Easy to lose, hard to restore: With Trump firing, US data trust now on the line

WASHINGTON – US President Donald Trump’s move to

fire the head of the US Bureau of Labour Statistics (BLS)

has put trust in US data reporting mechanisms on the line, just as demand for reliable diagnoses of the health of the world’s largest economy is bigger than ever.

Examples from elsewhere show credibility is easily lost and hard to restore.

A first test will be the choice to replace Ms Erika McEntarfer, accused without evidence by Mr Trump of manipulating job numbers in the US after weaker-than-expected growth and large downward revisions were reported last week.

“Imagine if one of your concerns is that there’s a lackey in charge of the agency and the numbers are fake,” said Mr Michael Strain, director of economic policy studies at the conservative American Enterprise Institute, of an appointment Mr Trump has said to expect within days.

“That’s a whole other level of problems.”

Policymakers, businesses and investors are scrambling to understand how Mr Trump’s attempt to upend the global trade system will affect prices, employment and household wealth.

Central banks, which once tried to guide market bets on rate moves months down the line, now say decisions are “data-dependent”.

The rub is that data collection is proving to be harder.

Debt-laden governments have, as Ms McEntarfer experienced, cut resources in their data departments; phone surveys – the go-to method for much macro research – are struggling to produce adequate samples as many households do without fixed lines.

Mr Trump’s implicit accusation of partisanship by “this Biden political appointee” adds the troubling factor of a political dimension usually indicative of countries dogged by wider doubts over their democratic checks and balances.

The key lesson from past examples of loss of data confidence is that it can take years for trust to be restored.

‘Man-made’ numbers

When Argentina in 2024 reported its first single-digit inflation in months, sceptics questioned the data and recalled the massive under-reporting of inflation in the 2000s and 2010s, for which it was censured by the International Monetary Fund.

“They manipulated the data for a long time,” said Mr Aldo Abram of libertarian think-tank Liberty and Progress Foundation in Buenos Aires. “It’s logical people remember this and continue having doubts.”

Turkey has changed the head of its Tuik statistics institute four times since 2019, with opposition parties arguing the changes were political.

Mr Roger Marks, fixed income analyst at asset manager Ninety One, said the result for investors has been a “gradual erosion of our trust in the numbers”.

For Greece, whose efforts during the 2000s to conceal mounting public deficits fed that decade’s sovereign debt crisis, it has been an equally long haul back to credibility.

It required the overhaul of its Elstat statistics agency in 2016 and the creation of an international panel of experts to appoint its chief statistician – steps that have meant its hard-fought efforts to improve its budget are now unquestioned.

It also prompted European governments to grant the Eurostat statistics arm of the European Union powers to check suspect national statistics reported to it.

Longstanding doubts over the accuracy of Chinese statistics – with even former premier Li Keqiang acknowledging in 2007 that the country’s output figures were man-made – have obscured genuine efforts to improve data quality, such as releasing in early 2024 a new measure of youth unemployment that excluded students.

“There were genuine methodological reasons for the change, but because of the history around Chinese data, a lot of people, particularly foreign investors, just didn’t really trust that,” said Mr Julian Evans-Pritchard, an analyst with Capital Economics.

“That underscores to me that once you undermine confidence in the data, it is quite hard to restore that confidence.”

US ‘spoils system’

The most urgent question now is whether the breach in credibility that the Trump intervention has opened is now widened further or mended.

Mr Enrico Giovannini, former chief statistician for the Paris-based Organisation for Economic Cooperation and Development, said there was more scope in the US for political appointments of key statistics roles than in other advanced economies, which have tended to make long, fixed-term appointments.

“So the incoming government has to wait (to replace them),” said Mr Giovannini, who has also served in two Italian governments.

“In the US, the spoils system works,” he said of the practice of party supporters getting rewarded with government jobs.

The International Statistical Institute, a professional organisation for data collectors, issued a statement late on Aug 4 that said Mr Trump’s move violated UN principles aimed at protecting fact-based statistics and called on his government to take steps to restore public confidence in US federal data.

Mr William Wiatrowski, the BLS’ deputy commissioner, will serve as acting commissioner until a successor to Ms McEntarfer is named.

Beyond that choice, some fear that further dangers may emerge from a Trump executive order on federal hiring intended to reserve posts for candidates who can prove they are “dedicated to the furtherance of American ideals, values and interests”.

Mr Aaron Sojourner, a senior researcher at the W.E. Upjohn Institute for Employment Research, said such a move would, if passed by Congress, apply to many jobs in federal economic statistical agencies.

“This proposal would convert many of those jobs into political jobs where people can be fired for any reason if they displease a political leader,” he said. REUTERS