President Donald Trump is testing the American economy’s ability to simultaneously withstand rapid-fire tariffs, a sharp decline in immigration and a sweeping overhaul of tax policy.
A key federal agency responsible for tracking how the country fares in the face of these challenges is beginning to show signs of strain.
The Labor Department has scaled back data-collection efforts that feed into its statistical bureau’s monthly inflation estimate, a step that economists and agency alums say will weaken the quality of economic reports that are critical to businesses and policymakers.
The move follows a similar decision to eliminate hundreds of gauges that track wholesale prices charged by everyone from toymakers to tool manufacturers. And additional cutbacks are likely in store if Congress approves Trump’s proposal to slash $56 million from the Bureau of Labor Statistics — the independent agency behind the consumer price index and the monthly employment report — and combine other bureaus into a single agency under the Commerce Department.
“We’re likely to continue to see data series get cut, sample sizes reduced, and some products might get cut entirely, depending on what happens in the budget process,” said Jed Kolko, a former Commerce undersecretary for economic affairs, whose office oversaw the Census Bureau and Bureau of Economic Analysis. “Some of our statistics might get less accurate. They might become more volatile month-to-month or quarter-to-quarter. And for series that get revised, we might see bigger revisions.”
Any erosion in the quality of American economic data risks undermining the Trump administration’s credibility as it pushes an aggressive agenda that many fear will lead to higher prices, lower growth and softer monthly employment.
Recession fears have faded since early spring, but the economic outlook remains highly uncertain. Federal Reserve policymakers rely on Bureau of Labor Statistics reports to determine their decisions around where to set interest rates. Businesses utilize them to draw up investment and hiring plans. While the cuts largely affect granular data on specific industries or regions, any further diminishment would be akin to erasing portions of America’s economic road map, said Guy Berger, a labor market economist who leads economic research at the Burning Glass Institute.
“It’s the crown jewel of American data collection. Without good data, we don’t know what’s going on,” he said.
For now, the economic fundamentals remain sound. Prices have climbed much more slowly than most economists had forecast in the wake of Trump’s tariff regime. On Wednesday, BLS reported that inflation rose at a monthly rate of just 0.1 percent in May, beating most forecasts, and that price growth in so-called core sectors of the economy — excluding the volatile food and energy sectors — softened to 2.8 percent.
Shortly after the report was released, the White House posted from its rapid response account on X that Trump had “promised to lower inflation and that’s exactly what his policies are delivering.“
And while recent downward revisions in non-farm payroll estimates point to weaker employment growth this year, monthly job tallies suggest that employers are continuing to hire even amid the policy uncertainty.
Nevertheless, fears about how the administration will manage the U.S. agencies responsible for economic data have been percolating for months. Those concerns were inflamed after administration officials delayed and redacted a recent Agriculture Department forecast because it predicted an increase in the nation’s trade deficit. Trump’s “big, beautiful bill” on taxes and spending also slashes funding for the Office of Financial Research, which is responsible for monitoring markets for risks.
There has been no indication that the administration has taken such a heavy hand with BLS. But a federal employment freeze, coupled with a deferred resignation program and layoffs of probationary employees, has exacerbated staffing shortages that have dogged BLS for years, former officials say.
The cuts have alarmed Senate Democrats, led by Arizona’s Ruben Gallego, who are pressing Labor Secretary Lori Chavez-DeRemer and Bureau of Labor Statistics Commissioner Erika McEntarfer for answers on what impact they could have on future inflation data.
“These numbers affect nearly every household in the country—impacting Social Security, wages, interest rates, and how businesses and families make financial decisions,” the lawmakers wrote in a letter on Tuesday.
Labor Department spokesperson Courtney Parella said the concerns about data quality are “false narratives in an obvious attempt to detract from the successes of President Donald Trump and his administration.”
“The mainstream media strikes again,” she said. “Over half a million jobs have been added since the president took office, and consumer sentiment is on the rise because hard-working Americans can see for themselves that we are restoring economic prosperity.”
Still, there’s a tacit acknowledgment within the administration that the statistical agencies are facing challenges that have affected their output. The Labor Department exempted BLS field data collectors from participating in the April round of deferred resignations to ensure the agency could continue to fulfill its legal obligation to produce certain reports.
And its budget and staffing concerns aren’t unique to the Trump 2.0 era. With fewer federal workers available to conduct in-person visits or follow up with non-respondents, response rates to BLS surveys that are critical to inflation and the labor market have been in persistent decline since before the pandemic. That’s likely contributed to hefty downward revisions to monthly non-farm payroll reports that became increasingly common in the aftermath of the pandemic.
“You’re getting more revisions because of the lower response rates. That can also be exacerbated by lower resources and lower staff, because the staff can issue reminders to employers who haven’t reported,” said former BLS Commissioner Erica Groshen. “They also do quality control. The imputations may not be quite as good, and the ability to find anomalies that need to be followed up on may not be quite as good.”
Those challenges could continue — or worsen — if Trump reduces the agency’s budget.
“The agencies, BLS included, are in survival mode,” said Michael Horrigan, a former top bureau official who is now president of the employment think tank Upjohn Institute. “You can’t save that money simply by cutting sampling or cutting indexes. The only way to save that kind of money is by cutting survey programs.”
