Lies, damned lies, and Donald Trump’s statistics

By Anne O. Krueger

 Statistics may seem dull, but they are indispensable. Without them, policymakers – and those tasked with implementing their decisions – would be unable to do their jobs. Reliable data form the foundation of sound governance, playing a central role in shaping monetary and fiscal policy and supporting and forecasting demand for infrastructure, commodities, schools, hospitals, and water.

Similarly, private companies rely on information about population growth, wage trends, and other key indicators to guide investment decisions and production strategies. The more reliable the data, the more valuable they become.

But when the reliability of official figures is in doubt, uncertainty grows, leading to poor decision-making. A census, for example, is useful only to the extent that people trust it to provide an accurate picture of population trends. For this reason, essential statistics should be regarded as public goods: their value increases when they are credible, accessible, and widely shared.

The Bureau of Labor Statistics is one of the United States’ most vital sources of reliable economic statistics, guiding policymakers, businesses, and investors alike. Each month, the BLS publishes data on employment, unemployment, consumer prices, and wages – not just at the national level but also by state, region, and municipality. The accuracy of these numbers has steadily improved over time, making them trusted benchmarks for businesses and governments worldwide. As The Economist recently noted, “trillions of dollars in global assets reprice within moments of a BLS release.”

That hard-won reputation was severely – and perhaps irreparably – damaged when US President Donald Trump abruptly fired BLS Commissioner Erika McEntarfer just hours after the release of the bureau’s July report, which revealed a sharp slowdown in employment growth and revised down earlier job gains. Trump claimed the figures were “phony” and “rigged” to make him and the Republican Party look bad.

These allegations were of course completely baseless. In reality, BLS commissioners do not see the final numbers until shortly before their public release. Moreover, the agency has refined its accounting methods to address problems like underreporting and misreporting.

Even prominent Republican economists have criticized Trump’s actions. Steve Hanke, who served as an adviser to former President Ronald Reagan, dismissed Trump’s claims of political interference in BLS statistics. “Whoever is at the top is pretty much irrelevant,” he told the Financial Times. “The bureaucracy and the template dictate what goes on. The idea that you can blatantly manipulate the data is frankly just rubbish.”

By undermining the BLS, Trump has placed the US in the company of authoritarian governments that regularly manipulate or conceal unfavorable figures. Most notoriously, data from the Soviet Union were widely considered dubious, even by Soviet officials. Over the past two decades, Russian President Vladimir Putin has compromised the reliability of Russia’s economic statistics, echoing Soviet-era practices.

Likewise, despite China’s considerable efforts since opening its economy to enhance the credibility of official data, it remains difficult to imagine any statistician openly defying demands from President Xi Jinping. This was evident in August 2023, when Chinese authorities temporarily stopped publishing youth unemployment figures after the widely used measure hit a record high.

Elsewhere, particularly in developing countries, budgetary constraints and large informal sectors have often limited the reliability of government statistics. The most dependable data tend to come from developed economies like the US, where nonpartisan technocrats generate high-quality estimates that support effective policymaking, business decisions, and research.

Trump’s decision to replace McEntarfer with an ultra-loyalist, E.J. Antoni, poses a serious threat to the ability of the BLS to fulfill its mission. Unsurprisingly, many have questioned Antoni’s qualifications and impartiality. As Jessica Riedl of the conservative Manhattan Institute observed, “no credible economist would take a job in which you’d get fired for publishing accurate data.”

Even if Antoni were qualified (which he is not), serious doubts would remain about whether BLS estimates could be trusted. Loss of confidence in the agency’s data will only deepen the uncertainty facing private and public decision-makers. Worse still, these doubts are likely to extend beyond labor statistics, especially when figures such as inflation rates conflict with Trump’s political agenda. The consequences for the US and global economy, not to mention for democratic governance, could be catastrophic.

Anne O. Krueger, a former World Bank chief economist and former first deputy managing director of the International Monetary Fund, is Senior Research Professor of International Economics at the Johns Hopkins University School of Advanced International Studies and Senior Fellow at the Center for International Development at Stanford University.

The post Lies, damned lies, and Donald Trump’s statistics appeared first on The Business & Financial Times.

Read Full Story