I took a statistics class back in college. Like many of my other subjects, I did not do that well in it. I did, however, gain a deeper understanding of what average meant and continue to aspire to get up there someday. Here are Clear Reasons You Need to Carefully Review Government Statistics.
The United States Government produces no shortage of statistics. The amount of data it releases is staggering.
The Federal Reserve Board (“The Fed”) Dual Mandate
The Fed has a dual mandate.
This mandate is maximum employment and stable prices.
Let us look at two of the reports it issues, the inflation rate and the unemployment rate.
Why these two? These are reports that Jerome Powell, Chairman of The Fed, mentions when first, raising interest rates and now lowering them.
While I understand there is no clear and objective way to measure inflation, caution should be exercised when reviewing these numbers. Remember, unemployment is a ‘real’ number, inflation is a calculation.
Inflation Rate
Inflation is the loss of purchasing power of your dollars over time. Back in the day, Al Capone was Public Enemy Number 1.
However, during the Covid-19 pandemic, inflation clearly became Public Enemy Number 1. Coming is a close second was the IRS.
But that is another story.
The Bureau of Labor Statistics (“BLS”) issues the core inflation report monthly. This number excludes food and energy costs. The rational of this is that these two components are too volatile. For now, I will agree with that.
However, all of the Average Joe’s need to eat and use energy.
The Core Inflation Rate was 3.1% as of July 2025. This is down from its peak during the Covid-19 pandemic of 6.6% in September 2022. 1)
Looking at the Consumer Price Index (“CPI”), which includes food and energy costs, it was 2.7% in July 2025. This is down from its peak during the Covid-19 pandemic of 9.1% in June 2022. This was the highest inflation rate since November 1981 when it reached 10.2%. 2) 3) 4)
Said differently, most folks under the age of 40 had never experienced inflation.
One issue with the inflation rate is what they call “quality improvements.” For example, if you buy a new computer that has more memory, a faster processor and better resolution in the monitor, this is adjusted in the inflation rate.
The bottom line is that the inflation rate is uncertain at best.
The Three Big Expenses
Investors are interested in what they get to keep after inflation and taxes. Taxes are easy to measure.
And yes, taxes will need to go up.
This is based on the One, Big, Beautiful Bill Act (OBBBA). This will increase deficits and add to the national debt.
However, using the government’s stated inflation rate may or may not disappoint you. Investors need to have their own Personal Inflation Index. Many investors will be faced with three big expenses:
• Housing
• Higher Education
• Medical
Housing
What was the American Dream has turned into the American Nightmare. The short history is this cycle began with The Great Recession of 2008-2009. For a host of reasons, the housing market crashed.
For people that were still working, they had a choice to make, pay the mortgage or pay the car loans. Many choose to pay the car loans as they needed the car to get to work.
Many homes went into foreclosure. It was not a pretty sight.
This caused builders to pull back significantly. Why build new homes when there is all this unoccupied inventory of homes everywhere.
One of the government’s responses was to cut interest rates to spur activity.
Then they held them there artificially for well over a decade.
Then the Covid-19 pandemic hit.
Many folks migrated out of the big cities. They bought a second home in the suburbs.
Other folks added a home office to take advantage of the work-from-home (WFH) phenonium. Others added an exercise room to hang clothes on the Peloton to workout. Finally, homeowners added that inground pool or that bar in the basement they always wanted. I suspect some did both.
The cool thing about this is that they could get mortgages for around 3.5% – 4.0% to finance this. Why not do it!
Fast forward to the post Covid-19 pandemic (if there is such a thing), and we have a significant housing shortage.
Low inventory, prices went through the roof (pun intended) and an increase in mortgage interest rates have made this a very challenging environment for potential first-time home buyers.
The U.S housing market needs first time home buyers.
This is what starts the upward mobility, and it will be a challenge. The biggest challenge is:
Getting homeowners with 3.5% mortgage to buy a bigger house with a 6.5% mortgage.
Good luck with that.
Another issue with regards to housing is how it is used in the calculation of the inflation index.
The government introduces what they call “owners equivalent rent.” This attempts to put buying on par with renting.
Housing, or shelter, lead the way and accounted for 35.4% of CPI in July 2025. 5)
Higher Education
The costs of higher education continue to escalate. Private universities tuition increased 126% from 2000 to 2025. However, inflation only increased 76% during this period. This tuition increase was 50% more than inflation.
