Last week’s fire from President Donald Trump’s top statistician of the United States, sparking concerns from economists and policymakers about data reliability in the world’s largest economy.
After the release of disappointing employment figures on Friday, the firing of Trump’s Director of Labor Statistics, Erica Mantelfer, sparked fears over the integrity of Washington’s economic data.
The National Business Economics Association warned that Mcentarfer’s “basic” expulsion risks that “it will cause permanent harm to the institutions that support the economic stability of America.”
“It can open the door to political interference and certainly undermine confidence in the federal statistics that businesses, policymakers and individuals use to make some of the most important decisions,” Erica Groshen, who headed the Bureau of Labor Statistics under former President Barack Obama, told Al Jazera.
If the rejection of Trump’s Mantelfer and other presidential appointees are allowed to stand, Groshen said he could create a habit of firing heads of statistical agencies or other agencies that provide “unwelcome news.”
“He is likely to replace them with appointees who prioritize providing his goals in serving their institutions, ethical standards or scientific integrity,” Groshen said.
Trump justified Mantelfer’s removal without evidence that the latest work figures were “equipped” to make him look bad, he said he would announce the new Director of the Labor Statistics Bureau in three or four days.
“Global Impact”
The collapse of trust in official economic data about the US will have an impact all over the world.
Despite the growing influence of emerging economies such as China and India, the US remains the largest economy in the world at some distance.
The US GDP accounts for more than a quarter of the global economy, accounting for approximately $30.3 trillion. China’s estimated GDP is about two-thirds of that amount.
US government data on trade, employment, consumer spending and GDP are considered important signals of the global economy’s direction, with companies and investors from London to Dubai and Tokyo in close proximity.
Many countries, including democratic states, face accusations of messing with economic statistics for political reasons, often resulting in serious reputational outcomes.
In 2010, the European Commission issued a thrilling report accusing Greece of deliberately forgerying to hide its poor financial situation.
In 2013, the International Monetary Fund officially denounced Argentina to provide what it said was inaccurate data on inflation and economic growth.
“Economic Data Manipulation”
Some studies suggest that countries run by strong-armed leaders are particularly prone to misrepresent economic conditions.
A 2024 survey published in the European Politics and Economics Journal found that economic openness and democracy reduced the likelihood that governments would manipulate statistics, despite having no observable positive impacts from media freedom or the independence of the Bureau of Statistics.
In a 2022 paper using night-light satellite imagery as a proxy for economic development, Lewis Martinez estimated that authoritarian countries inflated annual GDP growth by about 35%.
“The manipulation of economic data is broad to dictatorships and dictatorships, particularly for creating stories for people,” said Thomas Michalsky, an associate professor of economics at the HEC Paris Business School.
“But what’s rare is finding such intentional behavior in countries that strive for or develop democracy.”
After Trump, a career economist appointed with overwhelmingly bipartisan support in 2024 fired Mantelfer, critics quickly resemble tactics stemming from strongman leaders trying to strengthen public recognition of their policies.
Nobel Prize-winning economist Paul Krugman said Substack, a subscription-based newsletter platform, “it’s another step towards the rapid descent into the position of the Banana Republic.”
Lawrence Summers, who served as U.S. Treasury Secretary under President Bill Clinton, described the firing as “a democratic thing that gives way to authoritarianism.”
Scott Sumner, an economics professor at Bentley University in Waltham, Massachusetts, said Trump’s move “looks like a banana republic,” but it was not seen whether he would directly manipulate government economic figures.
“It’s actually hard to fool the public. Few people were fooled by Argentina’s manipulation,” Sumner told Al Jazeera.
“It’s too early to say whether Trump is going to do the same thing or not, and any attempt to do so will likely fail.”
“Quality of US Economic Statistics”
The quality of US economic data has been growing concern for some time, partly due to the Trump administration’s freeze over federal employees and staff cuts at many agencies.
In March, Commerce Secretary Howard Lutnick dissolved two committees of experts advising the government on economic statistics, igniting concern among some economists.
In June, the Bureau of Labor Statistics (BLS) announced that it had stopped collecting price-related data in three cities in Buffalo, New York. Lincoln, Nebraska; Provo, Utah – Due to “current resources” restrictions.
But even before Trump returned to the White House in January, the decline in response rates to public surveys in recent years made data collection more difficult and increased concerns about accuracy.
In a poll released by Reuters last month, 89 of the 100 policy experts surveyed said they had at least some concerns about the quality of US economic statistics.
“Some data are unreliable because they either stopped responding to the survey or were very biased given the non-uniform response rates,” said Michalski, an associate professor at HEC Paris.
“There is no easy remedy to improve data collection given that many people are not using landline phones, unreachable or providing careless answers to investigators,” he said.
Even healthy methodologies involve data, when politicians are involved, Mikalsky added.
“Even with the correct numbers, we can spin the story about inflation and GDP growth by changing the base year or selecting a specific period to weave the story,” he said.
“The incentives for manipulation and forgery are clearly there. There is little or no punishment.”
Groshen said she doesn’t expect US economic data to stop being reliable in the near future, but “it appears to be heading in that direction.”
“For now, BLS will continue to work the same way as before,” she said.
“We need to start worrying about whether the president’s people are embedded there.”
