Inside the Fed’s Data Playbook: Alternative Datasets Driving Policy

The 2025 US government shutdown exposed a critical vulnerability in the global economic data ecosystem: when official statistics go dark, markets still need signals. In response, the Fed provided information about the alternative datasets it uses to guide monetary policy decisions — ranging from private-sector inflation trackers to real-time labour market indicators. While these datasets have quietly informed policy for years, their recent prominence highlights both the limitations of traditional statistics and the growing importance of high-frequency, nontraditional data. This shift is not about replacing official figures, but augmenting them — reshaping how policymakers, investors, and data providers interpret the economy in real time.

Alt data adoption across central banks

The Fed and other central banks have recently made their use of alternative sources more widely known. The 2025 US government shutdown, which halted the release of official economic data, highlighted the alternative sources capable of providing insight into economic performance.

During the data blackout at the October FOMC Press Conference, Fed Chair Jerome Powell cited the use of PriceStats, Adobe, and ADP to gauge trends in inflation and the labour market. What’s perhaps less widely known is that central banks have long relied on alternative data to inform monetary policy decisions. According to the IMF, the Fed have been using nontraditional datasets since COVID-19. Traditional economic indicators struggled to keep pace with the rapid changes of the pandemic economy. The Fed was able to draw on previously developed alternative data sources — such as payroll processing and credit and debit card transactions — to track the sharp deterioration in economic activity.

The Fed only recently made its use of such data more explicit, perhaps to reassure markets during last year’s data blackout. This transparency helped ease concerns, reinforcing that the Fed was not navigating economic decisions without sufficient insight. Central banks have likely avoided publicising their use of alternative data until now, as doing so would have drawn greater scrutiny to long-standing data-quality issues in official statistics. While the Bank of England have mentioned the reliability of ONS data on several occasions during BoE meetings, a broad erosion of confidence in official figures would also pose risks to market stability.

Powell’s acknowledgement of the Fed’s use of private datasets during the October press conference included “many, many different sources.” Understanding the specific datasets central banks rely on to monitor economic conditions can give investors an edge in anticipating the direction of interest rate moves. 

What’s wrong with official statistics anyway?

Some of the data quality issues with government data include:

• Dropping response rates to the surveys that determine official figures – this has been in decline since COVID-19 across the UK and the US – with the most notable impact on inflation figures.

• US budget cuts have been driving mass layoffs across statistical agencies – these layoffs saw a large rise since the Trump administration came into office, which means there aren’t enough statisticians and qualified professionals to collect and analyse the data and remove significant errors.

• Outdated data collection methodologies – survey data can have panel size constraints and may not be statistically representative of the entire economy.  

• Data lags mean we’re often looking at a picture of the economy as it was, not as it is. Survey-based and other government-collected data can be significantly delayed—sometimes by up to a year. Much like the Hubble Telescope, which observes the light from celestial objects that take light-years to reach us, official statistics can reflect economic conditions in the past rather than offering a real-time view of the present.

From Substitute to Standard: Alternative Data’s Role in Macro Measurement

In September 2025, I spoke to Business Insider about the growing use of alternative data sources for macro insights. In the article, I argued that alternative datasets won’t replace official figures, but rather complemented by them, enhancing headline indicators to provide a more accurate view of economic activity.  A month later, during the late October FOMC meeting, Powell also made it clear that these sources weren’t a replacement for government data. So, what will the future of economic data look like?

The Fed and other government organisations may increasingly publish alternative indicators alongside traditional data to provide a more holistic view of the economy. Several regional Federal Reserve Banks already publish employment data from alternative sources, such as job postings data from Indeed, Lightcast and Revelio Labs. During the data blackout, ADP’s NFP estimates became a key reference point for headline employment figures, underscoring the demand for timely substitutes.

Indeed New and Total Job Postings Index (SA)

FRED constructs daily job postings indices from Indeed, released weekly

Source: FRED, Indeed, Alternatus Intelligence

For data providers, this presents a significant opportunity: those able to deliver credible insights into inflation, consumer spending, GDP growth, and other core indicators have the potential to establish themselves as a benchmark alternative index. Building recognition as a trusted, monthly reference point for economic activity can also serve as an effective gateway to monetising higher-frequency datasets. This shift is already underway—for example, Revelio Labs’ release of the RPLS introduced a publicly available monthly read on key labour market trends.

Another potential development is the integration of alternative data sources into official government statistics. A growing number of initiatives, led by organisations such as the U.S. Census Bureau and the National Bureau of Economic Research, are exploring how these inputs can enhance the timeliness and granularity of economic measurement. Anticipating which sources are incorporated into headline figures may provide investors with a trading edge.

Regardless, one thing is clear: alternative sources will play a role in the future of official economic data.

For a shortlist of likely alternative data candidates for headline figures and further details on the alternative sources central banks use, please reach out to us directly at info@alternatusintelligence.com.