Key Takeaways
- President Donald Trump’s federal hiring freeze has forced the Bureau of Labor Statistics to cut back on collecting consumer price information.
- Economists have raised concerns that key data on inflation and other important measures of the economy will become less accurate because of Trump’s policies.
- Earlier, the Trump administration disbanded expert panels that advised the BLS, raising further concerns about the quality of economic data.
A key government agency has cut back on the amount of data it collects, raising concerns among experts about the accuracy of the information used to track inflation, unemployment, and other facets of the economy.
The Bureau of Labor Statistics said this week it had cut back on the price surveys it uses to determine the Consumer Price Index (CPI). The agency said it cut back sample collection across the country and stopped data collection entirely in Buffalo, New York, Lincoln, Nebraska, and Provo, Utah.
“These actions have minimal impact on the overall all-items CPI, but they may increase the volatility of subnational or item-specific indexes,” the BLS said in a statement. “BLS makes reductions when current resources can no longer support the collection effort.”
A Hiring Freeze And Staff Shortages
Any problems with the inflation data could be widely felt across the economy.
The inflation rate is closely watched by policymakers at the Federal Reserve who set the nation’s monetary policy; by bond traders who determine the price of 10-year treasurys; and by major companies who use the information to make business decisions.
Many federal benefits, including SNAP food aid and Social Security payments, are directly tied to the Consumer Price Index.
The BLS is one of the federal agencies affected by President Donald Trump’s freeze on hiring federal employees, which was instituted shortly after he took office. An internal BLS report said staffing shortages were the reason for cutting back data collection, the Wall Street Journal reported Thursday, citing an email the agency sent to economists.
Trump has requested further cuts to the agency. His budget proposal would cut the BLS budget by 8% in 2026 from 2025 levels, if approved by Congress.
“The CPI temporarily reduced the number of outlets and quotes it attempted to collect due to a staffing shortage in certain CPI cities,” beginning in April, the email read, according to the Journal. “These procedures will be kept in place until the hiring freeze is lifted, and additional staff can be hired and trained.”
The cutbacks forced the BLS to use less hard data and more guesswork to produce the inflation data for April, the Journal reported.
Price Checks
To measure the inflation rate, the BLS collects about 100,000 prices each month, with employees across the country visiting stores, making phone calls, or going online to check prices. About two-thirds of the data in the survey comes from in-person visits. Experts look to the BLS’s massive surveys as the “gold standard” of economic data.
In addition to cutting back on its consumer price survey, the BLS said it will stop monitoring wholesale prices in 34 different industries including cookware, greeting cards, toys, and power tools. That data is used to create the Producer Price Index.
The cutbacks raised alarms about the reliability of BLS data, according to a report by Bloomberg.
“The reduced number of price quotes will likely reduce the reliability of the CPI as a measure of inflation and increase the volatility in the monthly CPI prints,” UBS economists led by Alan Detmeister said in a report obtained by Bloomberg.
Growing Concerns About Data
The cutback on data collection is just the latest red flag about the accuracy of the Trump administration’s economic statistics.
Jed Kolko, former Under Secretary for Economic Affairs at the Department of Commerce, wrote a blog post in April detailing several major threats to public trust in government statistics, including budget cuts. In March, Trump disbanded two outside advisory panels that helped the BLS produce its statistics. Kolko noted that expertise will be hard to replace.
A survey of academic economists in March by the Chicago Booth School of Business showed that experts overwhelmingly believed the staff cutbacks at statistical agencies and the elimination of the advisory panels would lead to a “substantial reduction in the reliability of government economic data.”