What would happen if America started faking its economic data? Here's what happened when other countries did it

CNN

5 hours ago

Donald Trump
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Lying to your lenders is a bad enough idea when you're an individual. It's even worse when you're a country.
That's the specter critics of President Donald Trump have raised after he fired the head of the US Bureau of Labor Statistics this month after disappointing jobs data. While there's no indication the data has been rigged (assertions from the White House aside) – or will be rigged in the future – the White House's nomination of a partisan to lead the government's economic data agency was enough to worry global economic and financial circles.
There's historical precedent for that fear. Countries like Greece and Argentina have been both been punished by investors for putting out manufactured numbers in the past.
'President Trump has just taken one very negative stop along a slippery slope,' Alan Blinder, a former vice chair of the Federal Reserve, told CNN. 'The next worry is going to be manipulation' of data.
At stake is the health of an economy relied upon by nearly every person on earth, directly or indirectly. The US economy affects everyone from Americans in glitzy Manhattan skyscrapers to, quite literally, garbage pickers living in developing nation slums.
But while Greece famously faked its way into the European Union and Argentina to this day remains embroiled in legal fights over its own sham numbers, there key differences here: The US economy is the world's biggest, buoyed by its global dominance and its years of strength.
The Trump administration says firing Erika McEntarfer wasn't about politics but was instead about making BLS data more rigorous and accurate.
'Historically abnormal revisions in BLS data over the past few years since COVID have called into question the BLS's accuracy, reliability, and confidence. President Trump believes that businesses, households, and policymakers deserve accurate data to inform their decision-making, and he will restore America's trust in the BLS,' said White House spokeswoman Taylor Rogers in a statement to CNN.
Still, economists warn, the United States is at something of a crossroads now, waiting to see what happens to data series that economists have praised as the gold standard, even if many agree that model updating and modernization could make major improvements to the data's accuracy.
'There's no substitute for credible government data,' said Michael Heydt, the lead sovereign analyst at rating agency Morningstar DBRS.
In 2004, Greece confessed it had faked numbers on its national deficit and debt to qualify for entry into the eurozone in 2001.
But the number-fudging didn't end there. Appointed to Greece's statistical agency in 2010, economist Andreas Georgiou made a bold decision: He worked to publish deficit numbers that aligned with reality. After years of untrustworthy numbers that made the idea of official Greek data a global punchline, his efforts were downright startling. What followed were years of legal fights, and he was prosecuted for allegedly inflating the country's deficit figures. Even the EU itself condemned Greece for the false data.
The fakery made the effects of the global financial crisis of 2008 and 2009 significantly worse in Greece. Lenders, skittish of what Greece's actual public finances might be, shied away, demanding increasingly higher rates to hold Greek bonds. Austerity measures demanded by the World Bank and International Monetary Fund to bail out Greece angered everyday citizens.
Pictures of Greeks rioting in the streets, burning cars and expressing their rage, underscored the dangers.
In Argentina, accusations of untrustworthy inflation and economic growth data have dogged Latin America's third-largest economy for decades, scaring off investors despite a wealth of natural resources. Then-President Nestor Kirchner demoted the person in charge of preparing inflation data because she (correctly) reported surging prices in 2007. Everyone from ordinary citizens to global investors treated official inflation data as suspect for years after.
That contributed to the country's credit ratings staying in junk territory for years – one of the factors investors typically cite to charge a country more to loan it money. (In Argentina's case, previous sovereign defaults were also a major factor. The unreliable inflation data, after all, did not happen in a vacuum.)
That matters to ordinary people because short- and long-term debt, whether from a federal government down to tiny cities and towns, can help fund everything from new schools to roads to essential services. When lenders turn off the money spigot – or charge dearly for access – that means regular people ultimately pay the price.
But the United States is far from replicating either scenario, said Robert Shapiro, the chairman of economic advisory firm Sonecon and a former Under Secretary of Commerce for Economic Affairs under President Bill Clinton.
When the data was revealed to be fake in both Greece and Argentina, those economies were already in terrible shape, Shapiro pointed out.
'So the impact of the markets no longer being able to rely on the data was a little less because the markets were already backing away from investment and employment.'
The US economy is growing, hitting a relatively robust annualized rate of 3% in the second quarter. And at over $30 trillion, the US economy has a heft that both Greece and Argentina lack.
'We're the largest economy in the world. We are by far the greatest financial center in the world,' Shapiro said.
Trump fired Dr. Erika McEntarfer, the commissioner of the Bureau of Labor Statistics, shortly after the August 1 jobs report showed sharply slower jobs growth than expected for July – and significant downward revisions to data from June and May. Trump accused McEntarfer, without evidence, of manipulating the reports for 'political purposes.'
Analysts begged to differ. The US is 'a world leader in providing high-quality data,' Heydt said. 'The BLS in particular is kind of a world class institution… The US for a long time has been kind of the gold standard for data.'
William Beach, a former Trump BLS commissioner, told CNN previously that 'there's no way' for McEntarfer or others to rig the data. 'By the time the commissioner sees the number, they're all prepared, they're locked into the computer system,' he said. 'There's no hands-on at all for the commissioner.'
But large revisions in the bureau's data have raised eyebrows, not just this month, but in the past as well. A preliminary annual revision in August 2024, for example, showed the US economy had added 818,000 fewer jobs over the past year than previously reported.
Those kinds of large revisions might suggest deeper issues, like how the BLS gets their data and constructs their economic models, said Kathryn Rooney Vera, the chief market strategist and chief economist at financial services company StoneX.
'Several economists and research teams I personally engage with have flagged these as structural issues with the data long before Trump's involvement or the firing of the BLS chief,' Rooney Vera told CNN.
And Shapiro noted another wrinkle: budget cuts. Already the BLS has said it will cut back on collecting some data because it has fewer people. That, in turn, means it can take longer to get to final numbers for data releases.
In the case of the jobs report, big companies usually respond with information first. Smaller companies tend to trail. 'And so you get a lot of responses that come in after the date when the initial estimate is put out,' he said, leading to revisions.
Still, the US has other sources of data, both public and private, to round out a fuller picture of the economy. Shapiro pointed to the Census Bureau and the Bureau of Economic Analysis.
'These institutions are made up virtually 100% by statisticians and economists,' Shapiro said. 'They're utterly nonpolitical in their jobs.'