Stat Of The Nation
Convention demands that emperors don't shoot messengers, but Trump sacked Erika McEntarfer on Friday after her Bureau of Labour Statistics (BLS) revised US jobs data for May and June downwards. Those were the first full months to reflect the impact of Trump's 10% baseline tariff. Initially, BLS had reported 144,000 new jobs in May, and 147,000 in June, suggesting that fears about the impact of tariffs were overblown. Now, it says only 19,000 and 14,000 jobs, respectively, were added in the two months. Initial data for July looks even weaker, with only 73,000 jobs added. Post-revision, it might turn out to be a month of net job loss.
Suddenly, Trump's tariff project is looking weak when high country-specific tariffs are about to take effect from Thursday. He's reacted predictably, alleging data was manipulated: 'In my opinion, today's jobs numbers were RIGGED in order to make the Republicans, and ME, look bad.' But as former US treasury secretary Larry Summers says, the charge is preposterous because the data is compiled by 'hundreds of people following detailed procedures'. The job numbers are off the mark every month simply because a third of the 121,000 employers BLS surveys don't send their responses on time.
Trump could have asked for better data gathering. It's a fair demand, given that investors and the Fed, with which he has a running feud, base their decisions on such indicators. But Trump's cost-cutting – remember Elon Musk's Doge? – is among the culprits here. His personal attacks on officials and sackings will only weaken global confidence in US. If he manages to 'control' data somehow, he will push US into the league of dictatorships that are known to fudge economic data all the time. In 2018, University of Chicago researcher Luis Martinez made an interesting observation using satellite images: a 10% increase in nighttime lights was correlated with a 2.4% GDP increase in democracies, but 2.9-3.4% increase in authoritarian countries.
India passed Martinez's test well, but our data framework isn't strong either. The delayed Census is a blemish, and even after improvements, getting a final estimate of GDP growth takes two years. There are questions about the accuracy of PLFS data also. To improve policy formation, and to attract more investment, we must improve our data collection and reporting. And if the data is sour, spare the messenger.
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This piece appeared as an editorial opinion in the print edition of The Times of India.
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