speaker 2: into their home as they used to be.
Speaker 1: We're getting saturated by surveys. Everybody wants to have our opinion,
Speaker 1: and so the government, which needs your response to do
Speaker 1: these really essential things, is victimized by the fact that
Speaker 1: households are getting less and less tolerant of answering questions.
Speaker 2: The BLS doesn't need every person they contact to respond
Speaker 2: to their survey for the results to hold. But the
Speaker 2: smaller the response rate gets, the less reliable the data is,
Speaker 2: especially when you get down to the more granular demographic breakdowns.
Speaker 2: Beach says that more funding could help agencies level up
Speaker 2: their data collection, but what's getting lost in the meantime
Speaker 2: is crucial for painting a clear picture of the country.
Speaker 1: If the response rate gets too small, it'll be difficult
Speaker 1: for us to represent the whole population. We'll have to
Speaker 1: drop certain questions, like we'll probably have to drop the
Speaker 1: question about are you Asian American? Are you Pacific Islander?
Speaker 1: Are you a Native American? Because we'll have too few
Speaker 1: households that are actually that way. So that's one of
Speaker 1: the reasons we're very concerned about it. We have ways
Speaker 1: we can fix that, but they're going to cost money.
Speaker 2: When we come back. What agencies think they could do
Speaker 2: with more funding, and why getting that funding under the
Speaker 2: Trump administration might just be a pipe dream. Government agencies
Speaker 2: collect crucial data about everything from unemployment to inflation are
Speaker 2: struggling with limited funding that can sometimes lead to bad data.
Speaker 2: William Beach, the former BLS commissioner, is now co chair
Speaker 2: of an organization called the Friends of BLS, which independently
Speaker 2: advocates for the agency and its funding. He says that
Speaker 2: data can be salvaged, but it'll take money.
Speaker 1: We have all of these internet resources and cell phone
Speaker 1: resources that we could employ. People would be given a
Speaker 1: little cash inducement to answer a survey during the month
Speaker 1: on their cell phone or through email, and we could
Speaker 1: send that survey out to a million households and if
Speaker 1: only twenty percent answered, that's two hundred thousand households that
Speaker 1: would give us a response. We would then combine those
Speaker 1: responses with the survey responses, and that's called blended data.
Speaker 1: We have a plan to do that, and it is
Speaker 1: not terribly expensive. But we're hoping Congress understand that modernization
Speaker 1: must occur, otherwise we're going to lose this most valuable survey.
Speaker 2: But Bloomberg editor Mollie Smith says Congress might not see
Speaker 2: it that way.
Speaker 3: Some Republican senators they almost insinuated in this recent letter
Speaker 3: that they sent to the BLS that the agency is
Speaker 3: perhaps prioritizing speed over accuracy. They raised an interesting point
Speaker 3: of why does the Jobs Report have to come out
Speaker 3: on the first Friday of every month? Is it a
Speaker 3: matter of that you need more time? Like what if
Speaker 3: it came out a week later.
Speaker 2: These senators may be raising these questions because of a
Speaker 2: few high profile incidents that occurred at the BLS over
Speaker 2: the past year.
Speaker 3: There was an early release of inflation data back in
Speaker 3: the spring, and then there was massive data revisions back
Speaker 3: over the summer to jobs data. There was one economist
Speaker 3: who had been exchanging emails with data users about information
Speaker 3: that wasn't public at the.
Speaker 2: Time, and Molly says, these are the kinds of incidents
Speaker 2: that could make the case for fun even harder.
Speaker 3: It seems like, you know, they keep messing up, that
Speaker 3: these data releases are getting botched. They're like, well, you
Speaker 3: have some other problems to fix, and like maybe who
Speaker 3: knows if that enters their mind when they're making appropriations,
Speaker 3: But I would think it's probably not a great look.
Speaker 2: As it exists today. Agencies like the Bureau of Labor
Speaker 2: Statistics are a minor slice of the federal government's budget.
Speaker 3: Pie the BLS budget in this past fiscal year was
Speaker 3: about seven hundred million dollars. You combine that with what
Speaker 3: the Bureau of Economic Analysis and the Census Bureau have
Speaker 3: together that's a little over two billion dollars, and that
Speaker 3: equates to roughly zero point zero three percent of total
Speaker 3: federal spending.
