Trump’s war on economic data, with Erica Groshen

Last week, president Donald Trump sacked the head of the US Bureau of Labor Statistics after a downbeat jobs report, insisting that the US economy was actually “BOOMING under TRUMP”.

The defenestration of Erika McEntarfer has naturally triggered a lot of angst, given the similarities to how government statistics and the people that produce them are sometimes treated in places like Turkey and Argentina.

With that in mind, listen to this week’s Economics Show podcast, in which MainFT’s chief data reporter John Burn-Murdoch interviews former BLS commissioner Erica Groshen.

As Groshen notes, even if Trump’s claims about the fairness of BLS numbers was unfounded, his complaint about the accuracy of economic data had a kernel of truth.

US statistical agencies largely rely on surveys to get data about the state of the US economy. But response rates have been in decline for some time. As Groshen told JBM: “Nobody ever got promoted for getting their numbers to the BLS on time.”

As a result, collecting enough data to get a granular picture of the economy has become harder — and not only in the US.

This is obviously not great. Worse data makes it harder to make informed decisions. That’s true for investors, central bankers, and policymakers. And sacking senior government statisticians is unlikely to help. As Groshen puts it:

. . . The benefits, if any, to doing that are shortlived and the ultimate consequences are disastrous In all cases, you had spurts of inflation and deep recessions afterwards . . . When you lose reliable information on the state of the economy, you get turmoil, you get chaos. It’s not good for business. It’s not good for the country as a whole . . . It’s intentionally choosing to put on a face mask to temporarily blind yourself and think that that’s going to improve your ability to perform.

The full interview between John and Erica is available here, and you can find the transcript here. However, we’d love for you to come back here and offer your thoughts in the FTAV comment box afterwards.

We’re particularly keen to hear whether you’re now worried about the credibility of US economic data, if you think this has been blown out of proportion — and what could be done to improve the quality of economic data.