The US economy influences everyone, from Wall Street bankers in New York to workers in developing nations dependent on American demand. (AP Photo/Alex Brandon)
Lying to lenders is a terrible idea for an individual. For a country, it can be catastrophic. That is the concern raised after President Donald Trump abruptly fired Erika McEntarfer, the head of the US Bureau of Labor Statistics (BLS), following weaker-than-expected jobs data. While there is no evidence the data has been manipulated, critics fear the appointment of a partisan figure to lead the agency could erode trust in the world’s most closely watched economic numbers.
The stakes could not be higher. The US economy influences everyone, from Wall Street bankers in New York to workers in developing nations dependent on American demand. If confidence in US data faltered, the shockwaves could be global.
When Data Lies BackfireThere is precedent for concern. Greece and Argentina both suffered heavily after being caught manipulating official statistics.
Argentina faced similar troubles when its government dismissed officials who reported true inflation numbers. Investors treated the country’s economic statistics as unreliable, keeping Argentina locked in junk credit ratings and raising borrowing costs. Ordinary citizens bore the brunt, paying higher prices while public finances dried up.
Both cases show how quickly trust can collapse, and how ordinary people end up footing the bill.
Why the US Is Different- For NowThe United States, however, is not Greece or Argentina. At more than $30 trillion, it is the world’s largest economy, with multiple statistical agencies like the BLS, Census Bureau and Bureau of Economic Analysis. For decades, US economic data has been seen as the global “gold standard.”
But warning signs remain. Recent large revisions to jobs numbers have raised questions about the accuracy of BLS models. Budget cuts have reduced the agency’s capacity, forcing it to scale back data collection. Analysts caution that this makes figures more prone to errors, regardless of politics.
“There’s no substitute for credible government data,” said Michael Heydt, lead sovereign analyst at Morningstar DBRS. Without that credibility, the very foundation of financial markets, trust, begins to crumble.
The Global Ripple EffectIf the US ever did cross the line into deliberately publishing manipulated numbers, the damage could be profound. Investors could demand higher returns on US debt, shaking the Treasury market, the bedrock of global finance. From mortgage rates to municipal borrowing, costs could rise for Americans. The ripple effects would extend far beyond US borders, disrupting economies that depend on American stability.
As economist Robert Shapiro notes, Greece and Argentina’s numbers were falsified during periods of deep weakness. The US economy, by contrast, is still growing at around 3% annually. That strength gives Washington more leeway, but also more responsibility.
America’s credibility has been built over decades of reliable, transparent data. If that credibility erodes, history shows the consequences: mistrust, higher borrowing costs, and pain for ordinary citizens. The United States may be too big to fail, but it is not too big to lose trust.