WASHINGTON / LONDON (IT BOLTWISE) – ADP’s decision to deny the Federal Reserve access to its employment data highlights the importance of government economic data. At a time when private data sources are flourishing, the reliability and consistency of government data remains irreplaceable. This development comes at a particularly unfortunate time as the government faces a shutdown that is disrupting usual data flows.
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ADP’s decision to deny the Federal Reserve access to its employment data caused a stir in the business world. Although private data sources have proliferated in recent years and provide valuable insights into economic development, the role of government data remains irreplaceable. The government’s ability to collect comprehensive data from all areas of a $30 trillion economy is unparalleled.
While private companies like ADP, which handle 20% of private payroll, provide detailed insights, their data is often skewed by commercial interests and limited samples. While ADP and others like Bank of America and Visa provide valuable information about consumer spending, this data is often a byproduct of their core business activities and is not always available to the general public.
The current situation shows that private data providers have different incentives than government agencies. ADP may have feared that disclosing its cooperation with the Fed could jeopardize relationships with its clients. This uncertainty underscores the need to rely on government data that is consistent and accessible to all.
During a government shutdown that delays the release of government data, the reliance on private data sources becomes even more apparent. Yet government data collection, as conducted by the Bureaus of Labor Statistics and Economic Analysis, remains the backbone of economic decision-making. The challenge is to use private data as a complement without undermining the importance of government data.
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