Concerns are rising among economists over the accuracy of U.S. inflation figures, as federal staffing limitations begin to disrupt the monthly monitoring of consumer prices. With gaps emerging in data coverage, experts warn that cost-of-living estimates could become increasingly unstable.
What Happened: The Labor Department has acknowledged that its team responsible for tracking monthly changes in consumer prices has shrunk, resulting in the suspension of in-person pricing surveys in several cities, including Buffalo, Provo, and Lincoln, according to a report by NPR.
This slowdown in field work comes as federal agencies operate under a prolonged freeze in workforce expansion initiated by President Donald Trump's administration. Since January, the number of federal employees has dropped by more than 26,000, according to official estimates.
In response to reduced manpower, the Bureau of Labor Statistics has resorted to estimating prices in more cases than usual, using proxy data for goods and services where direct observations are unavailable.
Why It Matters: The Consumer Price Index, which is derived from this research, is a key benchmark used to set interest rates, determine Social Security adjustments, and guide household and business financial decisions. A less robust survey process, analysts say, could distort the true picture of inflation and mislead policymakers.
"This is the worst possible time to make staffing cuts to the CPI of all data sources," economist Ernie Tedeschi posted on social media, cautioning that both over- and underestimates of inflation carry serious consequences.
"The federal government hiring freeze and the drive to cut funding across federal agencies may be starting to impact the quality of economic data," warned Omair Sharif of Inflation Insights. He noted that statistical models now have to compensate for missing observations by extrapolating from similar goods.
"It's not a stretch to say that they affect the lives of everyday folks," Sharif added.
This news comes in the heels of a report from American consumers from the University of Michigan indicating that American consumers remained deeply pessimistic in May 2025, with confidence stuck at a three-year low and near-term inflation fears climbing to levels not seen since 1981. Another report from Yale University's Budget Lab shows that Trump's tariffs have led to a 2.5 drop in disposable income for the poorest households in the country.
Wall Street economists largely agree that annual headline inflation will stay above 2.4%, keeping it above the Fed's 2% threshold for rate cuts—a trend many link to the tariff-driven spike in April.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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