Private Data Providers Gain Traction Amid Skepticism of US Economic Data

Private enterprises in the United States are seizing the opportunity presented by the growing skepticism surrounding federal economic data. These enterprises are developing alternative data products to fill the void left by questionable official statistics. One notable platform is offering free access to data for the public, marking a significant shift from the previously dominant profit-driven model in this sector. This change is driven by the increasing distrust in official government statistics, which has created an opportunity for private entities to provide more transparent and reliable data solutions.

The trend of private enterprises stepping in to fill the void left by questionable official data is not limited to the United States. Globally, there is a growing demand for independent and verifiable data sources. This demand is fueled by concerns over the accuracy and reliability of government-provided statistics, which have been called into question in various contexts. Private firms are responding to this demand by offering a range of data products that are designed to be more transparent and trustworthy.

The rise of private data providers is also driven by advancements in technology, which have made it easier and more cost-effective to collect, analyze, and distribute data. These technological advancements have enabled private enterprises to offer data products that are more comprehensive and detailed than those provided by government agencies. This has made private data providers an attractive alternative for businesses and individuals who rely on accurate and reliable data for decision-making.

Despite the broad coverage and comprehensive nature of government data, which is still considered the "gold standard" for measuring the performance of the world's largest economy, economists and traders are increasingly accepting private indicators. The sudden dismissal of the Bureau of Labor Statistics (BLS) director by President Donald Trump, and the perceived partisan bias of the nominated successor, has raised concerns among some investors about the reliability of official data. The BLS, traditionally a non-partisan agency, is responsible for compiling key inflation and labor market data.

Economists, the Federal Reserve, and other policymakers have long incorporated private sector data, such as that provided by ADP Research Institute, Challenger Consulting, and the University of Michigan, to assess economic health. Many Wall Street banks also use their own credit card data to track consumer spending. The increasing demand for real-time information in the face of rapidly changing government policies and overall economic conditions has led to a surge in the frequency and investment in proprietary statistical data.

In the politically divided United States, the risk of government shutdowns leading to the suspension of federal data releases is relatively frequent. During such periods, third-party data providers often gain more attention. Currently, several startups are attempting to enter this field more stably. Labor market analysis company Revelio Labs, which previously sold employment market data to hedge funds and private equity firms, has announced that it will provide macro-level statistical data for free to everyone. This decision is based on the belief that such data should be considered a "public good." The company already provides data on employment changes, job openings, and wages at the enterprise and professional levels.

Revelio Labs aggregates over 150 million individual career records from platforms such as LinkedIn and Jobcase, summarizing the data at the national level. The company claims that this data covers 85% of the U.S. workforce, compared to an estimated 27% coverage by the BLS enterprise survey. The company's chief economist, Lisa Simon, stated that the goal is to apply competitive pressure on the BLS to update its statistical methods or collaborate with external data providers on certain indicators. The first batch of free macro data from Revelio Labs is scheduled to be released next week, just before the BLS publishes its August employment report.

The July employment report sparked the latest controversy surrounding the BLS. The significant downward revision of the data led to the dismissal of Erika McEntarfer, and without evidence, Trump accused her of manipulating the data, damaging the Republican Party's image. Additionally, official data has been plagued by multiple release errors, and the ongoing trend of declining survey response rates has further fueled external doubts about the BLS and the reliability of its data.

OpenBrand, a company that sells inflation data to manufacturers and retailers, has seen increased demand from clients due to the Trump administration's erratic tariff policies. These clients seek real-time insights into competitors' price increases or discount strategies. OpenBrand's data covers nearly 200,000 products and introduced a new product in August that can "track price changes in real-time, rather than with a one-month lag."

Some platforms, including Motio Research, are still exploring their business models. This startup, with only three employees, generates household income analysis data using Census Bureau data and plans to sell approximately 150 data series to financial institutions and research organizations. The co-founder, Matías Scaglione, stated that the company aims to provide as much data as possible for free to the public, as they believe this type of data has public good attributes. Through the newly launched data series, the company will attempt to commercialize some data while keeping other data freely accessible.

Claudia Sahm, the chief economist at New Century Advisors and a former Federal Reserve employee, disagrees with the notion that private data can serve as a public good. In a recent opinion piece, she argued that government statistical work is free from profit motives, while businesses ultimately operate for profit. If a business fails, it may cease data compilation. Sahm emphasized that these are private enterprises with operating costs, shareholder demands, and employee salaries to consider. In contrast, the government does not profit from statistical work, and its methods are highly transparent, making the nature of competition with other providers different.

Ultimately, numerous private data providers, including Revelio Labs and OpenBrand, either calibrate their data against official data or use it as a starting point for data compilation. Despite concerns about the reliability of official statistical data, its rigor, traditional authority, and independence make it the "gold standard." Scaglione stated that their work complements the efforts of the Census Bureau and the BLS, aiming to add more value to public data.