When government data is called into question

Summary

Marketplace Morning Report: When Government Data Is Called Into Question

Released on August 14, 2025 | Host: David Brancaccio, Marketplace

In this episode of Marketplace Morning Report, host David Brancaccio delves into pressing economic issues, including unexpected inflation rates, potential shifts in Federal Reserve policies, challenges facing government data integrity, and a resurgence in adjustable rate mortgages. The episode features insights from economists Diane Swonk of KPMG, Michael Strain of the American Enterprise Institute, Claudia Sahm of New Century Advisors, and reporter Daniel Ackerman, among others.

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1. Inflation Surges Beyond Expectations

[00:01]
David Brancaccio opens the episode by highlighting a concerning spike in wholesale inflation. "A flare of inflation at the wholesale level," he notes, emphasizing that inflation rates soared between June and July by an unexpected 9-10%, tripling economists' projections.

[00:29]
Diane Swonk, Chief Economist at KPMG, provides context:
"The data suggests that firms are actually passing along higher prices onto consumers and that their margins actually widened. So that's important to watch..."
She explains that while consumer inflation remained relatively controlled, the underlying wholesale inflation trends indicate a broader inflationary pressure that could influence future economic policies.

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2. The Federal Reserve's Interest Rate Decisions

[00:57]
Brancaccio transitions to the implications of rising inflation on monetary policy. He poses a critical question: Could the unexpected wholesale inflation delay the Federal Reserve's planned interest rate cuts?

[01:09]
Swonk elaborates on market expectations:
"Financial markets had hoped that they would do a half percent cut, and the Fed has been saying they're not sure about what size cut, but it's probably not going to be an outsized cut in September or it's not a slam dunk that we have a cut in September as well."
She suggests that the Federal Reserve may need to reassess its strategies in light of the new inflation data, indicating potential adjustments to their interest rate policies in upcoming meetings.

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3. Scrutiny Over Government Data: The BLS Leadership Void

[01:37]
Brancaccio shifts focus to a significant development within the Bureau of Labor Statistics (BLS). The agency, responsible for critical economic indicators like hiring and unemployment rates, remains leaderless after President Trump dismissed Commissioner Erica McIntarfer on August 1st. Trump alleged that the "monthly jobs numbers, which were revised downward, were rigged to make them look bad."

This leadership vacuum has cast doubt on the reliability of BLS data, prompting businesses and policymakers to seek alternative data sources for making informed decisions.

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4. The Rise of Private Economic Data Sources

[02:09]
Reporter Daniel Ackerman explores the implications of questioned government data by examining the role of private economic data providers.

[02:12] – [03:19]
Kurt Barton, CFO of Tractor Supply, discusses the importance of location-specific data for retailers:
"Location is everything for a retailer like Tractor Supply. We serve customers in only certain geographies... They can parse that for ex-urban and rural, even in some cases to the zip code level."
Michael Strain from the American Enterprise Institute adds:
"This kind of specificity is a big reason there's a market for private economic data."

Claudia Sahm, Chief Economist at New Century Advisors, underscores the complementary role of private data:
"It's an extremely helpful complement to government statistics. You can get some really good information about the labor market, for example, from companies like Indeed or ADP."
However, she cautions that private data cannot fully replace government statistics:
"Government data, including BLS data, really are the gold standard... They are freely available to the public and use sampling methods to reflect economic conditions nationwide."

Ackerman summarizes the dependency on high-quality government data:
"The reality is the high quality private sector data that are being produced, they depend on the high quality government statistics."
He warns that any reduction in government data quality could lead to suboptimal decision-making by businesses and policymakers.

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5. The Resurgence of Adjustable Rate Mortgages

[04:49]
Transitioning to the housing market, Brancaccio introduces the topic of adjustable rate mortgages (ARMs) making a comeback. According to the Mortgage Bankers Association, ARM applications surged by 25% last week, reaching the highest levels in three years.

[05:14]
Marketplace’s Matt Levin reports on consumer attitudes toward ARMs:
"If the phrase adjustable rate mortgage triggers your late 2000s financial crisis PTSD, you're not alone."
He recounts the story of Amy Moreno, a loan officer in southeast Arizona, who encountered resistance from potential homeowners wary of ARMs due to past financial crises.

[05:45]
Levin explains how ARMs have evolved:
"Adjustable rate mortgages have changed since the aughts. You typically lock in that cheaper intro rate for a longer period of time, 5, 7, 10 years, and borrowers now are vetted better."
Economist Joel Kahn from the Mortgage Bankers Association attributes the renewed interest in ARMs to buyers seeking cost savings:
"ARMs are regaining popularity because home buyers are searching for any savings they can get."

Claudia Sahm adds:
"People are looking for a slightly lower rate option to the extent that they can because some of these markets still have pretty high home prices."
Levin concludes that despite the uncertainty of future interest rates, borrowers are willing to take the risk in hopes that rates will stabilize or decrease:
"ARM borrowers today won't benefit from any predicted Fed cuts this year, but they're willing to take the risk that in the future rates won't be higher than they are right now."

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Conclusion

In this episode, Marketplace Morning Report provides a comprehensive overview of current economic challenges, from unexpected inflation rates influencing Federal Reserve policies to the critical role of government data and the resurgence of adjustable rate mortgages in the housing market. Through expert analysis and on-the-ground reporting, listeners gain a nuanced understanding of how these factors interplay to shape the economic landscape.

