The Fragile Foundation of Federal Data: A Looming Crisis for the US Economy
Federal economic data, often overlooked, forms the bedrock of the US economy, akin to essential infrastructure like roads and bridges. This vital data informs crucial decisions made by policymakers, businesses, and organizations, influencing investments and ultimately impacting people’s livelihoods. However, this critical infrastructure faces a growing threat of deterioration due to a confluence of factors, including funding shortages, declining public trust, and political pressures. Experts warn that the consequences of neglecting this statistical backbone could be far-reaching and detrimental to the nation’s economic health.
The reliability and quality of federal data, long considered the "gold standard," are increasingly jeopardized by declining survey response rates. People are less inclined to participate in traditional surveys, particularly those conducted by phone or in person, leading to less comprehensive data collection. This decline contributes to more volatile estimates and larger revisions in key economic indicators, opening the door to public skepticism and politicization of data. The controversy surrounding the 2024 employment data revisions exemplifies this vulnerability, highlighting the potential for political agendas to undermine trust in official statistics.
Declining response rates are compounded by long-term funding cuts for statistical agencies. While agencies have strived for efficiency, these cuts have come at a cost, hindering modernization efforts and limiting the resources available for contingency planning and resilience. For instance, the Census Bureau’s efforts to modernize the Current Population Survey, crucial for the monthly jobs report, have been stalled by lack of funding. This modernization is essential for adapting to evolving demographics and data collection challenges, such as the rise of cellphone-only households and online communication.
The current political climate poses an additional threat to federal data. Proposed government streamlining efforts, aimed at reducing spending, could inadvertently cripple statistical agencies by further restricting their already limited budgets. This would have a paradoxical effect, as accurate data is essential for efficient government operations and informed decision-making. Without reliable data, measuring cause and effect, identifying economic problems, and targeting solutions becomes significantly more challenging, hindering both government and private sector performance.
While some streamlining proposals, such as consolidating statistical agencies, could potentially benefit data collection if implemented thoughtfully, experts caution against placing these agencies under direct political control. Instead, they advocate for an independent agency headed by a chief statistician, ensuring secure funding and protecting data integrity from political influence. Alternative solutions, such as partnerships with universities, could also provide cost-effective ways to maintain essential data collection efforts without compromising quality.
Despite these challenges, there are efforts underway to safeguard federal data. Organizations like the End of Term Web Archive actively preserve government websites, including those containing economic data, to ensure continued access during administration transitions. Furthermore, advocacy groups like the Census Project and the Association of Public Data Users work to protect government data at the Congressional level, highlighting the importance of data transparency and accessibility.
The potential scaling back of data collection poses unique risks to marginalized communities, particularly those already underrepresented in data. Changes in data collection practices or the elimination of questions relating to specific demographics, such as the LGBTQ+ community, can hinder efforts to understand the economic realities and challenges faced by these groups. This lack of information can make it difficult to address disparities and develop effective policies to improve their economic well-being. Moreover, the erasure of certain communities from data collection can have a detrimental impact on their sense of inclusion and belonging.
In conclusion, the current state of federal data presents a serious concern for the US economy. Declining survey response rates, funding cuts, and political pressures threaten the reliability and accessibility of vital economic information. The consequences of neglecting this statistical infrastructure could be far-reaching, impacting policy decisions, business investments, and the livelihoods of all Americans, particularly those from marginalized communities. Protecting and modernizing federal data collection is not merely a technical matter but a crucial investment in the long-term health and prosperity of the nation.