When President Donald Trump did not like them, he fired the person responsible for producing them.
It was a measure with few precedents in the centennial history of economic statistics in the United States – and for a good reason: when political leaders interfere with government data, the outcome is rarely positive.
There is the case of Greece, where the government has manipulated deficit numbers for years, contributing to a debilitating debt crisis that required several rounds of rescue. Subsequently, the country came to criminally prosecute the head of the statistics agency for insisting on publicizing the real numbers, further impairing their international credibility.
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There is the case of China, where, at the beginning of this century, local authorities handled data to achieve Beijing -imposed growth goals, forcing analysts and policy formulators to resort to alternative indicators to evaluate the economy.
Perhaps the most famous is the case of Argentina, which in the 2000s and 2010 decades systematically underestimated inflation to such an extent that the international community failed to trust the official data. This loss of credibility raised the country’s loan costs and aggravated the debt crisis, culminating in a default on its international obligations.
It is still early to know if the United States will follow a similar way. But economists and other experts claim that Trump’s decision on Friday, confirmed by the Senate, is a worrying step in that direction.
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Former treasure secretary and former Federal Reserve President Janet Yellen said dismissal is not expected from the world’s most advanced economy.
“This kind of thing would only expect to see in a bananas republic,” said Yellen.
Essential Statistics
BLS is officially part of the Labor Department, whose secretary is part of the president’s office. But the agency operates independently, producing detailed and nonpartisan data on employment, prices, wages and other topics.
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Economists claim that reliable and independent statistics are crucial to solid decisions in both the public and private sector. Federal Reserve authorities depend on official inflation and unemployment data to decide the interest rate, which affects how much Americans pay for real estate financing or a car loan.
“Quality data help not only the Fed, help the government and also the private sector,” said Jerome Powell, Fed’s president, in a recent interview. “The United States has been leaders in this for 100 years, and in my view we need to continue this way.”
Experts point out that data from BLS and other agencies should not be dramatically deteriorated overnight. McNTAFER’s interim substitute, William J. Wiatrowski, is a widely respected veteran employee. Career servers responsible for data collection and analysis remain in office, using the same methods and procedures as before.
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However, experts who until a few days advocated the integrity of these agencies now seeing uncomfortable questions about the future of economic data in the US.
“If poverty numbers come good, the census director will receive an increase? What if families’ income doesn’t come good? And the GDP? And the CPI?” Asked Amy O’Hara, a former census bureau employee and now a teacher at Georgetown University.
Integrity at risk
Trump claimed to have fired McNTAFER because the figures released by his agency would be “manipulated” to harm him politically.
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Former BLS combats of Democratic and Republican administrations, they dispute this allegation. The commissioner, who is the agency’s only political nominated, does not control the published numbers – and do not even see them before being finalized by the career technical team, whose performance goes through several governments.
Erica Grosso, who headed the BLS during the Barack Obama government, recalls that he faced internal resistance when he tried to make the newsrooms of monthly employment reports more “optimistic”. The technicians insisted that the agency’s function was not to say whether the glass was a little full or half empty, but only reporting: “It’s a container of eight ounces with four ounces of liquid.” Grosen gave in.
Still, political interferences are possible. Government statistics depend on hundreds of methodological decisions, often based on technical judgments without unique responses. A sufficiently experienced boss could, over time, adjust methods to favor a political result without causing a scandal that would lead to the collective renunciation of the technicians.
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“I can imagine a new commissioner trying to change methods and procedures to move numbers to one side or the other,” said Katharine G. Abraham, who led BLS in Clinton and George W. Bush governments. “He would have to know exactly where to put his finger on the scale.”
Private alternatives
There are also more direct methods. In 2007, in Argentina, the government of Nestor Kirchner dismissed the mathematician responsible for the consumer price index and released an inflation far below the originally calculated calculated.
The public was not fooled – nor international investors, who began to resort to private rates calculated by independent researchers.
But these alternatives have limitations, says Alberto Cavallo, Harvard economist who developed one of the most commonly used private rates in Argentina.
“Private sources can complement official statistics, but not replace them,” Cavallo wrote in email. “Only government agencies have the resources and scale to conduct national research – something no private initiative can completely replicate.”
Nancy Potok, a former Census employee and a former US statistics chief in the first Trump government, said she once had strong bipartisan support to the statistical system, both in Congress and in the business sector. But political polarization seems to have corroded this backing, precisely at the moment that political pressures and budget restrictions increase the need to preserve it.
“Before there were people who really understood the value of economic data, but today this is no longer the conversation – and the defenders that existed are no longer there,” he said. “There is no one leading the defense to make these investments.”
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