Bill Beach on Trump's Politicization of US Economic Data | Odd Lots

The Firing of the BLS Commissioner

• 🎯 Donald Trump fired Erika McEntarfer, the head of the Bureau of Labor Statistics (BLS), following a weaker-than-expected jobs report and significant downward revisions to previous months' data.
• shock The firing was shocking because, while the president has the authority, it signals a potential sustained attack on official economic statistics, undermining public confidence.
• ⚠️ The BLS commissioner position has a statutory four-year term and is typically exempt from normal presidential turnover to keep data out of politics, similar to the Federal Reserve chair.

Understanding Economic Data Revisions

• 📊 The non-farm payroll numbers come from a survey of businesses, with initial estimates based on about 68% of responses, revised as more data (up to ~94%) becomes available over subsequent months.
• 💡 Revisions are normal and often increase during economic turning points, indicating more information is being incorporated, not necessarily errors.
• 📉 Recent large revisions may reflect the impact of tariff-related supply shocks on smaller businesses and the expiration of COVID-era subsidies affecting state and local government hiring.

Challenges and Modernization at the BLS

• 📉 Response rates to surveys are falling, and costs are rising, making traditional data collection methods increasingly difficult.
• 💰 The BLS needs more funding, around $15-20 million over two years, for experimental costs to test and implement modernizations, such as improving the Current Population Survey (CPS).
• 🚀 During COVID, the BLS repurposed funds from canceled travel and conferences to invest in a new data center and research, demonstrating the potential for innovation with flexible funding.

Impact on Trust and Future of Statistics

• 📉 The politicization of economic data can damage confidence and create uncertainty, potentially reducing investment and economic activity.
• 🏛️ Even if a highly reputable person is appointed as the new BLS chief, the suspicion that data is influenced by political motives may linger, affecting policymakers and the public.
• 🌍 Other countries' statistical agencies are experimenting with new data sources like price scanning data, highlighting the need for the BLS to also adopt new technologies to maintain data quality and relevance.

Contradictions in Criticism

• 🧐 Trump's criticism of the BLS for weak job numbers contradicts his desire for the economy to appear strong, as distrust in the data would undermine any positive narrative.
• 🏦 His simultaneous criticism of the Fed for being