Inaccurate Data Blinds Government Policymaking

Posted on October 8th, 2020

Among the many disruptions caused by the pandemic, government data collection has been hindered considerably. Various agencies and departments of the federal government have relied on personal collection of data for decades as a reliable and validated process of gathering data.

Numerous economic indicators and indices are vital for economists and government officials to decipher what the economic condition of the country might be. The pandemic has now raised the question as to whether data collection has been flawed and if certain government provided reports are truly accurate.

Natural disasters such as hurricanes and fires have affected data collection efforts in the past as face to face surveys have been delayed if not limited in scope. The significance of the current pandemic though, has created data collection challenges that have never occurred before.

The Bureau of Labor Statistics has acclimated to the new environment by instituting surveys by telephone and by examining publicly available data. Inflation has been difficult to gauge, as random price spikes over the past few months have misled economists and the Federal Reserve. The Consumer Price Index (CPI) not only is the leading indicator for inflation, but it is also used to modify and establish tax rates, Social Security benefits, poverty thresholds, and eligibility requirements for food stamps.

This year, the Census of 2020 has been delayed and jeopardized, as in-person surveys have been essentially canceled. Instead the U.S. Census is relying on self-response rates, where U.S. citizens effectively count themselves via the Census 2020 internet portal. The Census, which only occurs every 10 years, helps determine the number of seats in the House of Representatives for each state, voting districts, and the allocation of federal funds nationwide.

Sources: BLS, U.S. Census, Dept of Labor, Federal Reserve