August 6, 2025 • 23 mins
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When politics collides with economic data, investors face a troubling dilemma: can we trust the numbers that drive markets? The unprecedented firing of the Bureau of Labor Statistics head by President Trump signals a concerning shift in how government economic data might be manipulated for political gain.
The BLS produces critical labor and inflation statistics that power Federal Reserve decisions and investment strategies worldwide. Now, this foundational data source carries an asterisk. As Clem Miller pointedly observes, "Don't trust the BLS data going forward because it's subject to a potentially high degree of manipulation." This isn't merely political theater—it represents a fundamental challenge to economic transparency.
Fortunately, we're entering an era where alternatives exist. Private sector solutions like ADP's employment data, sophisticated web scraping, and AI-powered analytics offer potentially more accurate and timely economic indicators. Major financial institutions possess unprecedented visibility into consumer spending and wage patterns through anonymized data. The future may belong to investment firms willing to embrace these alternative data streams rather than relying on potentially compromised government statistics.
For skeptical investors, this represents both challenge and opportunity. Those who recognize this shift early can gain an information advantage by questioning traditional sources and diversifying their data inputs. Whether you're managing a portfolio or simply trying to understand market movements, adapting to this new data landscape might prove essential for navigating today's politically charged economic environment.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Steve Davenport (00:02):
Hello everyone and welcome to Skeptic's Guide
to Investing.
Today, clem Miller and I willinvestigate the firing of the
Labor Statistics Board and we'lltalk about a political
appointment and the Departmentof Labor and how the data and
(00:24):
how the sausage gets made, andthen we'll also just try to
figure out if there is any reallegitimacy to the need to reform
the way we get data and the waywe understand data as far as
investors.
So, clem, what do you thinkabout the firing of the head of
the Labor Statistics Board?
Clem Miller (00:46):
Well, I think it was purely a political reaction
on the part of President Trumpto the fact that she delivered a
negative report on jobs andrevised the prior couple of
months reports as well, in anegative direction.
Steve Davenport (01:11):
But isn't it going to benefit Trump if they
have a lot of negative data?
Because then the Fed will lowerrates.
So I don't understand how thisis Like.
If you wanted good data, youwould never get lower rates, so
I don't understand.
Clem Miller (01:25):
But a politician doesn't think that way.
A politician thinks oh, this isbad news and so it's bad.
No matter what, you know, apolitician will not accept bad
news as a way to get, as a wayto get something else that that
they want, as a way to getsomething else that they want.
So he wants his cake and hewants to be able to eat it too.
(01:48):
He wants good economic news toshow that his tariffs are
working and aren't causing a lotof problems with the economy,
and he wants to be able toeventually get the Fed to lower
rates.
So there's a.
You know, obviously there's aninconsistency there which you've
(02:10):
picked up on right, but it'syou know.
He wants to have his cake andeat it too.
So it's a simple thing.
I mean, is this?
Steve Davenport (02:18):
the first time this has happened.
Clem Miller (02:22):
I'm not aware of other events where this has
happened before, but I will saythat, as far as I know he had,
trump has the ability to firethis person because this person
in charge of the agency is apolitical appointee and and the
(02:45):
BLS is a part of the LaborDepartment.
So you know there's none ofthose issues around.
You know independent agencies,like you had with the National
Labor Relations Board or theConsumer Finance Protection
Board.
There's none of those issuesaround whether Trump has the
ability to fire heads or boardmembers.
(03:07):
None of those issues exist.
So he has.
Or the Fed, for example.
You know the Fed.
There are lots of issues aroundwhether he can fire board
members.
None of those issues applieshere.
He's quite free to remove thehead of this agency.
Steve Davenport (03:26):
But let me just try to throw out an idea here.
I know it could be a littlecrazy, but isn't there somebody
who is the head of the LaborDepartment?
Isn't there usually a secretary?
Clem Miller (03:37):
Yeah, there is.
Steve Davenport (03:38):
There is, and so if there is a secretary of
labor, isn't it their job tohire and fire the people that
they need for the LaborDepartment, like it feels like
for the president to reach overthe Secretary of Labor and fire
this person on social media.
