Why the Fed is increasingly flying blind on the economy

Analysts have long expected a slowdown in the US labor market, but for the past 10 months, the data has come in better than expected.

That may sound like a good thing for the economy, but as the Federal Reserve attempts to fight inflation, the still-hot jobs market is signaling that more painful interest rate hikes could be ahead.

But lately, some economists have begun to worry that the data on which Fed officials rely is becoming increasingly inaccurate. The number of people responding to labor market and inflation surveys has been declining for years, and the pandemic accelerated that slowdown. That causes more volatility in the incoming data and hence more volatility in markets, economists say.