Donald Trump’s cuts to US government raise worries over economic data quality

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The Trump administration’s deep cuts in federal labor and researching research threatens to erode the quality and credibility of American statistics “Gold Standard”, economists warned.

American data, from the report on inflation clues, can swing the stock market and bonds of 105 TN of Wall Street in Milliseconds, and underlie policies that influence the trajectory of the world’s largest economy.

But economists are increasingly worried about the efforts of the so-called Elon Musk Government Department of Effectiveness (DOGE) To radically slim The government will undermine the capacity of civil servants to collect, analyze and search for statistics on the American economy.

“All the reductions in federal funding and some of those you have seen getting out of Doge … are often a death blow for investigative operations that are already very stretched,” said Ricardo Reis, professor of London Economy School, consultant at the Richmond Federal Reserve.

He added: “The things that go behind [the consumer price index, GDP] And others – all these surveys that I consider as possible losses. »»

The United States Tentacular Statistics operation is decentralized, with more than a dozen agencies and data collection units in several departments, including trade, work and agriculture. These agencies produce flagship reports such as the consumer price index and non -agricultural payroll, which are closely examined at Wall Street, as well as a treasure of lower profile data which contribute to clarifying political debates and university research.

“Having the highest data quality of data, than the United States government Statistical agencies have absolutely crucial, “said Austan Goolsbee, president of the Fed de Chicago, at the Financial Times this week.” The data could not be more important. It should be in the interest of everyone to make sure that the figures are as precise as possible. »»

The suggestion of the commercial secretary, Howard Lutnick, according to which his department produces a measure of GDP which withdraws public spending, unlike international standards, has also made an alarm on the question of whether politicians will seek to influence economic relationships.

“The United States has always been the data stallion on data, especially on things like GDP, workforce, prices,” said Steve Cecchetti, economist at the University of Brandeis and former head of the Bank’s economic and monetary department for international establishments. “It is the gold stallion because society and the government have supported and believed in the measure of things as precisely as possible.”

Lutnick’s decision to close the Federal Economic Statistics Consultative Committee, an organization that advised statistical agencies, has raised concerns among the economists interviewed by the Booth School of Business from the University of Chicago and the FT at the beginning of the month.

David Wilcox, who chaired the committee before closing in February, said that this decision was “a shame, because the work of the council has almost no cost for the taxpayer and that his closure will lead to a quality of lower statistics”.

More than 90% of respondents in the FT-CHICAGO stand survey said they were either “a little” or “very” worried about a drop in the quality of American economic data, partly due to the closure of the FESAC.

Economists are also concerned about the fact that Doge’s attempts to slow down expenses will lead to statisticians with a high degree of specialized knowledge leaving the government – something they warn can end up costing the taxpayer in the United States more than it will save it in the longer term.

Matthew Shapiro, an economist at the University of Michigan who is a former president of Fesac, “said:” The [push for federal staff to take] The first pensions could lead to many very expert human capital that came out of the door. »»

Shapiro also believes that President Donald Trump’s decree to eliminate “information silos” that would force agencies to share data with officials appointed by the president should also lead to response rate drops for surveys, such as the labor market survey.

Research networks that play an essential role in developing and maintaining standards, such as the National Office for Economic Research, are also under pressure by billions of dollars in reductions for research funding.

The NBER receives about half of its funding from the National Institutes of Health, the National Science Foundation and the US Social Security Administration – all organizations that are now exposed to Trump’s attempts to brake research.

Jim Poterba, president of the NBER, said that current and proposed financing reductions would lead its organization to reduce activity and reduce costs. Although some of the funds can be recovered from private sector financing sources, it was unlikely that it is enough to correspond to the loss of government financing, he said.

“The researchers’ pipeline will become smaller,” said Poterba, adding that the probable impact would be lower political decisions.