It's an overreach in that Idon't know if there's any due
(03:59):
process in this, but let's justsay why leave it to the
Secretary of Labor.
Clem Miller (04:11):
Well, he could have , except for the fact that, you
know, he responded ratherimpetuously to what he saw as
what he perceived to be negativedata.
And so he, you know, he didwhat he frequently does, which
is he fires people by tweet whenhe doesn't like what they do.
Okay, so, steve, let me justget into a couple of things here
(04:35):
which I think are important forour listeners to understand.
First of all, why is thisimportant to begin with?
Right, and it's important tobegin with, bls does labor data
and it does inflation data, andwe know that labor data and
(04:55):
inflation data is what drivesFederal Reserve decisions.
It's what drives other economicdecisions, it influences what
investors do.
Practically every significantinvestment firm of any size
(05:15):
really has an economist who willproduce nice tables and graphs
showing inflation and jobs, andat the very bottom it'll say
source BLS.
And so all of that data goingforward is going to at least
have to have an asterisk whichsays we don't necessarily trust
(05:38):
this data, or they're going tohave to find alternative sources
, which is my second point.
There are some alternativesources of data, and by
alternative I don't meanalternative facts, steve, I mean
private sector efforts toprovide inflation.
Steve Davenport (06:01):
There's no way the private sector could compete
with the government in terms ofeffectiveness of data.
Is there?
Clem Miller (06:06):
Why not?
Okay, because if you thinkabout it, you know when I think
of, when I think of governmentstatistics, I think of lots of
people doing surveys, I think oflots of people, you know, green
eye shades right, I'mexaggerating a little bit you
(06:28):
know, sitting over, hunched overthe data, doing all this.
We're not, you know, we're in adifferent world now.
Not only do we have, you know,the, the BLS is, I'm sure, still
in the computer processing age.
They've probably moved beyondpunch cards, uh, but uh, they're
still in that age and theyhaven't, I'm sure, moved into
(06:49):
the data web scraping or AIstage of the information
processing revolution.
So the private sector certainlyhas the ability to do AI web
scraping.
I know that there areinvestment firms who, for years,
have been doing this.
(07:09):
I remember there were somefirms that were using satellite
data to count the number of carsin mall parking lots, which may
not work anymore since mallshave been declining.
Steve Davenport (07:24):
Yeah, if everybody buys things online,
I'm not sure that's going tohelp.
Clem Miller (07:29):
But that's the other point is that there's lots
of statistics about onlinepurchases Right, and let me just
continue with that.
So there's already Carlyle,which actually puts together
alternative statistics, andthat's for prices, right, and I
(07:56):
believe there are some otherfirms that are looking into it
right now.
You already have on the laborfront.
You've got ADP, you know, whichI think we all know does
payroll, and while ADP doesn'tcover the public sector, it
covers all the private sector,and arguably that's more
(08:16):
important from an investmentstandpoint and an economic
standpoint, and so I don't knowwhy investment firms wouldn't
just put more of their relianceon the ADP data rather than on
the BLS.
I mean, I know historicallyhistorically, they've used ADP
(08:37):
as a precursor to the BLS andsaid hey, the ADP says this, the
BLS is likely to say that.
I think going forward it'll bemore like well, the BLS is less
relevant, we'll just rely on theADP data.
Steve Davenport (08:51):
Right.
I mean, from what I understand,the government represents.
When you take local governmentand state governments, it
represents 30% of the overalllabor force, right, so I
understand why they'd wantsomething with 100% versus 70%.
But can I just go back to thisreleasing of data and whether
it's wrong?
(09:11):
Help me understand.
When this is a survey data andthis is the initial result, they
give you a number and it says100,000 jobs.
Then three months or threeweeks later, they say this is
now, I don't know, not final,but here's more data.
(09:32):
Because simply, I mean, is thisa mail-in that we mail in the
survey and then they mail it andthey open the letters?
I hope this is more automaticand easy to do, because I don't
understand why they can't getthe survey results back or why
we don't just wait until thesurvey results are more complete
(09:54):
, like having incomplete dataand saying, oh, we got it early,
though Well shit if it's 60% ofthe respondents.
