Federal Reserve Chair Jerome Powell mentioned a refrain Wednesday that he’s been repeating for a while now: The central bank wants to see more data. More good data. Enough good data to make the Fed feel confident that inflation is under control and it can start cutting interest rates.

But Powell and his colleagues keep an eye on a lot of different data sources.

So what type of data is the Fed watching out for? And how has its data diet changed in recent years?

The Federal Reserve looks at a lot more than the monthly inflation figures and other big government reports.

“I like to refer to the Federal Reserve as the Hoover vacuum of data,” said Claudia Sahm, founder of Sahm Consulting and a former Federal Reserve economist.

She said that vacuum also sucks up nongovernment data from banks, payment processors and research companies. The Fed even gathers its own data on factory output and consumer credit.

Sahm said when she started working at the Fed, all that data was pretty overwhelming.

“And I told the more senior person who was trying to train me, like, ‘What am I supposed to do with all these numbers?’ And she looked at me and she said, ‘You just breathe it all in,'” Sahm recalled.

Sahm said what the Fed is good at is spotting patterns in the numbers and recognizing whether those patterns are just noise or show a meaningful trend.

And although the Fed puts the most emphasis on official government reports, she said, you can think of a lot of these other data sources as adding nuance.

“Like, that unemployment rate is low, but what does the hiring rate look at? Or, what does some regional number look at?” she said.

Certain private-sector data can also give the Fed a quicker read on the economy.

Eric Swanson, an economics professor at the University of California, Irvine, said that early in the pandemic, when things were changing quickly, the Fed looked at online rent prices, anonymized cellphone location data and credit card transaction data.

“Because consumer spending data comes out at the end of the next month, whereas credit card transaction data can come out within a day or two,” he said.

But now that things have settled down, the Fed is keeping a closer eye on parts of the economy that are still too hot.

Tim Duy at SGH Macro Advisors said that includes the number of job openings.

“It’s not that we weren’t following that data before or didn’t think it was important, but it can gain new life as circumstances change,” he said.

In other words, as the economy evolves, the Fed’s data diet does too.

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