Macro investment decisions are based on timely economic data that is produced by the government. The value of good economic data is foundational for strong developed economy and may be a key role of government - the measurement of what happens inside an economy to help with allocation decisions of consumers and investors.
Much of this data is not generated from counting goods or bodies, but employing surveys to sample different sectors of the economy. What would happen if no one answered the surveys? Responders are busy. Business staffs are often lean and many may just think of this as a burden that has little benefit. This is becoming a real problem as reported by the BLS with significant declines in survey rates.
Jobs data survey responses have been falling for years, but the declines are becoming increasingly alarming. This will mean more noise in any survey. Noise will mean that the variation from one month to the next will be greater and the signal about trends in the jobs market will be less reliable. There will be more surprises or greater surprises relative to expectations because of sampling error. By construction, surveys are not hard counts so there will not be revisions. It will be harder to undertake seasonal adjustments. We will be stuck with bad numbers.
Data will just not be useful, so there will be a premium with finding new data sets and new ways to attract macro signals through the government or through private source, but all of this extra effort will cost money. Who will pay for this private information? Only those who can exploit it through their trading will gather and they may not share all of their private information. There will be more costs in gathering and measuring information which will make the markets less efficient and more exploitable.
There is value with governments collecting and refining information as a serve for all those making economic decisions whether it is a stock trade or an investment decision.
No comments:
Post a Comment