I don't know if getting it twoweeks earlier.
Clem Miller (10:08):
I mean, is it better data?
Here's the problem.
It used to not matter thatfinal results, that is, after
several months have gone by ofdata collection, it used to not
be a problem that final resultsuh took a long time, because we
were in a different economy.
(10:28):
Uh, we were, uh, you know,investors didn't demand, uh, you
know, such real-time data.
But now we're in an environmentwhere, where investors react,
you know, to hourly data, minuteby minute data, right, even
(10:49):
monthly, seems like it's uhforever.
And so the BLS in issuingmonthly data and then, and then
revising it after a month andthen after two months, it's just
not good enough.
And on top of that, that datais backward looking.
Steve Davenport (11:08):
Was this woman set up for failure?
Like was her data?
Like?
I fail to see why it's all onher versus the process is broken
and needs to be improved.
So it's really on the head ofSecretary of Labor to figure out
how to make the data better.
It's not, I guess.
(11:29):
I'm saying is this personallylike, do we have her?
You know?
Was she in the library with theknife?
Have her it has you know?
Was she in the library?
Clem Miller (11:41):
with the with the knife at the moment.
You know like I'm trying todecipher the clues.
Here is what she did wrong.
It has nothing to do with herwhat do you mean?
Steve Davenport (11:47):
she just got fired it has to.
Clem Miller (11:49):
It has to do with the, it has to do with the whole
system of relying on governmentfor data.
Okay, that's, that's the pointI'm trying to make.
Point I'm trying to make isthat we're in a different world
now, steve.
We're in a different worldwhere investors and others have
to rely, have to use privatesector data, have to look at
(12:11):
markets.
You know, we get millions ofpieces of data every day about
what's going on with commodityprices, what's going on with
interest rates, what's going onwith stock market prices, bond
(12:31):
prices, credit prices.
We have lots and lots of datathat can inform what markets do,
have lots and lots of data thatcan inform what markets do and
month old, two month old, threemonth old inflation data is.
I mean, how relevant is thatanymore when we have all these
alternative sources of data thatare available?
Steve Davenport (12:52):
We just I guess what I'm getting at is as an
investor.
Where do I put this firing onmy, you know, list of important
things to consider for thesecond half of 25?
Does this, does this, is thisworthy of a full podcast or is
this worthy of an investor?
Absolutely, investors, beworried about this?
Clem Miller (13:14):
yes, because to the extent that investment firms
and I know many of our listenerswill follow investment firms
will watch CNBC and so on to theextent that they're still using
BLS data in the future, I wouldsay don't trust it.
(13:40):
Don't trust the BLS data goingforward because it's subject to
a potentially high degree ofmanipulation going forward.
So just don't trust that data.
Steve Davenport (13:52):
I guess I'm saying, if we look at our
typical investor and we tellthem be longer term, be patient,
don't be moved by noise.
On your windshield there's acouple of drops of rain, but
it's not enough to put thewipers on.
I mean, this seems like anevent that well, it might affect
(14:17):
certain firms and it mightaffect people who use this data
in their economic models, butfor the average investor, this
feels to me like a mild event,not a major event.
Is that fair?
It depends on what you considerto be other minor and major
events, but I consider I don'tknow, I consider it to be, you
(14:41):
know, if we have peace in theUkraine or we have peace in Gaza
.
I consider those to be moremajor.
Clem Miller (14:48):
Well, they're more major, for if you live in that
area, right?
Steve Davenport (14:52):
More major for the movement of oil.
They're more relevant for themovement of natural gas.
I think they have more economic.
Clem Miller (15:03):
We have investment markets that are very reliant on
BLS data.
Okay, and if you can't rely onthat data anymore, then there's
a problem, and I'm saying hereit's an eminently fixable
problem.
It's just that there has to beless reliance on government data
(15:26):
.
There's got to be a lot morereliance on data.
Steve Davenport (15:30):
You're not really calling for a correction
of the data process at BLS.
You're saying I want toprivatize this.
Clem Miller (15:40):
I'm saying ignore it, ok.
I'm saying or, or give it muchless credence in your
decision-making, and honestly Imean investment.
