5 days ago
Firing the BLS commissioner will come back to haunt Trump
N. Gregory Mankiw, a professor of economics at Harvard University, was chair of the Council of Economic Advisers under President George W. Bush. Cecilia Rouse, president of the Brookings Institution, was CEA chair under President Joe Biden.
We are both former chairs of the Council of Economic Advisers. In that capacity, our responsibility was to offer the president objective economic advice using the best available data.
We used the data collected by government agencies to understand employment trends; to judge changes in the pace of economic activity; and to gauge whether inflation was under control. At times, the data did not paint the picture the president might have wanted. But we were always confident they were collected using the best available methods and analyzed by a dedicated, nonpartisan staff.
Politicizing those federal statistics and questioning the integrity of those who produce them — as President Donald Trump did last week when he fired the commissioner of the Bureau of Labor Statistics after the monthly employment report came in weaker than expected — is likely to come back to haunt the administration. It compromises the ability of policymakers in the executive branch, Congress and the Federal Reserve to properly analyze the state of the economy and develop the best policies to ensure prosperity.
While no single piece of economic data is dispositive in a leader's decision-making, each must be as accurate as possible to help guide their decisions. Recognizing this need, the federal government has over time created 13 statistical agencies. The BLS is one of the oldest, created in 1884 to collect data on many aspects of the economy, including the monthly employment report and retail and wholesale prices. Today, government and business leaders throughout the economy rely on this information to make sound decisions. These statistics shed light on the state of the labor market, trends and opportunities in business investment, and the size and health of our population.
The collection and analysis of federal statistics is complex. Often, the first numbers produced are revised as more information is gathered. And sometimes the revisions are quite large. This can lead to questions about the process, so it is crucial that the users of the data (which is really all of us!) trust that those collecting and analyzing these statistics are not swayed by politics. After all, if data are only considered 'good' when they support a particular politician's worldview and 'bad' when they do not, why should anyone believe them? And if we don't believe them, we know less about what is happening in the economy.
Economists such as Nicholas Bloom at Stanford University have documented that uncertainty about economic prospects and policy reduces economic growth. Further, Nobel Prize winners Daron Acemoglu, Simon Johnson and James Robinson have identified the strength of a nation's institutions as a source of economic growth. We have little doubt that part of the success of the U.S. economy over the past century is due to its strong and independent federal statistical agencies, which generate the kind of information leaders need to make smart decisions.
Federal statistics may seem like an arcane topic that interests only econ wonks like us. But the truth is that these statistical agencies have made it possible for business leaders and policymakers alike to analyze credible data and plan for the future. And that is something everyone should care about.
Politicians spin — it is what they do. But when their spin undermines the integrity of the numbers we have come to rely on, the consequences are real. We will all pay the price.
