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New Questions on How a Key Agency Shared Inflation Data

BusinessNew Questions on How a Key Agency Shared Inflation Data


The Bureau of Labor Statistics shared more information about inflation with Wall Street “super users” than previously disclosed, emails from the agency show. The revelation is likely to prompt further scrutiny of the way the government shares economic data at a time when such information keenly interests investors.

An economist at the agency set off a firestorm in February when he sent an email to a group of data users explaining how a methodological tweak could have contributed to an unexpected jump in housing costs in the Consumer Price Index the previous month. The email, addressed to “Super Users,” circulated rapidly around Wall Street, where every detail of inflation data can affect the bond market.

At the time, the Bureau of Labor Statistics said the email had been an isolated “mistake” and denied that it maintained a list of users who received special access to information.

But emails obtained through a Freedom of Information Act request show that the agency — or at least the economist who sent the original email, a longtime but relatively low-ranking employee — was in regular communication with data users in the finance industry, apparently including analysts at major hedge funds. And they suggest that there was a list of super users, contrary to the agency’s denials.

“Would it be possible to be on the super user email list?” one user asked in mid-February.

“Yes I can add you to the list,” the employee replied minutes later.

A reporter’s efforts to reach the employee, whose identity the bureau confirmed, were unsuccessful.

Emily Liddel, an associate commissioner at the Bureau of Labor Statistics, said that the agency did not maintain an official list of super users and that the employee appeared to have created the list on his own.

“It is not something that the program office assembled or maintained or sanctioned at all,” she said.

In responding to The New York Times’s records request, the Labor Department redacted the names of the email recipients. But their employers are visible in some cases. Many of the recipients appear to have been in-house economists at large investment banks such as Barclays, Nomura and BNP Paribas.

Others work for private research firms, which sell their analysis to investors. And some recipients appear to have been analysts at large hedge funds such as Millennium Capital Partners, Brevan Howard and Citadel, which trade directly on their research.

Brevan Howard and Citadel declined to comment. Millennium did not immediately provide comment.

There is no evidence in the emails that the employee provided early access to coming statistical releases or directly shared other data that wasn’t available to the public. In several instances, the employee told users that he couldn’t provide information they had requested because it would require disclosing nonpublic data.

But the emails show that the employee did engage in extended, one-on-one email exchanges with data users about how the inflation figures are put together. Such details, though highly technical, can be of significant interest to forecasters, who compete to predict inflation figures to hundredths of a percentage point. Those estimates, in turn, are used by investors making bets on the huge batches of securities that are tied to inflation or interest rates.

Analysts regularly interact with government economists to make sure that they understand the data, but “when such access can move markets, the process for that access needs to be transparent,” said Jeff Hauser, executive director of the Revolving Door Project in Washington. “This stuff is so valuable, and then someone just emails it out.”

In at least one case, emails to super users appear to have shared methodological details that were not yet public. On Jan. 31, the employee sent an email to his super users describing coming changes to the way the agency calculates used car prices, at the time a crucial issue for inflation watchers. The email included a three-page document providing detailed answers to questions about the change, and a spreadsheet showing how they would affect calculations.

“Thank you all for your very difficult, challenging and thoughtful questions,” the email said. “It is your questions that help us flesh out all the potential problems.”

The Bureau of Labor Statistics had announced the change in a news release in early January, but did not publish details about it on its website until mid-February, two weeks after the email from the employee.

Ms. Liddell said it “wasn’t appropriate” to be sharing information that wasn’t public and hadn’t been fully vetted.

“When matters like this happen, it really undermines our credibility not just with the public but with the people who have placed their trust in us to give us data,” she said.

It isn’t clear when the employee began providing information to super users, or whether he was the only economist at the agency to do so. Several of his emails were also sent to an internal Bureau of Labor Statistics email alias, suggesting that he did not believe his actions to be inappropriate.

The super users issue came to light in February, when the employee emailed the group saying that he had identified a technical change that explained an unexpected divergence between rental and homeownership costs in a recent data release. “All of you searching for the source of the divergence have found it,” he wrote.

About an hour and a half after that email went out, a follow-up told recipients to disregard it. In a subsequent online presentation, Bureau of Labor Statistics economists presented evidence that the change identified in the employee’s email was not, in fact, the source of the divergence.

It wasn’t the first time that the employee had provided information that later proved unreliable. In an email in mid-February, he told users that rent and homeownership cost estimates were based on separate data sets. A few days later, he followed up to say his understanding had been incorrect.

“Because of this misinterpretation I am now training as a shelter economist,” he wrote. “Hopefully, this training will prevent future misinterpretations” of the housing cost calculations.

Omair Sharif, founder of Inflation Insights and a recipient of some of the emails, said that the practice of emailing super users was relatively new, and that it probably evolved alongside increased interest in inflation data.

After years of remaining low and stable, inflation started to take off in 2021, and it has remained a major news story ever since. Because it influences Federal Reserve policy, it is a major driver of market trading.

“I just think the volume of questions has increased so much,” Mr. Sharif said. “The staffing has not. They are almost certainly overwhelmed.”



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