Firms should be looking forcompanies, institutes, whatever
that are collecting billions andbillions of prices, and in fact
(16:01):
there is a $1 billion priceproject out there that collects
all this data.
There are tremendousopportunities for firms to get
into this area to do webscraping of prices of labor.
You got the ADP.
Somebody could improve on theADP data.
There are lots of opportunitiesto step in here and do a better
(16:24):
job than what the government isable to do.
So no, I just I mean it's.
Steve Davenport (16:30):
I always wondered Clem, and this could be
.
Maybe it's not legal, but Ilook at an Intuit that has all
this personal data that peopleare downloading into their
spreadsheets and their Intuitsoftware to track their expenses
and I wonder, can they take thedata of individual people and
(16:52):
aggregate it and say, hey,aggregated wise these consumers.
15% goes to retail and now Isee 18%.
Clem Miller (17:05):
So Steve, there's this whole process where it's
called anonymization hard topronounce, but it's to make data
anonymous by aggregating it andtaking out identifying
information, and thisinformation is sold to the data
brokers I know that sounds likea real shadowy kind of concept,
(17:25):
but to data brokers and the databrokers then sell it to
businesses, so all sorts of datais sold.
So there's an immense amount ofdata that's out there that can
be used to generate investment,useful data, and I'm sure that
there are firms out there Imentioned Carlyle was doing it.
There are investment firms thatactually use this data already
(17:51):
in order to, you know,renaissance, for example.
They do it right.
So I think there are lots offirms out there that could
benefit from this, and it couldcreate a sort of a dichotomy
among firms, where you've gotfirms that have advanced the
furthest in terms of using AIresources to develop good data
(18:17):
and those that are still stuckin the kind of BLS world.
Steve Davenport (18:22):
So we looked at the major banks, like let's
just take Bank of America.
I mean, they can tell when anindividual gets paid, they can
tell what their you know theirlargest expenses from real
estate or apartment, or I mean,don't you think that they
classify some of these items andtherefore they could provide
(18:45):
some interesting data in termsof, you know, I don't know which
bank represents a trulynational footprint.
I think that probably, you know, Wells and Bank of America
would be the two that I wouldguess have the most households,
and so if you have thosehouseholds and they represent a
pretty good cross-section,except for the portion of the
(19:07):
society that's unbanked, wouldthat be the data that you would
want to look at for increases inexpenses and decreases in wages
?
Clem Miller (19:21):
I mean, if we start to notice, yeah, that's
certainly a good source ofinformation.
The banks for labor data, forprice data, it's a good source.
If you could take all the majorretailers and aggregate their
data, anonymize it and aggregatetheir data, that would be good
(19:42):
too.
Steve Davenport (19:44):
Yeah, I don't know if I would want to share my
data if I was CarMax and all ofa sudden, you know, I think
that if you're a company that'sbeing it's having trouble with
their sales or trouble theymight, they might drop out of
that participation in thatsurvey.
You know what I mean.
Clem Miller (19:59):
Yeah you could, you could, but if if you have, you
know the benefit, don't knowyou're picking carmax out of the
air, I know, but the benefitfor a carmax would be they have
access to all the other data too, that's uh aggregated and uh
anonymized.
So they would.
You know you, you play, youknow you what is it you play to
(20:20):
know you pay to play, right?
Steve Davenport (20:22):
So they would have to submit data and then
they would get a broader set ofanonymized data back to get
(20:42):
involved in something thatreally is a Department of Labor
issue and, if the data hasn'tbeen correct, it feels a little
bit like you said, that it's apolitical decision and not a
decision based on her ability orher performance.
I feel like this is more of adistraction than it is a real
economic event, and I agree withyou that the data could be more
(21:03):
suspect, but I think we'd haveto wait a few months before we
can definitely certify that.
I mean, once they vary too muchfrom ADP.
As we mentioned, ADP is about70% of the market and then the
BLS is 100%.
It includes all government andlocal.
So I like to get from 100%source versus an 80% or 70%.
(21:27):
But what do you think, Clem, interms of closing this out?
What should investors thinkabout?
Clem Miller (21:34):
They should be thinking about.
