After the U.S. Census Bureau's "unbelievable" data, Wall Street increasingly relies on "private surveys": ADP employment, Challenger job cuts, and other data are becoming more important to the market

After Trump questioned the Bureau of Labor Statistics (BLS) data and fired its head, Wall Street investors are considering reducing their reliance on government economic data and turning more to private institution surveys.

Trump previously claimed that the BLS "manipulated" the July employment report and fired the head of the agency, Erika McEntarfer. Although the White House has not provided any evidence to support this allegation, investors are concerned that government statistical data may be politicized, thereby affecting its independence and credibility.

On August 23, it was reported that in the face of this uncertainty, Wall Street is turning more attention to 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 pointed out that investors are not questioning the accuracy of BLS data, but are worried that the Trump administration may exert political influence on this agency, which has long been regarded as the gold standard for independent economic statistics. Several Wall Street strategists stated that if government data becomes politicized, it will reduce market trust in it and may raise risk premiums.

Wall Street Strategists Turn to Private Data Sources

Several senior investment strategists have explicitly stated that they will increase their reliance on private data.

Philip Petursson, Chief Investment Strategist at IG Wealth Management, stated that Trump's turmoil with the BLS "raises questions about the validity of future data." He is concerned that the government may begin to politicize these numbers, making it impossible to rely on official data.

Michael O'Rourke, Chief Market Strategist at Jonestrading Institutional Services, said that the "appearance of this situation is very bad," and he plans to place more emphasis on private data sources in the future, particularly the employment report from ADP Research.

For a long time, Wall Street has used hiring statistics collected by private companies such as Challenger, Gray & Christmas Inc. or ADP Research as supplementary information sources, but now more and more people are saying that these reports will become increasingly important.

Inflation reports from the Institute for Supply Management or manufacturing and service 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 see if Trump's nominees intend to change the statistical methods of BLS data.

Julian Emanuel, Chief Equity and Quantitative Strategist at Evercore ISI, stated that as "government data increasingly becomes a question mark," the shift to private data is "gaining more and more attention."

The Politicization of Data Threatens Market Confidence

Investors generally believe that once data is politicized, private data sources can help them quickly identify issues. Wall Street strategists indicate that they will more rigorously compare and validate official data against private sources.

Jacobsen, Chief Economist at Annex Wealth Management LLC, stated, "If data becomes politicized, we will notice quickly," because 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 with reporting processes or questioning their accuracy, "the usefulness of government reports will diminish." He emphasized, "Trust is the cornerstone of the financial industry, and once lost, it is hard to rebuild."

Keith Lerner, Co-Chief Investment Officer at Truist Advisory Services, cautioned that a decline in confidence in data could marginally raise risk premiums, meaning slightly lower valuations and increased data volatility.

Despite these concerns, Wall Street has not completely abandoned BLS data. The non-farm payroll report for August, scheduled for release on September 5, 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 staff shortages and outdated data collection methods, while resource constraints have forced the agency to cut costs in some cases and rely more on estimates, reducing data reliability. Survey response rates have been declining for years, and the magnitude of data revisions has been increasing