WEBVTT - What Happens When US Economic Data Can’t Be Trusted? 0:00:02.720 --> 0:00:07.200 Bloomberg Audio Studios, podcasts, radio news. 0:00:08.080 --> 0:00:11.320 Some of the presidents Alex advisors have suggested that you 0:00:11.560 --> 0:00:12.360 should resign. 0:00:12.960 --> 0:00:15.760 If he asked you to leave, would you go? No? 0:00:17.360 --> 0:00:19.000 Can you follow up on it? 0:00:19.560 --> 0:00:22.639 Do you think that legally you're not required to leave? 0:00:23.079 --> 0:00:23.159 No. 0:00:33.560 --> 0:00:36.760 I'm Stephanie Flanders, head of Government and Economics at Bloomberg. 0:00:37.520 --> 0:00:40.680 Welcome to Trumpanomics, the podcast that looks at the economic 0:00:40.720 --> 0:00:43.360 world of Donald Trump, how he's already shaped the global 0:00:43.400 --> 0:00:46.200 economy and what on earth is going to happen next? 0:00:46.960 --> 0:00:49.800 And it's that what's going to happen next part that 0:00:49.840 --> 0:00:53.280 we're focusing on this week. There's so many presidents being 0:00:53.280 --> 0:00:56.320 broken in Washington these days, it's easy to miss a few. 0:00:57.360 --> 0:01:01.000 Last week, well, most were focused on deportation, court orders, 0:01:01.120 --> 0:01:04.840 flights to El Salvador. Something happened that we at Trumpanomics 0:01:04.880 --> 0:01:08.720 think should have got more attention. Two commissioners on the 0:01:08.720 --> 0:01:13.200 Federal Trade Commission got fired for being Democrats. Now you 0:01:13.280 --> 0:01:16.520 might say, so, what, who isn't being fired in the 0:01:16.600 --> 0:01:20.000 nation's capital these days? Except it's not really supposed to 0:01:20.080 --> 0:01:23.440 happen at an independent agency like the FTC. And if 0:01:23.440 --> 0:01:27.280 it can happen to officials there. It raises questions about 0:01:27.400 --> 0:01:31.600 whether folks at other independent agencies, even senior ones, could 0:01:31.600 --> 0:01:35.360 be fired too. Fed share J Powell, for example, who 0:01:35.440 --> 0:01:38.360 you heard voicing a rather different opinion at the start 0:01:38.360 --> 0:01:41.640 of the show. It also made us think about some 0:01:41.800 --> 0:01:45.160 other seemingly minor developments in other corners of DC that 0:01:45.959 --> 0:01:49.640 could raise red flags about the independence and oversight of 0:01:49.800 --> 0:01:54.640 not only the agencies that implement America's economic and regulatory policies, 0:01:55.200 --> 0:01:59.240 but even potentially the economic data on which every judgment 0:01:59.360 --> 0:02:02.840 about the US economy is based. Now, of course we 0:02:02.960 --> 0:02:05.480 might be overdoing it. I hope we're overdoing it. Some 0:02:05.520 --> 0:02:08.520 of these risks may well not materialize, but when it 0:02:08.520 --> 0:02:12.800 comes to the independence of monetary policy and economic statistics, well, 0:02:13.120 --> 0:02:17.280 we at Bloomberg get nervous fairly easily. David Wilcox has 0:02:17.280 --> 0:02:21.320 spent his entire career overseeing and analyzing US economic data 0:02:21.320 --> 0:02:24.640 and policy, first as Assistant Secretary for Economic Policy at 0:02:24.639 --> 0:02:27.880 the US Treasury under President Clinton. He was then many 0:02:28.000 --> 0:02:31.840 years until twenty eighteen, leading the Research and Statistics Division 0:02:31.960 --> 0:02:35.760 for the US Federal Reserve. Acted as a senior advisor 0:02:35.960 --> 0:02:40.200 to three Federal Reserve chairs, including Jay Powell happily for us, 0:02:40.240 --> 0:02:43.280 he's now reached the pinnacle of his career as the 0:02:43.520 --> 0:02:47.120 director of US economic research for Bloomberg Economics. David, thank 0:02:47.160 --> 0:02:49.200 you very much for joining us and for being the 0:02:49.240 --> 0:02:51.160 one really to sound the alarm about a lot of 0:02:51.200 --> 0:02:51.680 these things. 