They should be writing theirinvestment managers and saying
what are you going to do aboutgetting better data?
Steve Davenport (21:45):
Okay, so maybe we'll put the address of that in
our comments so that people canmail letters to different
people and ask I do believe thatit's a piece of information and
(22:06):
the more information the better.
I'm a big believer intransparency and if this data
could be organized better andpresented better, I think we all
benefit.
So I appreciate everybodylistening and this is kind of a
short term item that we puttogether and in all things,
we're trying to improve yourfinancial wellness IQ and we
(22:28):
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Thanks, everybody, and have agood day.
Hello everyone and welcome to Skeptic's Guide
to Investing.
Today, clem Miller and I willinvestigate the firing of the
Labor Statistics Board and we'lltalk about a political
appointment and the Departmentof Labor and how the data and
(00:24):
how the sausage gets made, andthen we'll also just try to
figure out if there is any reallegitimacy to the need to reform
the way we get data and the waywe understand data as far as
investors.
So, clem, what do you thinkabout the firing of the head of
the Labor Statistics Board?
Clem Miller (00:46):
Well, I think it was purely a political reaction
on the part of President Trumpto the fact that she delivered a
negative report on jobs andrevised the prior couple of
months reports as well, in anegative direction.
Steve Davenport (01:11):
But isn't it going to benefit Trump if they
have a lot of negative data?
Because then the Fed will lowerrates.
So I don't understand how thisis Like.
If you wanted good data, youwould never get lower rates, so
I don't understand.
Clem Miller (01:25):
But a politician doesn't think that way.
A politician thinks oh, this isbad news and so it's bad.
No matter what, you know, apolitician will not accept bad
news as a way to get, as a wayto get something else that that
they want, as a way to getsomething else that they want.
So he wants his cake and hewants to be able to eat it too.
(01:48):
He wants good economic news toshow that his tariffs are
working and aren't causing a lotof problems with the economy,
and he wants to be able toeventually get the Fed to lower
rates.
So there's a.
You know, obviously there's aninconsistency there which you've
(02:10):
picked up on right, but it'syou know.
He wants to have his cake andeat it too.
So it's a simple thing.
I mean, is this?
Steve Davenport (02:18):
the first time this has happened.
Clem Miller (02:22):
I'm not aware of other events where this has
happened before, but I will saythat, as far as I know he had,
trump has the ability to firethis person because this person
in charge of the agency is apolitical appointee and and the
(02:45):
BLS is a part of the LaborDepartment.
So you know there's none ofthose issues around.
You know independent agencies,like you had with the National
Labor Relations Board or theConsumer Finance Protection
Board.
There's none of those issuesaround whether Trump has the
ability to fire heads or boardmembers.
(03:07):
None of those issues exist.
So he has.
Or the Fed, for example.
You know the Fed.
There are lots of issues aroundwhether he can fire board
members.
None of those issues applieshere.
He's quite free to remove thehead of this agency.
Steve Davenport (03:26):
But let me just try to throw out an idea here.
I know it could be a littlecrazy, but isn't there somebody
who is the head of the LaborDepartment?
Isn't there usually a secretary?
Clem Miller (03:37):
Yeah, there is.
Steve Davenport (03:38):
There is, and so if there is a secretary of
labor, isn't it their job tohire and fire the people that
they need for the LaborDepartment, like it feels like
for the president to reach overthe Secretary of Labor and fire
this person on social media.
It's an overreach in that Idon't know if there's any due
(03:59):
process in this, but let's justsay why leave it to the
Secretary of Labor.
Clem Miller (04:11):
Well, he could have , except for the fact that, you
know, he responded ratherimpetuously to what he saw as
what he perceived to be negativedata.
And so he, you know, he didwhat he frequently does, which
is he fires people by tweet whenhe doesn't like what they do.
Okay, so, steve, let me justget into a couple of things here
(04:35):
which I think are important forour listeners to understand.
First of all, why is thisimportant to begin with?
Right, and it's important tobegin with, bls does labor data
and it does inflation data, andwe know that labor data and
(04:55):
inflation data is what drivesFederal Reserve decisions.
