Odd Lots
Big Take DC: Economists May Be Using Bad Data to Make Big Decisions
Jan 30, 2024
The podcast tackles the tricky balancing act the Federal Reserve faces in managing inflation. It questions the reliability of labor market data and highlights the urgent need for updated metrics after the pandemic. Survey response rates are falling, casting doubt on data representativeness, which could affect future economic decisions. The discussion also contrasts hard versus soft data, illustrating how public sentiment plays a role in economic growth. Lastly, it emphasizes restoring trust in government institutions to improve data collection.
16:49
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Quick takeaways
- The reliance of the Federal Reserve on potentially flawed labor market data raises concerns about the accuracy of policy decisions.
- Declining response rates to government surveys can lead to flawed assumptions and incomplete understanding of the economy, impacting both policymaking and public perception.
Deep dives
The Limitations of Data in Guiding the Federal Reserve's Decisions
The podcast episode explores the reliance of the Federal Reserve on data to make decisions regarding interest rates and inflation. It discusses how the labor market data, specifically from the job openings in labor turnover survey (JOLTS), may have been flawed due to changes in job listing practices during the pandemic. The decline in survey responses overall also raises concerns about the accuracy and representativeness of the data used by policymakers. The episode emphasizes the significance of ensuring the reliability of data in order to make informed policy decisions.
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