President Donald Trump next to a chart on household income in the Oval Office of the White House in Washigton. Photographer: Yuri Gripas/Abaca/Bloomberg
WASHINGTON: Philip Petursson has relied on Bureau of Labour Statistics (BLS) data for decades to inform his investing recommendations at IG Wealth Management. Not solely, but as a key input, he says.
That changed when President Donald Trump said the BLS “rigged” July’s labour report and fired Erika McEntarfer, the agency’s head.
It’s not that Petursson, chief investment strategist at Toronto-based IG, thinks BLS was cooking the books.
Indeed, the White House has offered no evidence for Trump’s claim.
It’s that he worries the Trump administration will slap a partisan sheen on what has long been considered the gold standard of independent economic statistical collections.
That view is gaining traction on Wall Street, as investors increasingly indicate they will crosswalk official data more strenuously with private sources.
They’ve long used stats collected by private firms such as Challenger, Gray & Christmas Inc or ADP Research for hiring, but now, a growing number say, those reports will take on more significance.
So, too, will inflation reports from the Institute for Supply Management or manufacturing and services data compiled by S&P Global.
“It calls into question the validity going forward,” Petursson said of Trump’s upheaval at the BLS.
“You’ve got to wonder if they’re going to start to politicise these numbers, in which case you can’t rely on them, and you’re going to have to rely on everything else.”
BLS data, long considered among the most accurate and independent in all of economics, have not been perfect.
Funding problems have led to staffing shortfalls and outdated methods of data collection.
Stretched resources have forced the agency to cut back in some cases and impute more, making the data less robust.
Survey response rates have been falling for years, and revisions have grown in size.
Still, investors say the government stats have, by their sheer size and scope, been the most reliable out there – as long as they remain free of political influence.
So far, the stock market has not shown any outsize reaction to Trump’s moves against the BLS, but the perceived threat to its independence has raised eyebrows among the investing class.
“The optics of this situation are not very good,” Michael O’Rourke, chief market strategist at Jonestrading Institutional Services LLC, said.
He intends to put “more emphasis” on private data sources going forward, especially the employment report from ADP Research.
Savvy investors have always used various data inputs to make their models as robust as possible.
And there’s no indication that Wall Street is abandoning the BLS figures. The August jobs report due Sept. 5 will be a major market event.
But with investors sensing Trump may want federal data that backs his political views, they are preparing to decrease reliance on government figures if that comes about. — Bloomberg