It's what drives other economicdecisions, it influences what
investors do.
Practically every significantinvestment firm of any size
(05:15):
really has an economist who willproduce nice tables and graphs
showing inflation and jobs, andat the very bottom it'll say
source BLS.
And so all of that data goingforward is going to at least
have to have an asterisk whichsays we don't necessarily trust
(05:38):
this data, or they're going tohave to find alternative sources
, which is my second point.
There are some alternativesources of data, and by
alternative I don't meanalternative facts, steve, I mean
private sector efforts toprovide inflation.
Steve Davenport (06:01):
There's no way the private sector could compete
with the government in terms ofeffectiveness of data.
Is there?
Clem Miller (06:06):
Why not?
Okay, because if you thinkabout it, you know when I think
of, when I think of governmentstatistics, I think of lots of
people doing surveys, I think oflots of people, you know, green
eye shades right, I'mexaggerating a little bit you
(06:28):
know, sitting over, hunched overthe data, doing all this.
We're not, you know, we're in adifferent world now.
Not only do we have, you know,the, the BLS is, I'm sure, still
in the computer processing age.
They've probably moved beyondpunch cards, uh, but uh, they're
still in that age and theyhaven't, I'm sure, moved into
(06:49):
the data web scraping or AIstage of the information
processing revolution.
So the private sector certainlyhas the ability to do AI web
scraping.
I know that there areinvestment firms who, for years,
have been doing this.
(07:09):
I remember there were somefirms that were using satellite
data to count the number of carsin mall parking lots, which may
not work anymore since mallshave been declining.
Steve Davenport (07:24):
Yeah, if everybody buys things online,
I'm not sure that's going tohelp.
Clem Miller (07:29):
But that's the other point is that there's lots
of statistics about onlinepurchases Right, and let me just
continue with that.
So there's already Carlyle,which actually puts together
alternative statistics, andthat's for prices, right, and I
(07:56):
believe there are some otherfirms that are looking into it
right now.
You already have on the laborfront.
You've got ADP, you know, whichI think we all know does
payroll, and while ADP doesn'tcover the public sector, it
covers all the private sector,and arguably that's more
(08:16):
important from an investmentstandpoint and an economic
standpoint, and so I don't knowwhy investment firms wouldn't
just put more of their relianceon the ADP data rather than on
the BLS.
I mean, I know historicallyhistorically, they've used ADP
(08:37):
as a precursor to the BLS andsaid hey, the ADP says this, the
BLS is likely to say that.
I think going forward it'll bemore like well, the BLS is less
relevant, we'll just rely on theADP data.
Steve Davenport (08:51):
Right.
I mean, from what I understand,the government represents.
When you take local governmentand state governments, it
represents 30% of the overalllabor force, right, so I
understand why they'd wantsomething with 100% versus 70%.
But can I just go back to thisreleasing of data and whether
it's wrong?
(09:11):
Help me understand.
When this is a survey data andthis is the initial result, they
give you a number and it says100,000 jobs.
Then three months or threeweeks later, they say this is
now, I don't know, not final,but here's more data.
(09:32):
Because simply, I mean, is thisa mail-in that we mail in the
survey and then they mail it andthey open the letters?
I hope this is more automaticand easy to do, because I don't
understand why they can't getthe survey results back or why
we don't just wait until thesurvey results are more complete
(09:54):
, like having incomplete dataand saying, oh, we got it early,
though Well shit if it's 60% ofthe respondents.
I don't know if getting it twoweeks earlier.
Clem Miller (10:08):
I mean, is it better data?
Here's the problem.
It used to not matter thatfinal results, that is, after
several months have gone by ofdata collection, it used to not
be a problem that final resultsuh took a long time, because we
were in a different economy.
(10:28):
Uh, we were, uh, you know,investors didn't demand, uh, you
know, such real-time data.
But now we're in an environmentwhere, where investors react,
you know, to hourly data, minuteby minute data, right, even
(10:49):
monthly, seems like it's uhforever.
And so the BLS in issuingmonthly data and then, and then
revising it after a month andthen after two months, it's just
not good enough.
And on top of that, that datais backward looking.
