During the shutdown, private-sector data have been stand-ins for government sources

Trend watch

First, we’re pleased to report that the Transportation Security Administration (TSA) is once again releasing the daily security checkpoint data. In the interim, we had temporarily replaced it with weekly hotel occupancy. Accordingly, the TSA air passenger chart is now updated and back on slide 6 (slides are available to clients in the full report).

While we’re on the topic, the good news is that we’re currently running 0.6% above 2024 on a year-to-date basis. The bad news is that’s likely in jeopardy given the Federal Aviation Administration announcement that it’ll throttle down domestic flights due to air traffic control staffing issues related to the government shutdown. Thus far, the pain is most acute at the nation’s largest hubs (ranked in order of most flight cancellations): Chicago/O’Hare, Atlanta, Dallas-Fort Worth, Newark, and Boston. There are rumblings of a possible deal in Washington to end the government shutdown, which is now the longest ever.

As a reminder, on slides 3, 4, and 5 (available in the full report), we’ve marked the impacted indicators in red and are changing the trend to “Ø” once a data release has been missed since a stale trend shouldn’t be relied upon. 

Our take

Despite the shutdown delaying most government-sourced economic data, we still have a fairly good pulse on the economy thanks to private data sources.

Such alternative data aren’t new. Many began in the aftermath of World War II, including the University of Michigan, which began its Surveys of Consumers in 1946. It later switched to a monthly format in 1978 and started releasing its consumer sentiment data publicly. The Livingston Survey – a poll for economic forecasts – also started in 1946.

In recent decades, as more information was digitized, many other groups have jumped in along the way, including nonprofit or industry groups from The Conference Board and the Business Roundtable to Association of American Railroads and Manheim/Cox Automotive.

Many have filled in gaps that aren’t captured by the government-sourced economic data. For instance, Manheim is the largest U.S. wholesale auto auction firm, thus has a unique access to used-vehicle pricing data, which it releases monthly. Similarly, Automatic Data Processing (ADP) is among largest payroll processing firms, especially for smaller employers. ADP began publishing its monthly employment report in 2006.

Another spurt of new private data arose during the COVID pandemic period. One of the largest was Opportunity Insights, which is an effort based at Harvard University and partners with business accounting giant Intuit, payroll processor Paychex, and many others to capture consumer spending, employment and other economic data.

These private sources supplement the excellent government-sourced economic data to help build the mosaic of data that is critical for understanding the U.S. economy. Hereto, government-sourced data has increased. For instance, TSA started releasing the daily security checkpoint data publicly during the pandemic.

Government-sourced data is far from perfect; it needs to continue to evolve and improve. The U.S. federal statistical system is a highly decentralized and interconnected structure, comprising 16 recognized statistical agencies and units, 24 statistical officials across major cabinet agencies, roughly 100 additional federal programs involved in statistical work, and several interagency and advisory bodies. That structure is ripe for a makeover along with upgraded software.

Furthermore, the tasks of collecting, scrubbing (i.e., normalizing data from multiple sources), and tabulating data are thankless jobs. Sadly, both parties have long underfunded and even cut funding for the statistical agencies. We believe that government-sourced data needs to continue to be supported and encouraged.

Bottom line

The U.S. economy remains in a muddle-through environment. The shutdown is delaying most government-sourced economic data. We expect the Fed to continue moving cautiously.