Speaker 2: The incoming Trump administration hasn't explicitly indicated that these agencies'
Speaker 2: budgets are on the chopping block. But Elon Musk, who
Speaker 2: Trump has tasked with running a new Department of Government Efficiency,
Speaker 2: has promised to cut as much as two trillion dollars
Speaker 2: from federal spending, and even small cuts to agencies like
Speaker 2: the BLS could have a big impact.
Speaker 3: You're not going to get anywhere near two trillion dollars
Speaker 3: by looking at these agencies alone. This is certainly not
Speaker 3: the area where you're going to get massive savings from.
Speaker 3: But as a lot of people who I taught you
Speaker 3: pointed out, you will see massive consequences.
Speaker 2: One of those people is Zach Brandon.
Speaker 4: I am the president of the Greater Madison Chamber of
Speaker 4: Commerce in Madison, Wisconsin.
Speaker 2: Brandon's job is to use data to make good economic
Speaker 2: investments in his community.
Speaker 4: What kind of roads do you need to build, what
Speaker 4: type of transit infrastructure do you need? How many schools
Speaker 4: are you going to need?
Speaker 2: He makes those decisions by looking at trends in the data.
Speaker 4: If you're wrong right, if you undercount, you're going to
Speaker 4: create a shortage, and shortages generally create cost increases. And
Speaker 4: if you overbuild then there's also certainly risk to that too.
Speaker 3: One person I got in touch with was an urban
Speaker 3: planner in the Chicago area and she had a client
Speaker 3: earlier this year who was trying to build a senior
Speaker 3: living facility in the Cleveland area. So she went to
Speaker 3: census data to find what the population was of people
Speaker 3: who were at least seventy five years old with a
Speaker 3: self care disability in the Cleveland area was and she
Speaker 3: found that the margin of error was enormous. The data,
Speaker 3: at the end of the day was telling her that
Speaker 3: the potential population for this senior living facility could be
Speaker 3: anywhere from roughly eight to twelve thousand people. That could
Speaker 3: be a massive difference in how you're going to allocate
Speaker 3: those resources.
Speaker 2: Private data collection companies have tried to pick up some
Speaker 2: of the slack, but there are drawbacks there too.
Speaker 3: Private data certainly has its place, but anyone who I
Speaker 3: spoke to pretty universally acknowledged that the government data is
Speaker 3: the gold standard. The government is able to do this
Speaker 3: in a way that doesn't have any other interest but
Speaker 3: serving a public good. That's truly what these numbers are
Speaker 3: here to do. Versus when it's then introduced used by
Speaker 3: a private company, who knows if there's some other kind
Speaker 3: of incentive.
Speaker 2: And for local organizations like the one Zach Brandon runs
Speaker 2: in Wisconsin, there's another benefit to public data.
Speaker 4: There's generally no cost to it, and so when you're
Speaker 4: a nonprofit and you're trying to pinch every penny, that
Speaker 4: certainly helps to be able to have resources that are
Speaker 4: available at no charge.
Speaker 2: And as former BLS Commissioner William Beach pointed out, part
Speaker 2: of the value of this government data isn't any one
Speaker 2: data point. It's about the trends they reveal.
Speaker 1: Give you an example, we ask people, are you working
Speaker 1: or are you looking for work in the past four weeks?
Speaker 1: That is a very important question, which we've been asking
Speaker 1: the same way since the late nineteen forties, and so
Speaker 1: it has produced a wonderful time series across all that
Speaker 1: period of time, like seventy five years, in which we
Speaker 1: can trace unemployment. People come to rely on it, policy makers,
Speaker 1: people in the private sector. Federal government needs to invest
Speaker 1: some funds otherwise one day, we'll have to say, well,
Speaker 1: we can't publish the unemployment rate this month because we
Speaker 1: just had too few households respond to the question are
Speaker 1: you working or looking for work?
Speaker 2: Thanks for listening to The Big Take DC podcast from
Speaker 2: Bloomberg News. I'm Salaia Moosim. This episode was produced by
Speaker 2: Julia Press. It was mixed by Alex Sugia, in fact
Speaker 2: check by Audrey and Atapia. It was edited by Aaron
Speaker 2: Edward and Wendy Benjaminson. Naomi Shaven is our senior producer.
Speaker 2: Our senior editor is Elizabeth Ponso. Nicole Beamster Bower is
Speaker 2: our executive producer. Stage Bauman is Bloomberg's head of Podcasts.
Speaker 2: Please follow and review The Big Take DC wherever you
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