A Business Opportunity for the BLS
Point 1: The US Federal Government is shutdown. One consequence is that official macro data won’t be released as scheduled. Let’s say the shutdown lasts long enough to impact one print of NFP, CPI, GDP, etc…(hopefully not more than one print).
Point 2: Recall a few weeks ago the BEA started publishing GDP data to a blockchain, which I think is a baby-step in an awesome direction.
Combining points 1 and 2, the Trump admin MIGHT say something like: See what happens? We went ~3 weeks without critical information. Our data pipeline is long, wrong, and fragile. We don’t need all of these economists and statisticians at these 3-letter agencies. We need a modern solution. We need to put all business/economic data on the blockchain.
I would agree with “long” and “wrong”. But that’s not novel. Every statistician knows about sampling errors. And every economist knows about the time lags between activity and publication.
I would certainly agree with the call to put business/economic data on the blockchain. I’ve written about that before.
The “fragile” claim would be questionable. The shutdown is what disrupted the data release process in the first place.
We know the Fed watches macro data carefully. Without these official releases, the Fed may be forced to punt at their 10/28-10/29 meeting because they don’t have clarity.
I could imagine the Trump Admin saying: The Fed is late. The Fed is flying blind. They don’t have one little data release and they are paralyzed. We talk to companies all the time. We’re making deals all the time. We know the economy needs rate cuts now.
Again, if that was said, there would be a grain of truth. The Fed would have less information without a Jobs report, for instance.
But the Fed also talks to companies; witness the Beige Book and the myriad regional surveys the Fed system publishes.
Let’s say the Trump admin does indeed convert furloughs into layoffs, which neuter the ability of the BEA/BLS, etc… to compile our vital macro stats.
Writing macro activity directly to the blockchain isn’t a complete solution. We still need to clean the data, seasonally adjust, develop price and quantity indices, etc…
If the statistical agencies aren’t equipped, then we’ll need to rely upon third party data processors.
S&P/IHS, Moody’s etc… are prime candidates.
But….
…do S&P/IHS, Moody’s etc… have the expertise to read from the chain? This opens a possible business opportunity for the furloughed/laid off government number crunchers that do yeoman’s work for the rest of us, and
…if we do rely upon third part data processors, we’ll likely wind up with several semi-official releases of the same data. There will inevitably be claims of manipulation, and clamor for a single definitive source, which hopefully leads us right back to the BEA/BLS.