Delivering Accurate Forecasts, Even When the Data Is Not Perfect

Have you ever heard a single wrong note slip through during a concert? That stumble may not ruin the entire performance, but just noticing it is enough for it to stand out, make you pause, and wonder what is off.

That same feeling is why economists are growing increasingly concerned when analyzing today's economic data, as sour notes have the potential to come through due to recent events.

What is Happening at the Bureau of Labor Statistics?

At the heart of these concerns is the latest news surrounding the Bureau of Labor Statistics (BLS), a US government agency responsible for critical economic indicators such as the Consumer Price Index (CPI), Producer Price Index (PPI), and overall employment data. These indicators are foundational to understanding inflation, wage growth, and the overall health of the labor market. However, recent staff reductions and lower response rates have raised concerns about the potential impact on the accuracy of this data.

Recently, in response to the July jobs report showing only 73,000 jobs added, downward revisions of 258,000 for May and June, and a rise in the unemployment rate from 4.1% to 4.2%, President Trump fired Bureau of Labor Statistics Commissioner Erika McEntarfer.

However, the agency is facing other challenges, with workforce reductions at the BLS now estimated at around 35%. While fewer staff could make it more difficult to collect, process, and verify data, it remains to be seen just how much of an impact these reductions will ultimately have on the agency’s ability to carry out its work.

In addition, more than one-third of the Consumer Price Index (CPI) is now based on imputed data, meaning it is estimated rather than directly collected. While imputation is a standard statistical practice, such a large share increases the risk that inflation figures may understate actual price growth over time.

We are watching this closely and comparing the CPI numbers to other data sources to confirm its accuracy. Although the impact is not significant yet, it could become a larger concern within the next year.

Economic Trends Matter More Than Headlines

At ITR Economics, we have spent decades building systems to navigate economic uncertainty, and that includes any potential data issues or accuracy concerns.

While official government data has historically been our gold standard, we also draw on several other sources to cross-reference any information that appears peculiar, and we listen closely to each client’s unique experiences to ensure the official numbers tell the full story. That intuition, paired with deep analysis, helps us protect the integrity of our forecasts by avoiding reliance on a single source; instead, we verify trends across multiple indicators and apply our proven economic methodology to keep the bigger picture clear.

We have always believed that a good economist is a bit like a skilled musician. They need to know the symphony of data so well that they can immediately hear when something is out of tune.

Even when the economic symphony plays a few wrong notes, our role is to recognize them, understand their source, and keep your business strategy in harmony with the bigger picture. At ITR Economics, we combine intuition with rigorous analysis to ensure that every forecast we deliver is tuned for accuracy — no matter the noise in the data. If you are ready to make confident decisions in uncertain times, contact us today and let’s make sure your planning stays perfectly in tune.