The average tuition for a private four-year school is $63,000. This is the sticker price. Allegedly, the net cost, after grants and scholarships is $36,200. Either way, it is a lot of money. 6)
The difference now is the decline in students and folks less willing to sign their life away to borrow money to go to school.
Medical
Medical expenses continue to skyrocket. Fidelity research indicates that a married couple age 65 would pay $345,000 for medical expenses in retirement. Investors in the survey estimated their costs at $150,000, less than one half of the Fidelity survey. 7)
Here are 3 Great Reasons to Fund a Health Savings Account.
Unemployment Rate
The BLS (it is convenient to have L in there, without it, well, you know what you get) also issues the unemployment rate. The official rate, known as U-3, was at 4.2% as of July 2025. The unemployment rate peaked at 14.8% in April 2020. This is the highest since the BLS started tracking data in 1948. 8)
However, this number excludes “discouraged workers” (people who have stopped looking for work), “marginally attached workers” (people who have not looked for work in the past four weeks), and involuntary part-time workers looking for full-time work. When these workers were included, the unemployment rate, known as U-6, was 7.8%.
The challenge, of course, is for the discouraged worker to find meaningful work they feel is worth it. Currently there are many entry level jobs that go begging for workers. We will see what the impact of Artificial Intelligence (“AI”) and more robots at the Amazon fulfilment centers has going forward.
Labor Force Participation Rate
A more telling statistic is the Labor Force Participation Rate (LFPR). This reflects the percentage of people working. As of July 2025, the LFPR was 62.2%. This is down from its peak of over 67% in 2000.
You would expect a decline due to demographics. Baby boomers are retiring every day.
Shake Up at the BLS and the Fed
The BLS had been a relatively quiet department until recently. The BLS, with 2,400 employees, is part of the Department of Labor, which has about 14,000 employees.
On August 1, 2025, President Trump fired Erika McEntarfer as the Commissioner of the BLS. The firing was for a weak jobs report that showed only 73,000 new jobs in July 2025 and significant downward revisions in the prior two months.
Without getting into all the colorful commentary, the President indicated the numbers were wrong. The BLS has a long history of revising numbers based on incomplete responses. They were rightly criticized by U.S. Senators in 2024. 9)
Their criticism was not that the numbers were wrong. It is that with all the large revisions to the prior months reporting, the methodology of collecting the data has long outlived its usefulness.
Do not shoot the messenger.
Update The Methodology to the 21st Century.
This was a practice lap to warm up and then fire Lisa Cook, Governor, Federal Reserve Board. This was for alleged mortgage related misconduct.
I have no idea if she did or did not have any alleged mortgage related misconduct. Either way, these allegations preceded her appointment. Regrettably, this will have to be decided in the courts.
The U.S. economy is the largest in the world. Why? Most folks would say capitalism is (generally) encouraged. I do agree with the statement. However, I would not say that is why it is largest in the world.
I would say despite the title of this post and my getting into the weeds and raising some finer points, the data issued by the government is (generally) reliable.
Three points:
1)The country needs to issue reliable data to attract foreign investment to say the largest economy in the world.
2)Investors need to be confident.
3)The Fed needs to remain independent.
Conclusion
Do not ignore the inflation rate and the unemployment rate. They can provide road signs as to when interest rates may rise or fall. However, investors should take these statistics with a grain of salt.
If you need any help with Clear Reasons You Need to Carefully Review Government Statistics, please call Thomas Scanlon at (860) 645-1415 or E-Mail Thomas.scanlon@raymondjames.com.
This is original content written by Manchester, CT Financial Advisor Thomas F. Scanlon, CFP®, CPA.
1)usinflationcalculator.com
2) bls.gov – July 2025
3)cbsnews.com – July 13, 2022
4) Investopedia.com – August 12, 2025
5) bestcolleges.com – May 8, 2025
6)bls.gov – July 2025
7) newsroom.fidelity.com – July 30, 2025
8) Congress.gov – August 20, 2021
9) helpsenate.gov – November 15, 2024
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that is accurate or complete, it is not a statement of all available data necessary for making an investment decision, it does not constitute a recommendation. Any opinions are those of Thomas F. Scanlon and not necessarily Raymond James.