Governments don’t just collect economic data for policymaking. These numbers are published for the world to use for informed decision making.

Inflation estimates guide central bank decisions. Employment numbers shape fiscal responses. GDP numbers influence everything from sovereign credit ratings to equity flows.

Most importantly, these metrics determine how trillions of dollars in capital gets priced and allocated. In the U.S. alone, there is roughly $120 million in U.S. assets, including Treasurys and corporate bonds which rely on accurate statistics.

This makes any loss of trust in official numbers a systemic risk. And right now, trust is faltering.

The U.K. Parliament is investigating its own statistics agency, calling the Office for National Statistics (“ONS”) a “catastrophic failure.” And in the U.S., the sudden removal of the Bureau of Labor Statistics (“BLS”) commissioner has triggered growing fears that economic reporting is no longer independent.

The erosion of trust in government statistics isn’t just a political issue; it also presents a growing financial risk for global markets and investors.

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In 2007, Argentina’s government declared inflation was just 8.5%. Yet, independent economists said the real number was closer to 25%.

The government had an incentive to manipulate economic data. Lower reported inflation meant less frustration and a better chance to retain power in the next election.

This tactic worked for a while. By 2014, the country defaulted on some of its debt, and the International Monetary Fund censured the country to force it to clean up its act.

Now, echoes of that same dysfunction are reverberating through the institutions once thought to be immune from such breakdowns.

The U.K. Parliament is investigating its own statistics agency, calling the Office for National Statistics (“ONS”) a “catastrophic failure.”

And in the U.S., the sudden ouster of the Bureau of Labor Statistics (“BLS”) commissioner has triggered growing fears that economic reporting is no longer independent.

The erosion of trust in government statistics isn’t just a political issue; it also presents a growing financial risk for global markets and investors.

Governments don’t just collect economic data for policymaking. They publish it for the world to use for informed decision making.

Inflation estimates guide central bank decisions. Employment numbers shape fiscal responses. GDP prints influence everything from sovereign credit ratings to equity flows.

Most importantly, these metrics determine how trillions of dollars in capital gets priced and allocated.

Roughly $120 trillion in U.S. assets, including Treasurys and corporate bonds, rely on accurate government statistics.

That makes any loss of trust in official numbers a systemic risk. And right now, trust is faltering.

In the U.K., Parliament’s inquiry into the ONS uncovered serious cracks. A 2023 internal audit flagged repeated failures in communication and leadership. But the report never made it to the top, until one staffer mentioned it during a hallway conversation more than a year later.

Lawmakers are now debating whether to dissolve the entire U.K. Statistics Authority.

The U.S. isn’t immune. Earlier this year, BLS Commissioner Erika McEntarfer was fired after a minor downward revision in job growth.

While no clear reason was given, many saw it as political retaliation. The move sparked a protest among economists, who warned it could compromise the bureau’s independence.

Even the appearance of manipulation can do lasting damage. After Argentina’s statistical scandal, investors turned to private data sources which were often inconsistent or inaccurate.

That pushed up bond yields, complicated central bank decisions, and triggered a wave of litigation from international creditors.

The same dynamic is starting to play out in the U.S.

Investors are increasingly relying on alternative data for everything from payroll aggregators to jobsite scraping.

But these tools weren’t designed to set interest rates or calibrate fiscal policy as they are noisy and narrow. And they don’t carry the same legal weight.

The global financial system runs on trust. Markets can handle inflation, recession, or even geopolitical risk as long as they agree on the basic rules of the game.

But when the numbers themselves come under suspicion, investors lose their anchor. We’re entering a phase where headline data no longer guarantees clarity.

Each new job print, or inflation update will be scrutinized not just for content, but for credibility.

That undermines the confidence required to make long-term investments and increases the odds of market overreactions.

This shift creates a new category of risk. It’s not just about what the next inflation number says; it’s about whether anyone believes it.

As this erosion of trust spreads from emerging markets to developed ones, investors must adapt. That may mean diversifying information sources and questioning data assumptions for every investment decision.

Best regards,

Joel Litman & Rob Spivey
Chief Investment Officer &
Director of Research
at Valens Research