Overview
Federal Reserve Chairman Kevin Warsh told attendees at a monetary policy forum in Sintra, Portugal that he expects the central bank to begin using new, near-real-time economic indicators within nine to 12 months. He framed the effort as a response to what he described as problematic measurement in some government reports and said better contemporaneous data would help central bankers make stronger decisions on interest rates and other policy tools.
Warsh's case for new measurements
Warsh argued that the Fed currently relies on a broad mix of official government releases, private-sector data and in-house information - some public, some non-public - to assess the economy. He said that while the Fed already draws on this variety of sources, certain government datasets suffer from mismeasurement and lagging relevance because their survey designs no longer capture current economic realities.
"My aspiration is that nine to 12 months from now we’re going to be using new technologies to understand what’s happening in the real economy in a contemporaneous, real-time way that positions us as central bankers to make better decisions," he told the forum. Warsh added that if the Fed does its work, within a year officials will be able to say they have discovered data that aids decision-making.
Institutional response and safeguards
Fed officials have long acknowledged the risk that early data releases can be revised or may not yet reflect current conditions. Colleagues of Warsh emphasize that the Fed attempts to hedge against misleading early readings by focusing on trends over time. That approach - looking beyond single releases and toward persistent patterns - is one Warsh publicly endorsed as he declined to tie recent reports to specific policy changes at the forum.
The Fed also uses qualitative outreach to capture near-term shifts. Warsh and others point to the regular compilation of business contacts and anecdotal reporting published in the Fed's Beige Book as a way to monitor conditions that may not immediately show up in official statistics.
Organizational moves - five task forces
Warsh said he will, starting next week, appoint members to five new task forces created to tackle different institutional priorities. One of those task forces is dedicated to identifying new sources and methods for gathering economic data that could give the Fed a more immediate view of the real economy.
Context inside government statistical agencies
Warsh's push to diversify away from some government data coincides with leadership changes and methodological reviews at key U.S. agencies. The U.S. Bureau of Labor Statistics is preparing for new leadership after the previous chief was removed by President Donald Trump following large revisions that showed weaker initial job growth than earlier reported. The incoming nominee, Brett Matsumoto, has said he does not think the data were manipulated but believes the collection process can be improved.
The monthly jobs report, a closely watched BLS release, was noted as due out on Thursday. Economists quoted in the forum have attributed part of the revision problem to falling initial response rates to job surveys, which can produce larger subsequent revisions as additional responses are aggregated.
Separately, the Bureau of Economic Analysis has announced a change to parts of its inflation measurement process, a revision expected to produce lower readings when implemented in September. Warsh indicated his task forces could offer suggestions both for improving established official datasets and for developing more immediate alternative indicators.
Implications and limitations
Warsh framed the initiative narrowly around data collection and timeliness rather than declaring a predetermined policy shift. He emphasized the Fed's current practice of blending multiple data types and of seeking business contacts for contemporaneous intelligence. The chairman's stated objective is to supplement, not necessarily to replace, the established statistical releases used in policymaking.
Note: The article presents the chairman's goals and the institutional changes he plans to pursue as stated at the Sintra forum. It reports on the BLS leadership transition and BEA methodological changes as described publicly, and reflects the Fed's described mix of government, private and internal data sources.