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The U.S. Bureau of Labor Statistics (BLS) plays a crucial role in shaping our economic narrative, producing data on inflation, employment, and productivity that moves markets and guides Federal Reserve policy. Yet despite this outsized influence, the BLS continues to rely on antiquated methods that can distort reality. Two of its most consequential reports — the Consumer Price Index (CPI) for inflation and Non-Farm Payrolls (NFP) for employment — are calculated using outdated techniques that may be fueling unnecessary financial volatility.
With trillions of dollars in investments changing hands daily and critical Fed decisions hanging in the balance, it's worth asking: Why are we still making high-stakes economic policy based on lagging surveys and statistical approximations? The answer lies in a system that hasn't kept pace with modern realities.
CPI and the inflation ‘illusion’
The CPI helps determine everything from Social Security adjustments to eligibility for government assistance programs. As a major market-moving data point, accuracy should be non-negotiable. Yet the way we calculate it, particularly for housing costs (which make up 35% of the index), it is no longer current.
Consider January 2025: While the BLS reported shelter inflation at 4.4%, real-time rental data from platforms like Apartment List showed rents actually declining by 0.4%. Had the BLS incorporated the more current data, overall CPI might have been closer to 1.3%, marking a dramatic difference with real-world consequences for monetary policy.
Two core issues are to blame. First, the rent data the BLS uses is severely outdated, sometimes lagging by as much as a full year. This means that CPI figures often reflect past conditions, not the current environment. Second, the methodology incorporates something called Owners’ Equivalent Rent (OER), which doesn’t measure actual rents. Instead, it asks homeowners to estimate what they think their home could rent for on the open market. Unsurprisingly, most homeowners aren’t professional appraisers or landlords, making this method speculative at best.
As a solution to this conundrum, BLS could start incorporating real-time rental data from reputable housing platforms while reassessing the usefulness of OER entirely. Relying on market-based information, rather than homeowner guesswork, would provide a clearer, more accurate view of inflation and its far-reaching impacts.
The phantom jobs mirage
Much like the CPI, the NFP report has a powerful influence on the economy and markets. Released monthly, NFP data often triggers movements in stocks, bonds, and even interest rate expectations. Yet the way these numbers are generated leaves much to be desired.
The report is based on the Current Employment Statistics (CES) Survey, also known as the establishment survey, which polls about 121,000 businesses spanning more than 600,000 worksites. Despite its scope, the survey leaves out entire groups of workers, including the self-employed workers and agricultural laborers. That’s a significant chunk of the labor force that goes uncounted.
Then there’s the Birth-Death Model, an estimation tool that adds or subtracts jobs based on assumptions about new business start-ups and closures. In 2024 alone, this model tacked on an average of 123,000 jobs per month, regardless of whether those jobs truly existed in real time. During economic slowdowns, this can result in wildly inflated employment figures. The report’s confidence interval further exposes the problem. In February 2025, the NFP headline stated that 151,000 jobs were added. But the 90% confidence interval for that number ranged from just 15,000 to a whopping 287,000. That kind of statistical vagueness makes it hard to draw any meaningful conclusions.
Contrast this with the Household Survey, which offers a broader view by including self-employed and agricultural workers. It also tells a very different story. That same month, while the Establishment Survey reported job gains, the Household Survey showed a loss of 588,000 jobs. It’s a discrepancy that is too large to ignore.
The official unemployment rate (U-3) derived from this data often misses the mark by excluding those who have stopped looking for work or who are underemployed, working part-time when they’d prefer full-time roles. It can even double-count individuals holding multiple part-time jobs. When the headline numbers from the two surveys diverge so sharply, it’s a clear signal that a broader, more inclusive measure like the Household Survey deserves more attention.
It's time to modernize BLS reporting
The consequences of relying on outdated metrics are very real. The Fed implements monetary policy based on data that often doesn't reflect reality. Markets react to numbers that might be statistically stale. And ordinary Americans bear the brunt when policy mistakes lead to unnecessary economic pain.
We live in an era where artificial intelligence (AI) can predict shopping patterns, and real-time data tracks everything from traffic flows to credit card spending. Yet our most important economic indicators still rely on 1950s-style surveys. It’s unsettling, and frankly, potentially dangerous.
Modern markets need modern measurement. The technology exists to incorporate real-time data streams, eliminate statistical guesswork, and provide policymakers with accurate snapshots of our economy. What's lacking is the institutional will to modernize systems that have remained largely unchanged for decades. The BLS must modernize now. Our financial future depends on it.
Robert Barone, Ph.D., Principal Wealth Manager at Savvy, digital-first platform for financial advisors that's centered on modernizing human financial advice experience.
Joshua Barone, Principal Wealth Manager at Savvy, a digital-first platform for financial advisors that's centered on modernizing human financial advice experience.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.