Headline Risk: Government Data & Your Finances
Posted on November 6, 2025
Over the past few years, as interest rate policy has become a major topic of conversation, with Federal Reserve Chair Jerome Powell on center stage, there has been greater importance attached to the US government’s economic data. More broadly, many of these government data points have far-reaching impacts on the financial affairs of every American and can whipsaw financial markets when they’re unreliable.
The US government collects data using numerous methods, usually through the Bureau of Labor Statistics (BLS). Arguably the most impactful data points generated by the BLS are housed in the Consumer Price Index (CPI) reports and its monthly job reports, both of which are central to the Fed’s internal forecasts and interest rate deliberations. In both cases initial BLS data is collected using disparate surveys of individuals and corporations across the nation, which are then aggregated into the headline figures.
For example, CPI estimates rely on a two-pronged approach—first surveying thousands of households annually to determine how the average American spending habits, and separately a monthly canvassing of these items’ costs, using a separate survey of businesses. The resulting series is intended to provide the estimated change in the average cost of living, and a proxy for price inflation. The monthly jobs report is produced by combining employment data from surveys of households and surveys of businesses and government agencies. That data is combined to produce statistics on unemployment, wages, and other employment-related data points.
These data series are crucial to both government and private sector calculations, with far-reaching impacts. CPI is used to determine federal taxes (standard deduction and tax bracket adjustments), retirement benefits, Medicare premiums, investment earning rates on certain securities, 401k contribution limits, and corporate pension payments. Additionally, the Federal Reserve takes an assortment of BLS reports into consideration when determining monetary policy, essentially the “data” in Powell’s oft-cited “data-driven” approach to its decisions. The Fed’s policy posture in turn drives interest rates—the cost of capital—across the globe. BLS data is also a key element used by investment professionals in forecasting recessionary/expansionary periods, business cycles, and by our portfolio managers in assessing expected returns for various sectors and securities.
Given how critical BLS data is, there is a challenging trade-off between timeliness and accuracy. To report the data more promptly, the BLS will make an initial release, often
without perfect data or robust survey response rates. Revisions therefore occur, sometimes quite large ones, as firmer data subsequently trickles in. In the post-pandemic period, revisions have been trending much higher than normal, prompting increased skepticism, and culminating in the termination of the BLS Commissioner after a sizable downward revision to job growth this summer. The administration’s concern is that the Fed, in relying on the original, flawed release, made a policy error in maintaining short-term rates.
Ultimately, a survey is only as accurate as its sample, methodology, and resources, and there are issues on all these fronts. Response rates have trailed off in the post-pandemic period, resulting in larger survey errors, and larger revisions. The aftermath of covid’s historically volatile economic climate, is a phenomenon known as “residual seasonality”, whereby prior models and seasonality estimates are no longer apt, with resultingly enlarged error ranges. Lastly, recent budget cuts at the BLS (~20% reduction this year) will further stress the agency’s thoroughness and quality control. At Florida Trust, the portfolio management team continuously monitors and interprets BLS data, in addition to a host of private-sector data, to arrive at a holistic view of the market and your portfolio. As the facts, and the data, change, we remain nimble and will continue to adjust accordingly.
At Florida Trust, the portfolio management team continuously monitors and interprets BLS data, in addition to a host of private-sector data, to arrive at a holistic view of the market and your portfolio. As the facts, and the data, change, we remain nimble and will continue to adjust accordingly.
Zachary Chichinski, CFA, CIPM
Portfolio Management
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