–Machines Displace Humans To Take Over US Labor and Commerce Economic Data
By Denny Gulino
WASHINGTON (MaceNews) – The jobs report hits the wires. Whoa, unexpectedly few additions to payrolls. Markets react. But in the same instant another headline tells you severe weather holds down survey response rate, revisions likely. Beginning March 1, forget that second headline.
In one swift kick, the Labor Department Thursday acted to eliminate the context from economic data headlines. By the time context arrives, millions of dollars may have been mistraded. Day after day, week after week. Welcome to the data whipsaw, the new normal in government data dissemination.
The announcement Thursday that beginning in another month and a half computers are being removed from the Labor Department’s data lockup room was predicated on a simple thesis: “Developments in high speed algorithmic trading technology now give a notable competitive advantage to market participants who have even a few microseconds head start.”
Of course that’s been the case since 2006 when Dow Jones pioneered its high speed delivery service of breaking economic news. And that will continue to be the case as securities firms are forced to perfect their “screenscraper” software that grabs the data off of Web releases faster than any human can read, turning the information into instant trading decisions executed by some of the fastest computers on the planet.
Who loses? Beside the markets, the news services which will see that desperately needed revenue from their super premium data product disappear, revenue that subsidizes other news gathering.
In fact, it’s not too much of a leap to see the Labor Department’s move as part of the lobotomization of American democracy. Sounds shrill and ridiculous? Let’s break it down.
First, the nation’s news industry once upon a time was what kept Congress firmly moored to reality by providing grass roots coverage of village and city councils, town meetings, local politicians and so much else. Local newspapers covered the local news even if no one else did, news service bureaus read the newspapers at the local, regional and state levels and often did the coverage themselves of statehouses.
Local newspapers disappear. Local and regional news service bureaus are closed. The food chain of news is now fragmented and the web of news flow is eroding at an accelerating pace. Internet information has proliferated, with both froth and sometimes hyper localism. Yet the element that is missing is the message wire among all those news service bureaus that turns them into the nervous system, the synapses of society.
One national news service mostly disappeared. Another recently cut another 50 reporters. The Labor Department’s move may alone extinguish one of the smaller news services.
Those reporters who for decades have been on the dawn patrol, setting their alarms for 5 a.m. in order to get to data lockups day after day at 7 a.m. or 7:30 a.m., have done more than fill out templates for the headlines, stories and analysis that go out into the world at 8:30 a.m. or 10 a.m.. They have recognized the factors that make this particular jobs or GDP or retail sales report different from the previous months, or that depart from months-long trends or reverse expectations. Their advance look at the reports have allowed instant context as well as instant data, via their computers in the lockups.
For those, like this reporter, who remember when the data was issued without the security of lockups, who remember when a White House official was found to be leaking data prematurely to their broker, who know the officials at the Labor Department who began to fear high-speed news and the inspector general who blindly amplified the concern based on a flawed Sandia Labs study, the Labor Department announcement is a sad commentary on how government policy can so easily go awry.
When the White House leaks led then Undersecretary of Commerce Sid Jones to propose the first news lockups during the Reagan administration and restricted government comment on statistics for an hour after release, a rule still in place, news services were for a time exempted. Inadvertent embargo breaks however soon eliminated that exemption.
The Bureau of Labor Statistics and the Bureau of Economic Analysis are jewels in the government’s crown of data collection, processing and dissemination. Some of their officials off the record relate how the new policy is misguided and unnecesessary. The BEA is only reluctantly forced to go along with the Labor Department which has the only remaining lockup facility and so sets the rules for releases.
Other government lockup operations, in Canada and the UK, don’t share the concerns of the U.S. labor Department. The technology that is used by high speed traders was inevitable and will always provide an advantage to those firms which bear the expense of using it. They will continue to reap the rewards and other firms that can’t compete simply won’t. The same applies in any industry. Investment pays off.
Now, however, the often misfiring screenscraper software will rule, triggering trades on the numbers without context, whipsawing markets that will trade first on the numbers and then, later, on the facts behind the data. The Labor Department, under the assumption that high-speed trading is inherently evil, will deprive the nation’s news services of revenue and so weaken the fabric of news gathering, already badly compromised.
Late Thursday, the Society for Advancing Business Editing and Writing, SABEW, representing 3,000 business and financial journalists, said it is “deeply concerned” by the Labor Department move. It “limits journalists’ ability to produce immediate, complete available-to-all reporting on government releases of economic data. It called on the Department of Labor “and the Trump administration” to explain the “rationale behind their decision making.”
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Contact this reporter: denny@macenews.com