The accuracy of federal economic data is at risk, report warns
The accuracy of federal economic data is at risk, complicating decision-making for policymakers, a new report warns.
According to the American Statistical Association, the Census Bureau's estimates of the economic decline after the Great Recession proved "significantly short" due to a lack of funding.
Federal data is critical not only as a point of reference but also as a guide for policy decisions that affect every American.
J. Steven Landefeld, a former director of the Bureau of Economic Analysis, says accurate GDP figures "are required for budget formulation, fiscal policy, monetary policy, international trade and investment policy."
Based on this data, the government also allocates over $300 billion in federal funds annually, he added.
Erica Groshen, a former commissioner at the Bureau of Labor Statistics, seconds Landefeld's concerns, saying, "Lousy data beget lousy decisions."
"It is no exaggeration to say that Americans’ well-being and the vitality of the U.S. economy rely in no small part on the quality of information provided by our federal statistical system."
The report uncovered three key areas where many of the 13 federal statistical agencies are vulnerable.
Some lack a high degree of autonomy to shield against inappropriate political interference, while others suffer from inadequate resources or a lack of government support.
Another problem is outdated models that are not changing with the times, with the unemployment rate cited as one metric that is "prone to become outdated."
Finally, public survey response rates are in decline, further impeding the accuracy of federal statistics.
In 2023, the Census Bureau's survey response rates fell to 70%—that's 20 percentage points lower than a decade ago. Groshen called this a "slow-moving train wreck."
Taking action now
The American Statistical Association calls for action to protect the integrity of federal data.
The organization calls accurate data "an important tool in fighting disinformation and misuse of AI," as well as a critical gauge of the effectiveness of economic policies.
Experts fear that some agencies may soon be unable to release reports examining economic metrics, such as unemployment rates among smaller demographics, because the data will no longer be reliable.
As a result, it could become harder to roll out targeted policies.
In response, the watchdog has urged Congress to give statistical agencies autonomy, encourage greater information sharing between departments, and ensure a ring-fenced budget.
Meanwhile, the Census Bureau's deputy director, Ron Jarmin, says work is underway to "stabilize or reverse" the trend of falling survey response rates.
"Issues like privacy concerns, challenges contacting respondents in cellphone-only households, and respondents’ availability when contact is made have all contributed to the decline," he said.