Trump's Crusade Against Economic Statistics, Featuring Erica Groshen
In a recent episode of MainFT's Economics Show podcast, Erica Groshen, the former commissioner of the Bureau of Labor Statistics (BLS), discussed the importance of accurate and reliable economic data.
Groshen emphasized that intentionally disregarding economic data can lead to a lack of understanding and worsen one's ability to make informed decisions. She pointed out that collecting enough data to get a granular picture of the economy has become increasingly challenging, not just in the US but globally.
During the interview, Groshen shared her experience at the BLS, stating, "Nobody ever got promoted for getting their numbers to the BLS on time." This comment highlights the potential pressure on statisticians to prioritize speed over accuracy, which could compromise the quality of the data.
The decline in response rates for economic surveys in the US and globally has significantly affected the accuracy and reliability of economic data. Lower response rates—now often below 50% for key surveys such as U.S. payroll and farm labor surveys—lead to increased biases and data quality concerns, reducing the representativeness and trustworthiness of the collected information.
This issue has several key impacts. Bias and data integrity issues can skew estimates like employment, wages, and prices, making them less reflective of the true economic conditions. Reduced sample sizes and confidentiality concerns sometimes force agencies to remove certain statistics entirely, further reducing data availability and utility.
Poor survey data weakens confidence in official statistics, which are critical for market transparency and fair competition globally. For instance, agricultural price setting depends heavily on USDA data; lower data quality could erode reliance on U.S. data and its global standing.
Challenges for statistical agencies have arisen during and after the COVID-19 pandemic, with response rates dropping sharply. Such drops complicate efforts by agencies like the BLS to produce timely and accurate employment numbers.
Similar patterns are seen internationally, like in Canada, where labor force survey response rates have declined significantly. This broader global issue affects data comparability and reliability across countries.
The defenestration of Erika McEntarfer, the former head of the US Bureau of Labor Statistics, has triggered angst due to similarities with how government statistics are treated in places like Turkey and Argentina. However, Groshen noted that Trump's claims about the fairness of BLS numbers might have been unfounded, but his complaint about the accuracy of economic data had a kernel of truth.
Trump claimed the US economy was "BOOMING under TRUMP" despite a downbeat jobs report. This discrepancy underscores the importance of accurate and reliable economic data for policymakers, investors, and the general public.
The interview between John Burn-Murdoch and Erica Groshen is available for listening, with the transcript also available for those who prefer to read. MainFT invites readers to share their thoughts about the credibility of US economic data and potential solutions for improving its quality in the FTAV comment box.
- The lack of accurate and reliable economic data can hinder the ability of policymakers, investors, and the general public to make informed decisions, as illustrated by Trump's unfounded claims about the US economy's performance during his presidency.
- In the interview, Erica Groshen pointed out that the decline in response rates for economic surveys globally, including in the US, has significantly affected the accuracy and reliability of economic data, leading to increased biases and data quality concerns.
- The quality of financial decisions in the business and economic sphere is strongly influenced by the trustworthiness of official statistics, making it essential for statistical agencies like the BLS to collect granular data without compromising its accuracy, despite the challenges posed by factors like declining survey response rates.
