Economists question accuracy of US inflation data as BLS grapples with staffing shortages

While there is no evidence of deliberate manipulation of the data, economists warn that even unintentional distortions could carry significant consequences

Concerns are mounting among economists about the accuracy of recent US inflation data after the Bureau of Labor Statistics (BLS) disclosed that staffing shortages had hampered its ability to conduct its monthly price survey. The revelations come as inflation remains a key focus for markets, policymakers and American households alike, the Wall Street Journal reported.

The BLS told economists this week that a federal hiring freeze had forced the agency to reduce the number of businesses it surveys each month. In the April report, government statisticians had to rely more extensively on less precise estimation techniques to fill gaps in data, a process known as different-cell imputation.

While there is no evidence of deliberate manipulation of the data, economists warn that even unintentional distortions could carry significant consequences. “They’re having to turn to less effective methods to fill in the blanks,” said Omair Sharif of Inflation Insights. Professional traders and policymakers who rely on the inflation rate are now questioning its reliability.

Staffing shortages undermine price collection 

Each month, hundreds of BLS enumerators visit stores across the country to record the prices of goods and services, from clothing to professional services. Those figures feed into the consumer-price index (CPI), the most widely watched measure of inflation in the US.

With fewer enumerators on hand, the agency is unable to gather data from all its usual sources. In April, it stopped collecting inflation data entirely in Lincoln, Neb.; Provo, Utah; and Buffalo, N.Y. The BLS said these cuts would have “minimal impact” on the headline inflation rate but acknowledged that regional and category-specific data might be more volatile.

The inflation rate affects everything from Social Security benefits to tax brackets, wage contracts and the payouts on $2 trillion in inflation-protected federal bonds. The Federal Reserve also relies heavily on CPI data to set interest rates.

Spike in imputed data raises red flags 

Economists noticed a sharp uptick in the use of different-cell imputation in the April report, published May 13. Alan Detmeister of UBS noted that nearly 29% of price estimates in April relied on this method—nearly double the highest level recorded in the past five years.

The report showed that annual inflation had cooled to 2.3%, the lowest level since 2021. But Detmeister cautioned that it is impossible to know whether the heavy reliance on estimates distorted the data upward or downward. “We don’t know if this is a big issue or a small issue, but we just know that directionally, it’s making things worse,” he said.

The Trump administration’s hiring freeze, imposed in January, has strained agencies across the federal government. It remains unclear whether BLS employees were directly affected by broader layoffs and buyouts led by Elon Musk’s Department of Government Efficiency, which has already eliminated thousands of federal positions.

The BLS and the Labor Department declined to comment.

A fragile system under pressure 

For decades, the US has prided itself on the quality of its economic data. The current strains, however, have raised alarms. “Being able to track what’s going on in the economy is very, very important,” Federal Reserve Chair Jerome Powell said earlier this year. “It’s something that the United States has led in for a long, long time.”

The inflation data concerns come amid a series of recent missteps in government statistics. In May, the BLS suspended publication of hundreds of wholesale price series. This week, it admitted to applying incorrect sample weights in its household unemployment survey for April, though officials said the impact was negligible.

Funding for government statistical agencies has fallen short for years, and concerns about data quality intensified after the Trump administration disbanded several external advisory committees earlier this year.

As inflation remains at the centre of US economic policy, questions about the accuracy of the numbers guiding those decisions are likely to persist.