Is it time to worry about government reported data?
A pair of headlines suggests as much
Earlier this year, I mentioned that experts were getting a little nervous that the government’s culling of departments (read: DOGE cuts) might impede the government’s ability to properly collect data, or that the government may even try to politicize the data by not disclosing data that goes against their narrative.
Well, we have two stories yesterday that highlight both of these concerns.
First, Politico ran a report yesterday that said the government had delayed the release of an agricultural report.
Trump administration officials delayed and redacted a government forecast because it predicts an increase in the nation’s trade deficit in farm goods later this year, according to two people familiar with the matter.
The numbers run counter to President Donald Trump’s messaging that his economic policies, including tariffs, will reduce U.S. trade imbalances. The politically inconvenient data prompted administration officials to block publication of the written analysis normally attached to the report because they disliked what it said about the deficit.
The published report, released Monday but dated May 29, includes numbers that are unchanged from how they would’ve read in the unredacted report, said the people, who were granted anonymity to discuss internal decision-making.
(PTO emphasis added)
In essence, this report shows that Trump’s policies, including tariffs, are causing the trade deficit to increase, not decrease. See below for the data from the report showing the increase in agricultural imports and rising trade deficit.
The story goes on to note why this data is important.
Policymakers, farm groups and commodities traders rely on the closely watched report, which the Agriculture Department issues quarterly, for its analysis of imports and exports of major farm commodities including cotton and livestock. The highly unusual rollout could raise questions about potential political meddling with government reports that have traditionally been trusted for decades.
“Objectivity is really key here and the public depends on it,” said Joe Glauber, a former USDA chief economist. “To lose that trust would be terrible.”
Clearly, the public deserves timely, accurate data free from political interference. And as the former 538er G. Elliot Morris noted in his Substack, it is the American people’s data. “When the government collects data, it is doing so with your tax dollars — about the things that your tax dollars pay for, and about your country. You have paid for this and deserve accurate data in return.”
In a related story, yesterday The Wall Street Journal delivered a similar headline…
Oh boy, problems with inflation data! What could possibly go wrong??
Some economists are beginning to question the accuracy of recent U.S. inflation data after the federal government said staffing shortages hampered its ability to conduct a massive monthly survey.
The Bureau of Labor Statistics, the office that publishes the inflation rate, told outside economists this week that a hiring freeze at the agency was forcing the survey to cut back on the number of businesses where it checks prices. In last month’s inflation report, which examined prices in April, government statisticians had to use a less precise method for guessing price changes more extensively than they did in the past.
Economists say the staffing shortage raises questions about the quality of recent and coming inflation reports. There is no sign of an intentional effort to publish false or misleading statistics. But any problems with the data could have major implications for the economy.
(PTO emphasis added)
The article, a similar version of which was published by The New York Times, notes that there is no indication of malfeasance or manipulation of the data going on here (that’s good!). But when government departments and agencies are needlessly and recklessly culled without any real plan to make-up the difference, cracks are going to form.
As a little reminder, why do we need accurate inflation data?
The inflation rate determines how much social-security benefits go up each year, and where federal tax brackets are set. Private-sector contracts such as wage agreements between companies and unions routinely reference the inflation rate. Payments on $2 trillion of inflation-protected federal bonds hinge on the inflation rate, as do yields on standard Treasury bonds. Businesses, investors and policymakers rely on the reading to guide their decisions. The Federal Reserve is laser-focused on inflation data when it sets interest rates for the country.
(PTO emphasis added)
Social security, tax brackets, wages within the private sector, bond yields, corporate investment decisions, and last, but certainly not least, the all important interest rate set by the Federal Reserve.
Put another way: virtually every economic decision is in some way impacted by the inflation rate.
So yes, I think it’s important we get inflation correct. Perhaps the government should hire back the folks it let go. Though, would they still be willing to take a role, knowing they are deemed expendable at a moment’s notice?