Transcript

[David Brancaccio]

A flare of inflation at the wholesale level. I'm David Brancaccio in Los Angeles. This is just one month, but concerning. There is news this morning that wholesale inflation is running hot, jumping 9, 10 of a percent from June to July, three times what economists were expecting. Consumer inflation had come in relatively tame, but could this delay a cut in interest rates? Diane Swonk is the chief economist at the audit, tax and advisory firm kpmg.

[Diane Swonk]

The data suggests that firms are actually passing along higher prices onto consumers and that their margins actually widened. So that's important to watch and that's something that, you know, we watch for the Fed's preferred measure of the index, the PCE index, which is derived from both the CPI and the ppi. That's not going to be quite as hot, although it will show that we're starting to see inflation continue to move up.

[David Brancaccio]

Now, our central bankers, the guardians of interest rates, will have to absorb this information and it could affect if they or if they don't lower interest rates at their next meeting.

[Diane Swonk]

Financial markets had hoped that they would do a half percent cut, and the Fed has been saying they're not sure about what size cut, but it's probably not going to be an outsized cut in September or it's not a slam dunk that we have a cut in September as well. So I think that's something that financial markets are now starting to absorb. We're seeing that in terms of what Fed speakers are saying right now. And we're going to get more news today on exactly where they stand on a rate cut.

[David Brancaccio]

Diane Swonk, the Bureau of Labor Statistics, which produces the closely watched hiring and unemployment reports every month, remains without a permanent leader. President Trump fired the commissioner, Erica McIntarfer on August 1st. Trump claimed that the monthly jobs numbers, which were revised downward, were rigged to make them look bad. Companies use BLS data to make big business decisions. With that data now called into question, reporter Daniel Ackerman looks at how alternative privately produced data might compare.

[Kurt Barton]

Location is everything for a retailer like Tractor Supply.

[Michael Strain]

We serve customers in only certain geographies.

[Kurt Barton]

Kurt Barton is CFO of Tractor Supply, which sells farming gear and animal feed. The company's motto for life. Out here.

[Michael Strain]

We do not have stores in urban America. A vast majority are ex urban or.

[Kurt Barton]

Rural, and that's why the retailer relies on private data about consumer sentiment. That data is produced by the firm Morning Consult.

[Michael Strain]

They can parse that for ex urban and rural, even in some cases to the zip code level.

[Kurt Barton]

This kind of specificity is a big reason there's a market for private economic data, says Michael Strain, an economist at the right leaning American Enterprise Institute.

[Claudia Sahm]

It's an extremely helpful complement to government statistics. You can get some really good information about the labor market, for example, from companies like Indeed or adp, a payroll.

[Kurt Barton]

Management firm that offers an earlier look at monthly jobs data than the bls.

[Claudia Sahm]

But Strain says it's not a substitute for government statistics. Government data, including BLS data, really are.

[Kurt Barton]

The gold standard for one, says Strain. It's freely available to the public. That's helpful for small businesses that can't afford private data. And Strain said the BLS uses sampling methods to make sure their data reflect economic conditions nationwide.

[Claudia Sahm]

Official government data are unmatched in their representativeness, so in their ability to tell you what's going on with the labor market as a whole, with the economy.

[Kurt Barton]

As a whole, private firms are more limited. For example, ADP has tons of payroll information, but only about companies that are customers of adp. Claudia Sahm is chief economist at New Century Advisors.

[Daniel Ackerman]

We can't talk about the economy as a whole just using one company's data because there are no companies that really give us that full picture.

[Kurt Barton]

And Sahm says many private data sources use government data as a benchmark to confirm their accuracy.

[Daniel Ackerman]

The reality is the high quality private sector data that are being produced, they depend on the high quality government statistics, sahm says.

[Kurt Barton]

If government data gets curtailed in any.

[Daniel Ackerman]

Way, businesses, people, policymakers are going to be making decisions with less information which.

[Kurt Barton]

Could lead them to make the wrong decisions. I'm Daniel Ackerman for Marketplace.

[David Brancaccio]

You can get a home loan where you pay the same every month for 15 or 30 years. Or you can get a loan where the monthly changes over time. The adjustable rate mortgage the ARM is making a comeback. According to the Mortgage Bankers association, the number of ARM applications where you get lower payments initially at the cost of uncertainty in The Future jumped 25% last week to their highest level in three years. Here's Marketplace's Matt Levin.

[Matt Levin]

If the phrase adjustable rate mortgage triggers your late 2000s financial crisis PTSD, you're not alone. A few years back, southeast Arizona loan officer Amy Moreno tried to show a would be homeowner the tens of thousands in savings they could get from an arm. Even with an introductory interest rate significantly cheaper than a 30 year fixed, it was a no go for this borrower.

[Amy Moreno]

Their fear from the information that was out there from the mortgage meltdown, they were too afraid to take that risk, which is understandable.

[Matt Levin]

Adjustable rate mortgages have changed since the aughts. You typically lock in that cheaper intro rate for a longer period of time, 5, 7, 10 years, and borrowers now are vetted better. About 10% of mortgage applications are now for ARMs, well above the share of the 2010s. Economist Joel Kahn at the Mortgage Bankers association says ARMS are regaining popularity because home buyers are searching for any savings they can get.

[Claudia Sahm]

People are looking for a slightly lower rate option to the extent that they can because some of these markets still have pretty high home prices because of.

[Matt Levin]

The long lag time for rates to actually adjust. ARM borrowers today won't benefit from any predicted Fed cuts this year, but they're willing to take the risk that in the future rates won't be higher than they are right now.

[David Brancaccio]

Hi, I'm Matt Levin for Marketplace Head in Los Angeles. I'm David Brancaccio. You're listening to the Marketplace Morning Report from apm, American Public Media.