Steve Davenport (11:08):
Was this woman set up for failure?
Like was her data?
Like?
I fail to see why it's all onher versus the process is broken
and needs to be improved.
So it's really on the head ofSecretary of Labor to figure out
how to make the data better.
It's not, I guess.
(11:29):
I'm saying is this personallylike, do we have her?
You know?
Was she in the library with theknife?
Have her it has you know?
Was she in the library?
Clem Miller (11:41):
with the with the knife at the moment.
You know like I'm trying todecipher the clues.
Here is what she did wrong.
It has nothing to do with herwhat do you mean?
Steve Davenport (11:47):
she just got fired it has to.
Clem Miller (11:49):
It has to do with the, it has to do with the whole
system of relying on governmentfor data.
Okay, that's, that's the pointI'm trying to make.
Point I'm trying to make isthat we're in a different world
now, steve.
We're in a different worldwhere investors and others have
to rely, have to use privatesector data, have to look at
(12:11):
markets.
You know, we get millions ofpieces of data every day about
what's going on with commodityprices, what's going on with
interest rates, what's going onwith stock market prices, bond
(12:31):
prices, credit prices.
We have lots and lots of datathat can inform what markets do,
have lots and lots of data thatcan inform what markets do and
month old, two month old, threemonth old inflation data is.
I mean, how relevant is thatanymore when we have all these
alternative sources of data thatare available?
Steve Davenport (12:52):
We just I guess what I'm getting at is as an
investor.
Where do I put this firing onmy, you know, list of important
things to consider for thesecond half of 25?
Does this, does this, is thisworthy of a full podcast or is
this worthy of an investor?
Absolutely, investors, beworried about this?
Clem Miller (13:14):
yes, because to the extent that investment firms
and I know many of our listenerswill follow investment firms
will watch CNBC and so on to theextent that they're still using
BLS data in the future, I wouldsay don't trust it.
(13:40):
Don't trust the BLS data goingforward because it's subject to
a potentially high degree ofmanipulation going forward.
So just don't trust that data.
Steve Davenport (13:52):
I guess I'm saying, if we look at our
typical investor and we tellthem be longer term, be patient,
don't be moved by noise.
On your windshield there's acouple of drops of rain, but
it's not enough to put thewipers on.
I mean, this seems like anevent that well, it might affect
(14:17):
certain firms and it mightaffect people who use this data
in their economic models, butfor the average investor, this
feels to me like a mild event,not a major event.
Is that fair?
It depends on what you considerto be other minor and major
events, but I consider I don'tknow, I consider it to be, you
(14:41):
know, if we have peace in theUkraine or we have peace in Gaza
.
I consider those to be moremajor.
Clem Miller (14:48):
Well, they're more major, for if you live in that
area, right?
Steve Davenport (14:52):
More major for the movement of oil.
They're more relevant for themovement of natural gas.
I think they have more economic.
Clem Miller (15:03):
We have investment markets that are very reliant on
BLS data.
Okay, and if you can't rely onthat data anymore, then there's
a problem, and I'm saying hereit's an eminently fixable
problem.
It's just that there has to beless reliance on government data
(15:26):
.
There's got to be a lot morereliance on data.
Steve Davenport (15:30):
You're not really calling for a correction
of the data process at BLS.
You're saying I want toprivatize this.
Clem Miller (15:40):
I'm saying ignore it, ok.
I'm saying or, or give it muchless credence in your
decision-making, and honestly Imean investment.
Firms should be looking forcompanies, institutes, whatever
that are collecting billions andbillions of prices, and in fact
(16:01):
there is a $1 billion priceproject out there that collects
all this data.
There are tremendousopportunities for firms to get
into this area to do webscraping of prices of labor.
You got the ADP.
Somebody could improve on theADP data.
There are lots of opportunitiesto step in here and do a better
(16:24):
job than what the government isable to do.
So no, I just I mean it's.
Steve Davenport (16:30):
I always wondered Clem, and this could be
.
Maybe it's not legal, but Ilook at an Intuit that has all
this personal data that peopleare downloading into their
spreadsheets and their Intuitsoftware to track their expenses
and I wonder, can they take thedata of individual people and
(16:52):
aggregate it and say, hey,aggregated wise these consumers.
