Investors have a backup plan if a shutdown torpedoes jobs and inflation data

Government data is important. But there are many other sources of jobs and inflation data, and they'll become more prominent if the government goes dark.

The government shutdown that began October 1 will preempt the publishing of the monthly jobs report due October 3. If the shutdown lasts more than a few days, the inflation report due October 15 might not arrive, either.

The Federal Reserve relies on that data to set interest-rate policy, and many investors and forecasters use it to gauge the direction of the economy. A government data blackout will add more uncertainty to business planning, on top of widespread confusion and higher costs already caused by President Trump’s on-and-off tariffs on trillions of dollars’ worth of imports.

Yet there are many alternatives to government data on jobs, prices and every other aspect of the economy. Government data provides important baselines accessible to everybody, but if some of this data went away, privately gathered data would probably replace much of it. Some of those data providers might even make the numbers freely available as a deliberate effort to replicate the government numbers.

Attendees at the annual Camp Kotok financial conference in northern Maine in August discussed this very topic in a forum featuring Jim Bianco of Bianco Research, Cameron Dawson of NewEdge Wealth and David Sherman of CrossingBridge Advisors. “Dearly beloved, I have gathered you all here today to mourn the death of economic indicators,” Dawson deadpanned.

The context then wasn’t a government shutdown. It was Trump’s firing of the economist who headed the Bureau of Labor Statistics after the July jobs report showed a sharp slowdown in hiring. Many economists worry that Trump will put loyalists in charge of government data and try to bend the numbers to his favor. Trump may be wavering. He nominated a partisan Trump acolyte to run the BLS, but then withdrew him on September 30. For now, a career civil servant is running the agency on an interim basis.

BLS data, while closely watched, has been growing less reliable, and many economists already supplement it with other data. The monthly job numbers come from two huge nationwide surveys that have had declining response rates in recent years. That makes the data more volatile and more subject to large revisions. Some analysts think the BLS inflation data is based on outdated methodology, while failing to capture real-world housing costs and changes in consumer buying habits.

Non-government sources of job-market data include the Indeed job-posting index, the Glassdoor employee confidence index, the LinkedIn workforce report and the National Federation of Independent Business jobs report. Alternate sources of inflation data include Truflation, PriceStats and the HBS Pricing Lab. The BLS even relies on some private pricing data to generate the official numbers; it gets new vehicle pricing from JD Power, for instance.

These alternate data sources aren’t all free or as easily accessible as most government economic data. But if there were a need, the organizations collecting the data might see an incentive to make it more accessible and also more nationally representative, for branding purposes or as an entry point to selling other services.

“You could call Satya Nadella at Microsoft or somebody similar and ask him, would you fix this and do it free, for your country,” Bianco suggested at the Maine conference. “They’re trillion-dollar companies. I would guess if you ask them to do it, they would. And that maybe we could do this now.”

Microsoft, as an aside, owns LinkedIn, the networking and job-search site. Providing jobs data under the LinkedIn banner would be on-brand and might bring more users to the site. So Microsoft might have a business case for becoming a more prominent economic-data provider.

Private-sector macroeconomic data could have biases. But any data can. The solution is to make the methodology transparent so analysts can account for those biases. There might be privacy concerns, but there are already laws in place requiring data miners to anonymize anything they publish.

Analysts already rely heavily on data published by non-government outfits such as S&P Global, The Conference Board, the University of Michigan, the Institute for Supply Management, the National Association of Realtors and Equifax. Government updates on jobs and inflation are important days on the economic calendar, but the market would fill the need if the official product weren’t there.

Those alternate data sources will also start to backfill forecasting models if Trump starts to fudge the official data, or there’s even a suspicion of that. The government has no monopoly on information, and it could lose market share if quality slips or a foolish shutdown limits supply.