As economy changes fast, alternative data can help us keep up

To say that a lot is happening in and to the U.S. economy feels like an understatement. And just as people are having a hard time keeping up with the happenings, the actual economic data is too.

So where can economists, or even regular people, turn to understand the facts and the trends when the economy seems like it’s being pulled in 1,000 different directions?

Martha Gimbel, executive director of the Yale Budget Lab, co-authored a piece in Harvard Business Review titled “The Economic Data You Need to Make Decisions Through Volatility.” She joined “Marketplace” host Kai Ryssdal to talk about the “alternative” data she’s tracking to discern the patterns in the chaos. An edited transcript of their conversation is below.

Kai Ryssdal: Let’s do a level-set here for a minute and have you tell me what you were looking at to gauge this economy, say, three months ago.

Martha Gimbel: Three months ago I was looking at the very standard set of economic data, right? So the monthly jobs report, what we were seeing on the [gross domestic product] side, throw in some inflation measurements there. But it was a lot of the standard data that you get a news alert about on your phone.

Ryssdal: And now I read in this paper that you did with some colleagues that’s in the Harvard Business Review and also your social media feeds, you say, “To be honest, it feels increasingly like early COVID. Not because the economy is going to shut down, but, given the pace of events, we need to look at data we don’t normally rely on to understand this economy.” What are you going to look at now?

Gimbel: So some of it is data that comes out from the government, but just comes out more frequently. So, weekly unemployment insurance claims — that gives us a quicker sense of how things are pivoting. But this is also a time where we need to think a little bit about alternative data sets, like data from private-sector companies. So for instance, Indeed, where I used to work, just put out data on how federal employees are responding to DOGE. I want to emphasize that private-sector data is not a substitute for public-sector data, but it does move faster. And so at a time where you’re trying to figure out if the economy is at a turning point, it can be useful to look at some of these alternative data sets that just move more quickly.

Ryssdal: We should say here, though, that there is government data that is disappearing from government websites. There are not unfounded questions about the future reliability of government data as it serves the political needs of the administration. Where are you on the trusting-maybe-have-some-doubt scale right now?

Gimbel: So I’m trusting government data until I don’t. There’s currently no sign that the data that’s been coming out about the economy from the government has been futzed with in any way. And frankly, if it were, I think we would know both because of the way that it comes out it would be easy for economists on the outside to tell, and also because, frankly, the career staff would throw a fit and we would find out from them. That being said, years ago, I spent a lot of time yelling at people whenever anyone tried to question government statistics and saying, “This is paranoia. This is a conspiracy theory,” and now it’s a real question. And just to take a step back, I don’t think people in the United States realize how strong our national statistics apparatus is. Economists in France, Germany, Australia, those countries would kill for the data infrastructure that we have here that helps us better understand our country, and our economy, and design better policy off of that.

Ryssdal: So, let’s talk about some of the things you are watching, and I assume will continue to watch as, as they serve your needs. And there’s a list of them in this paper that you all wrote. Here’s one: daily Treasury statement non-interest government spending. So should I stop doing the numbers every day and instead we should figure out the music for whatever it would be for the daily Treasury statement non-interest government spending segment, right?

Gimbel: Well, I mean, for now, the music would just be kind of toddling along, but, you know, that’s one that looks at the amount of spending the government is doing. But I think that’s particularly important given the conversations around DOGE and the questions around is a pullback in government spending going to slow down the economy? And what you’ve seen right now is there really isn’t any sign in the aggregate that the government is stopping spending in any kind of substantive way.

Ryssdal: Take off your economist hat for a second and put on your regular person hat. If I’m just trying to get by in my life and I’m watching all the chaos in the news, and, you know, price levels are still elevated and I’m a little worried about uncertainty, what should the layperson be looking at to have some sense of what this economy is all about?

Gimbel: I don’t think anyone’s ever accused me of being good at talking to normal people, but, you know, I think this is a moment where it’s really important not to confuse emotions for facts, right? Emotions are running really, really high, and it is easy to feel like the economy is going to crash because things feel so uncertain. But if you look at the data, that is just not yet what it is showing. And so it is very important to distinguish the vibes from the facts on the ground.