Private data sources are playing a key role in how the Federal Reserve is
Fed Gov. Adriana Kugler said in a speech Tuesday on data measurement that
"While these challenges in traditional data that I have described may take some time to be addressed, I am encouraged by the explosion in data produced by the private sector over the past decade or so that can greatly enhance our understanding of the economy," Kugler said. "Such data give an opportunity to measure economic developments with greater timeliness, at a higher frequency, and with more granularity."
Kugler said the Fed highlighted hiring trends and market rents as factors measured more quickly, and potentially more accurately, by private analytics groups than by government entities.
She said that housing services have been a "
"That is why policymakers can also rely on current market rent data, showing what landlords charge new tenants, information that is available from multiple private-sector sources," she said. "Those data can provide some early signal of where official housing inflation series are likely headed."
In her remarks, which were delivered at a seminar hosted by the National Association for Business Economics, Kugler noted that some government pricing surveys are in need of updates to better reflect the current economy. She highlighted that while manufacturing and agricultural factors are well represented, more recent developments such as so-called "gig" workers are not.
"I believe the statistical agencies grapple with these issues, and it takes time to lay the groundwork and develop new data series, but this challenge is a real one," she said. "If reports are built for the past, that may mean they struggle to capture big developments today and in the future, such as the changing nature of where and how people work or the rising use of artificial intelligence technology."
Kugler also called for innovative solutions to increase response rates for government-conducted surveys to ensure the data is sufficiently representative of market conditions.
She added that forward-looking surveys, many of which are conducted by nongovernmental entities, are also an essential tool for her and other policymakers.
"I pay close attention to these surveys, because they are forward-looking and help inform where behaviors by businesses and households may be trending," she said.
Even so, Kugler's overall outlook on governmental data output was positive. She praised innovative efforts by government stat trackers, some of which have incorporated private data into their methodologies. Specifically, she pointed to the Bureau of Economic Analysis, which uses a number of private sector sources in its gross domestic product calculations, as well as the Fed itself, which taps private data for its Industrial Production and Capacity Utilization report, as well as its consumer credit statistics.
Kugler also noted that government agencies are using the data that they collect in new and innovative ways. She singled out a Bureau of Labor Statistics initiative to use housing survey data to create a national tenant rent index to track quarterly changes to lease terms.
"Despite the many challenges, the future of economic measurement is bright," she said. "The statistical agencies have already proven their ability to innovate and adapt, even under tight resource constraints. And the wealth of private-sector data sources will only expand in the future."
