It is a great irony that the fate of the U.S. economy is now interwoven with that of an industry entirely dependent on clean, applicable, trustworthy data — a tenuous paradigm the government is now upending by sullying the trustworthiness of data collection and reporting. This has systemic implications for a financial system built on this information to analyze current conditions, draft policies, plan business delays, and manage investment risk.
Just how important is AI tech — and thus good data — to economic growth right now? CC this nugget from WSJ: “Capex spending for AI contributed more to growth in the U.S. economy in the past two quarters than all of consumer spending, says Neil Dutta, head of economic research at Renaissance Macro Research, citing data from the Bureau of Economic Analysis.”
Our quant Castor and Pollux: The Bureau of Economic Analysis collects and reports economic, income, and investment data, and the Bureau of Labor Statistics tracks working conditions, price changes, and employment.
Indeed, a week after the White House AI Action Plan highlighted the need for trust in AI technology — brand trust being the currency of the realm for most businesses, and good data being the currency of the realm for effective AI technology — the government’s own data collection practices risked hallucinating and sowing doubt, as the President fired BLS leadership with little evidence of deviation from precedent or intentional wrongdoing. Trust in AI and trust in economic reports are both based on a fundamental belief in the method and the results: How is data collected, stored, validated, promulgated, and used in decision making? On a national level, public access to details on how the economy functions informs how business is done. At the firm level, many boards are groking the dangers of overhyped and potentially risky AI tools.
To be sure, there are massive private-sector institutions with huge swaths of excellent, useful information on economic activity, likely enhanced as we’ve seen a wave of consolidation in so many industries over the last 20 years; it’s possible they could provide indicators of trends in their sectors that would rise to the standard of government reporting. But as our conversation with Nova Credit today shows, just because you have the data doesn’t mean you will share the details — even for a fee. After all, the name of the game in the private sector is profits, and inside information on economic shifts is a material advantage.
–The Editors
