After the U.S. Census Bureau "lost credibility," Wall Street increasingly relies on "private surveys": ADP employment data, Challenger layoffs, and other data become more important to the market.

After President Trump questioned the data from the Bureau of Labor Statistics (BLS) and fired its head, Wall Street investors are considering reducing their reliance on government economic data and turning more to private institutions for surveys. Previously, Trump claimed that the BLS "manipulated" the July employment report and fired the agency's head, Erika McEntarfer. Despite the White House not providing any evidence to support this accusation, investors are concerned that government statistical data could be politicized, affecting its independence and credibility. On August 23rd, it was reported that, facing this uncertainty, Wall Street is shifting more attention towards private data sources such as the employment report from ADP Research, layoff data from Challenger, Gray & Christmas Inc., and inflation reports from the Institute for Supply Management. Analysts point out that investors are not questioning the accuracy of BLS data, but are worried that the Trump administration may exert political influence on this institution that has long been seen as the gold standard for independent economic statistics. Several Wall Street strategists have stated that if government data becomes politicized, it will diminish market trust in it and may increase risk premiums. Wall Street strategists turn to private data sources Several senior investment strategists have expressed an intention to rely more on private data. Philip Petursson, Chief Investment Strategist at IG Wealth Management, stated that the turmoil involving Trump and the BLS "raises questions about the effectiveness of future data." He is concerned that the government may start politicizing these numbers, in which case official data can no longer be relied upon. Michael O'Rourke, Chief Market Strategist at Jonestrading Institutional Services, called the situation "very bad", and plans to focus more on private data sources in the future, especially the employment report from ADP Research. For a long time, Wall Street has used recruitment statistics from private companies such as Challenger, Gray & Christmas Inc. or ADP Research as supplementary information sources. However, more and more people are now saying that these reports will become more important. Inflation reports from the Institute for Supply Management or manufacturing and service sector data compiled by S&P Global will also receive more attention. Brian Jacobsen, Chief Economist at Annex Wealth Management LLC, stated, "Private data serves as a check on official data," and he will closely monitor Senate confirmation hearings to understand if Trump's appointees intend to change the way BLS data is calculated. Julian Emanuel, Chief Equity and Quantitative Strategist at Evercore ISI, said that as "government data increasingly becomes a question mark," the shift towards private data is "getting more and more attention." Politicizing data threatens market confidence Investors generally believe that private data sources can help them quickly identify problems once they detect politicization of the data. Wall Street strategists stated that they will rigorously compare and verify official data with private sources. Jacobsen, Chief Economist at Annex Wealth Management LLC, said that if the data becomes politicized, "we will notice it quickly," as private data sources allow economists and strategists to cross-verify. Donald Ellenberger, Senior Portfolio Manager at Federated Hermes, warned that if the Trump administration is seen as interfering in the reporting process or questioning its accuracy, the "usefulness of government reports will decline." He emphasized, "Trust is the foundation of the financial industry, and once lost, it is difficult to rebuild." Keith Lerner, Co-Chief Investment Officer at Truist Advisory Services, warned that if confidence in the data decreases, it may marginally increase risk premiums, meaning slightly lower valuations and increased data volatility. Despite these concerns, Wall Street has not completely abandoned BLS data. The August non-farm employment report scheduled for release on September 5th will still be a significant market event. However, as investors sense that Trump may want federal data to support his political views, they are preparing to reduce their reliance on government data when necessary. It is worth noting that BLS data itself is not perfect. Funding issues have led to staffing shortages and outdated data collection methods, while resource constraints have forced the agency to cut expenses in some cases and rely more on estimates, reducing data reliability. Survey response rates have been declining for years, and data revisions have been widening. This article is reprinted from Wall Street News, edited by GMTEight: Chen Yufeng.