15% goes to retail and now Isee 18%.
Clem Miller (17:05):
So Steve, there's this whole process where it's
called anonymization hard topronounce, but it's to make data
anonymous by aggregating it andtaking out identifying
information, and thisinformation is sold to the data
brokers I know that sounds likea real shadowy kind of concept,
(17:25):
but to data brokers and the databrokers then sell it to
businesses, so all sorts of datais sold.
So there's an immense amount ofdata that's out there that can
be used to generate investment,useful data, and I'm sure that
there are firms out there Imentioned Carlyle was doing it.
There are investment firms thatactually use this data already
(17:51):
in order to, you know,renaissance, for example.
They do it right.
So I think there are lots offirms out there that could
benefit from this, and it couldcreate a sort of a dichotomy
among firms, where you've gotfirms that have advanced the
furthest in terms of using AIresources to develop good data
(18:17):
and those that are still stuckin the kind of BLS world.
Steve Davenport (18:22):
So we looked at the major banks, like let's
just take Bank of America.
I mean, they can tell when anindividual gets paid, they can
tell what their you know theirlargest expenses from real
estate or apartment, or I mean,don't you think that they
classify some of these items andtherefore they could provide
(18:45):
some interesting data in termsof, you know, I don't know which
bank represents a trulynational footprint.
I think that probably, you know, Wells and Bank of America
would be the two that I wouldguess have the most households,
and so if you have thosehouseholds and they represent a
pretty good cross-section,except for the portion of the
(19:07):
society that's unbanked, wouldthat be the data that you would
want to look at for increases inexpenses and decreases in wages
?
Clem Miller (19:21):
I mean, if we start to notice, yeah, that's
certainly a good source ofinformation.
The banks for labor data, forprice data, it's a good source.
If you could take all the majorretailers and aggregate their
data, anonymize it and aggregatetheir data, that would be good
(19:42):
too.
Steve Davenport (19:44):
Yeah, I don't know if I would want to share my
data if I was CarMax and all ofa sudden, you know, I think
that if you're a company that'sbeing it's having trouble with
their sales or trouble theymight, they might drop out of
that participation in thatsurvey.
You know what I mean.
Clem Miller (19:59):
Yeah you could, you could, but if if you have, you
know the benefit, don't knowyou're picking carmax out of the
air, I know, but the benefitfor a carmax would be they have
access to all the other data too, that's uh aggregated and uh
anonymized.
So they would.
You know you, you play, youknow you what is it you play to
(20:20):
know you pay to play, right?
Steve Davenport (20:22):
So they would have to submit data and then
they would get a broader set ofanonymized data back to get
(20:42):
involved in something thatreally is a Department of Labor
issue and, if the data hasn'tbeen correct, it feels a little
bit like you said, that it's apolitical decision and not a
decision based on her ability orher performance.
I feel like this is more of adistraction than it is a real
economic event, and I agree withyou that the data could be more
(21:03):
suspect, but I think we'd haveto wait a few months before we
can definitely certify that.
I mean, once they vary too muchfrom ADP.
As we mentioned, ADP is about70% of the market and then the
BLS is 100%.
It includes all government andlocal.
So I like to get from 100%source versus an 80% or 70%.
(21:27):
But what do you think, Clem, interms of closing this out?
What should investors thinkabout?
Clem Miller (21:34):
They should be thinking about.
They should be writing theirinvestment managers and saying
what are you going to do aboutgetting better data?
Steve Davenport (21:45):
Okay, so maybe we'll put the address of that in
our comments so that people canmail letters to different
people and ask I do believe thatit's a piece of information and
(22:06):
the more information the better.
I'm a big believer intransparency and if this data
could be organized better andpresented better, I think we all
benefit.
So I appreciate everybodylistening and this is kind of a
short term item that we puttogether and in all things,
we're trying to improve yourfinancial wellness IQ and we
(22:28):
hope we're doing that, and soplease, text, share with your
friends and let us know how wecan make skeptics guide to
investing better.
Thanks, everybody, and have agood day.
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