Recent efforts to eliminate advisory committees suggesting improvements for economic data, along with remarks from Commerce Secretary Howard Lutnick, have sparked concerns regarding the credibility of government statistics.
Win McNamee/Getty Images
hide caption
toggle caption
Win McNamee/Getty Images
Each month, the federal government provides a variety of economic reports covering topics from grocery prices to unemployment figures. These reports are closely monitored as they can influence market trends and the approval ratings of the president.
Investors and businesses heavily rely on these figures, which are studied thoroughly and presented without political bias.
However, recent actions by the Trump administration are causing doubts about that trust.
The government has disbanded two advisory panels that previously provided recommendations on improving the reliability of economic data.
In conjunction, Commerce Secretary Howard Lutnick has indicated plans to alter the calculation method for gross domestic product (GDP), the key measure of the economy.
These developments are prompting worries that economic statistics could be manipulated for political gain or other intentions.
One voice of concern is Erica Groshen. She recently received a brief email indicating her services were no longer required due to the folding of the committee she was on—the Federal Economic Statistics Advisory Committee.
Groshen has a vested interest in the integrity of government data, having once managed the Bureau of Labor Statistics’ number analysis.
“The integrity of statistical agencies hinges on trust,” she stated. “If the data is not credible, people won’t rely on it for significant decisions, essentially rendering it worthless.”
Erica Groshen previously oversaw the Bureau of Labor Statistics, responsible for producing key reports such as the monthly jobs figures and consumer price index. This image captures Groshen as she testifies before the Joint Economic Committee in January 2014, during her tenure as commissioner.
Alex Wong/Getty Images
hide caption
toggle caption
Alex Wong/Getty Images
The email sent to Groshen, along with information on the committee’s site, indicated that the commerce secretary ended the committee’s functions, claiming their purpose had been achieved. Another advisory group tied to the Bureau of Economic Analysis was also disbanded.
This decision surprised Groshen, now a senior labor market adviser at Cornell University’s School of Industrial and Labor Relations, as tracking an ever-changing economy is an ongoing task.
“Continuous improvement is one of the fundamental goals of statistical agencies,” Groshen asserts.
Modifying GDP Calculations
The correspondence Groshen received coincided with Lutnick’s announcement about changing the GDP calculation formula.
“The Commerce Department manages GDP statistics,” Lutnick stated in an interview. “Historically, governments have manipulated GDP figures. They include government expenditures in GDP. I intend to distinguish between the two and ensure the process is transparent.”
Lutnick contended that by excluding government spending from GDP calculations, a clearer view of the economy would emerge. This viewpoint echoes remarks made by President Trump’s advisor, Elon Musk, regarding the ineffectiveness of much government expenditure in improving citizens’ lives.
Commerce Secretary Howard Lutnick has proposed excluding government spending from GDP calculations, arguing this would yield a clearer economic overview. However, this marks a departure from traditional methods of estimating GDP.
Anna Moneymaker/Getty Images
hide caption
toggle caption
Anna Moneymaker/Getty Images
Such a change would signify a significant shift from established practices and international benchmarks. Additionally, it might obscure any adverse impacts of cuts to spending by the Trump administration.
Trump has repeatedly questioned the integrity of government economic data, implying that job gains under the Obama administration were overstated.
Nonetheless, Trump and his administration readily accept credit when the figures present favorable outcomes. In the early days of his presidency, then-press secretary Sean Spicer cheered a positive jobs report.
“I spoke with the president beforehand, and he insisted I quote him accurately,” Spicer remarked then. “While they may have been dubious in the past, they’re definitely real now.”
Challenges for Data Analysts
The recent actions by the Trump administration have caused concern for Groshen.
Though she hasn’t observed data manipulation, she’s worried about the potential temptation, “either for political ends or even for financial benefit,” Groshen mentions. “I would be apprehensive about all these possibilities.”
Even without intentional interference, government data analysts are grappling with numerous challenges. There has been a decline in responses to their surveys, budgets are increasingly constrained, and some staff members have accepted the administration’s voluntary exit offers in exchange for a severance package.
“They’re functioning with very limited resources,” states Tara Sinclair, a professor at George Washington University’s Center for Economic Research. “Now they are encountering further anxieties and uncertainties regarding their upcoming budgets, alongside existing staffing reductions, partly due to individuals opting for what they term the ‘fork’ emails.”
These concerns were prominently raised during a recent panel discussion organized by the National Association for Business Economics.
“Attendance was at full capacity,” Sinclair notes.
Any Attempts to Alter Data Would Encounter Resistance
Sinclair describes the disbanding of government advisory committees as a “yellow caution flag,” even though she believes that civil servants would protest vigorously if political appointees sought to manipulate the figures.
“If any alterations were made to the data, even slightly, it would undermine the credibility of the whole statistical system,” she asserts. “This could have global financial repercussions, as entities worldwide depend on the quality of U.S. economic data for their decisions.”
Groshen acknowledges that businesses require dependable economic statistics to make informed hiring and investment decisions. She hopes that any attempts to manipulate the data will be met with strong opposition from the corporate and financial sectors.
“I anticipate that the business and financial communities will voice their concerns unequivocally,” Groshen emphasizes. “Perhaps they will raise their voices now to avert such an outcome.”
