Wall Street concerned about the reliabilty of inflation data

quote:

---

However, the bureau’s often primitive way of collecting jobs data — largely through phone calls and written surveys — has fed into caution about the reliability of pre-revisions data releases. Survey response rates have been steadily sliding, forcing the BLS into bigger revisions.

“Significant downward revisions to job growth and increased imputation for CPI have raised questions about the reliability of the official statistics,” Bank of America senior U.S. economist Aditya Bhave wrote. “We argue the data remain reliable, though we would recommend being careful with the initial jobs data.”

Looking for inflation clues
On the market’s plate this week, though, are the two key inflation readings, first with the consumer price index on Tuesday, then the producer price measure, considered a gauge of costs at the wholesale level, on Thursday.

At issue for the BLS is its move to stop collecting CPI data from several cities due to staffing limitations, as well as the growing use of imputed data, or estimating price movements in areas where it can’t get exact information. In those cases, the BLS will try to use data from another source, preferably somewhere near to the locale it is surveying, but sometimes it has to use prices from other urban areas as assumptions.

When the imputed data comes from a local source it has a higher degree of reliability. But Gapen and other economists worry that if the BLS has to rely on “different cell” imputation, the chances for higher variance increase. Estimates are that some 35% of BLS data for its price reports is affected in some way by imputing.

---