Federal Reserve Loses Access to Key Employment Data from ADP

Federal Reserve officials in the United States have lost access to ADP’s employment data, impacting their real-time labor market assessments since late October 2023.

This data cut increases economic uncertainty, particularly regarding labor market trends, affecting policy decisions and potentially leading to increased market volatility across financial and crypto assets.

Key Developments, Impact, and Reactions

The Federal Reserve’s interruption in accessing ADP’s employment dataset followed a footnote in a speech by Fed Governor Waller, which cited the data as crucial for highlighting labor market issues. This data, covering 20% of U.S. private employment, provided timely insights until its termination. The Federal Reserve has yet to comment further on compensating for this data gap, which is vital for monitoring economic shifts. The impact of this event adds uncertainty to forecasting capabilities, particularly as it coincides with additional government data collection disruptions.

The termination aligns with past data disruptions that heightened economic uncertainties. As observed during past government shutdowns, private data reliance soared although it offered less alignment with official statistics.

“This lack of real-time US jobs data could increase macro uncertainty, impacting risk assets across both TradFi and crypto.” – Arthur Hayes

Historical Perspective on Data Reliance and Economic Forecasting

Did you know? ADP’s employment data provided the Federal Reserve with a more immediate insight into the labor market than government data, aiding monetary policy decisions for nearly five years before this interruption.

Per CoinMarketCap, Bitcoin’s value stands at $108,242.50, with a market cap of $2.16 trillion and a market dominance of 59.05%. The trading volume experienced a 22.61% shift, totaling $97.63 billion, with Bitcoin’s price falling by 3.85% within 24 hours. These statistics reflect recent volatility surrounding the ongoing macroeconomic uncertainties.

Coincu’s research team suggests that the disruption may shift the focus towards more dynamic indicators of economic performance. Financial and regulatory practices might realign to hedge against lacking real-time insights from longstanding data sources like ADP.