State Street buys private-sector inflation data provider

• Key Insight: State Street has acquired PriceStats, a private-sector economic researcher. The merger comes at a fraught moment for government economic statistics, which have faced attacks by the Trump administration.
• Expert Quote: "The things that the administration has done that have undermined the trust in the data are unprecedented and very damaging," said Erica Groshen, a former commissioner of the U.S. Bureau of Labor Statistics.
• Forward Look: State Street hopes to give its investors an edge as they evaluate a quickly evolving macroeconomic environment.

At a troubled moment for government economic research, State Street is betting big on private-sector data.

On Monday, State Street Corporation announced that it has acquired PriceStats, a for-profit gatherer of daily inflation statistics. The Boston-based holding company of State Street Bank and Trust Company did not disclose the price of the acquisition.

State Street had already been exclusively partnering with PriceStats since 2011, providing the custody bank's clients with proprietary data on the prices of goods and services. But acquiring the Cambridge, Massachusetts-based company outright, State Street said, will allow its research to go further.

"What this really enabled us to do was invest more in the platform," Will Kinlaw, head of State Street Data Intelligence, the department that will absorb PriceStats, told American Banker. "We see the opportunity to take it to the next level."

With State Street's financial and technological resources, Kinlaw said, PriceStats will be able not only to provide "more granular" data on inflation, but also to expand its purview to other economic variables.

Since the end of the COVID-19 pandemic, when inflation rose to historic levels, investors have had to keep up with the quickly evolving state of the U.S. economy. Tracking inflation expectations, Kinlaw said, has been particularly important to clients as they've tried to predict the repricing of assets and the Federal Reserve's decisions on interest rates.

"Our clients, increasingly, were looking for an investing edge through data," he said. "PriceStats just gives us a fantastic platform from which we can build and invest and do more to help our clients get ahead of the curve."

The merger comes at a time when public-sector economic research is under heavy strain. Since returning to office, President Donald Trump has fired the commissioner of the U.S. Bureau of Labor Statistics, disbanded the advisory committees to several data-gathering agencies, and proposed deep cuts to the BLS's budget, among other measures.

To top it all off, the government shutdown has left the BLS unable to conduct its monthly inflation surveys, raising the possibility that the Consumer Price Index will miss October entirely. Until now, the survey has never skipped a month in its history.

"The things that the administration has done that have undermined the trust in the data are unprecedented and very damaging," Erica Groshen, the BLS's commissioner from 2013 to 2017, said in an interview.

The damage to public trust in government data, Groshen said, is twofold: By maligning the BLS — Trump claimed when he fired the agency's head that it "rigged" its July jobs report — the president may have convinced some citizens that the agency is biased and dishonest. But for those who never believed such accusations, Trump's pressure campaign on BLS could itself become reason to doubt its numbers.

Meanwhile, the loss of staff and funding may be doing damage to the actual data, Groshen said.

"At the national level, the increase in standard errors from all of these impacts are minimal," she said. "But then when you go down to more disaggregated — so when you're looking by geography, industry, occupation, demographic group … that's where you see some deterioration in the quality of the data."

In this context, private providers of economic data may seem more valuable than ever. But for his part, Kinlaw said the state of government data was not a factor in State Street's decision to acquire PriceStats. The purchase, he said, was a way to supplement government data, not replace it.

"There's really an opportunity here to complement government statistics, which … are highly rigorous, they're comprehensive," Kinlaw said. "The process, though, takes some time."

By combining public data with PriceStats' daily inflation analytics, State Street hopes to give clients both accuracy and speed as they assess the macroeconomic environment.

"What this approach enables us to do is get an earlier reading on what's going on, and that's of great interest to our clients, who really want to get ahead of that curve," Kinlaw said.