0:02:51.880 --> 0:02:52.880 It's good to be here. 0:02:53.160 --> 0:02:54.799 Well, I know you do have a lot of thoughts 0:02:54.800 --> 0:02:57.800 and concerns about this, based on your experience on the 0:02:57.840 --> 0:03:01.400 inside of these agencies and decisions. But I also wanted 0:03:01.400 --> 0:03:04.320 to get a bit of the reporter perspective from Molly Smith, 0:03:04.480 --> 0:03:07.680 who's a US economics editor for Bloomberg in New York 0:03:08.040 --> 0:03:10.440 and has been writing up quite a lot of what's 0:03:10.480 --> 0:03:13.760 been happening at the statistical agencies and other parts of 0:03:14.440 --> 0:03:18.480 DC that collate US economic data in recent months. Molly, 0:03:18.800 --> 0:03:20.360 welcome to Trumponomics. 0:03:20.639 --> 0:03:21.480 Thanks for having me. 0:03:28.040 --> 0:03:30.680 So, David, let's start with that first thing. I mentioned, 0:03:30.720 --> 0:03:33.320 the firing of two commissioners, which definitely did get a 0:03:33.360 --> 0:03:35.880 little bit lost in the enormous amount of other news 0:03:35.920 --> 0:03:39.040 that's happening on a daily basis in Washington. Why did 0:03:39.080 --> 0:03:42.000 you immediately pick up the phone to tell us this 0:03:42.120 --> 0:03:43.120 was something to worry about. 0:03:43.640 --> 0:03:48.840 Well, the historical parallel is just echoes very loudly. Nearly 0:03:48.880 --> 0:03:52.080 one hundred years ago, President Franklin Dello and Or Roosevelt 0:03:52.120 --> 0:03:56.840 also tried to fire an FTC commissioner named William Humphrey. 0:03:57.720 --> 0:04:01.960 Humphrey initially had been appointed to the FTC by President 0:04:02.120 --> 0:04:05.360 Calvin Coolidge in nineteen twenty five, and was reappointed to 0:04:05.400 --> 0:04:10.440 a second term by President Herbert Hoover. When FDR came 0:04:10.480 --> 0:04:14.880 into office, he correctly identified Humphrey as somebody who held 0:04:14.880 --> 0:04:19.000 different policy views than FDR did, and so he asked 0:04:19.160 --> 0:04:24.440 Humphrey twice in letters to resign, but Humphrey refused, so 0:04:25.520 --> 0:04:29.920 FDR fired him. And that came despite the fact that 0:04:30.000 --> 0:04:35.000 there was language in the FTC Act saying that the 0:04:35.040 --> 0:04:39.520 President could fire members of the Commission only for inefficiency, 0:04:39.640 --> 0:04:44.160 neglected duty, or malfeasance in office, and Roosevelt didn't allege 0:04:44.200 --> 0:04:48.160 that any of those applied in the case of William Humphrey. 0:04:48.920 --> 0:04:53.080 Humphrey refused to go. He sued for back wages, the 0:04:53.120 --> 0:04:56.880 wages that he hadn't been paid after he'd been terminated. 0:04:57.600 --> 0:05:02.360 Then he suffered the misfortune of before the case found 0:05:02.440 --> 0:05:06.560 completion through the court system, which then as now the 0:05:06.600 --> 0:05:11.320 wheels of justice turned rather slowly, but Humphrey's executor, the 0:05:11.400 --> 0:05:15.760 executor of his estate, took up the legal cause and 0:05:16.040 --> 0:05:19.560 maintained the lawsuit, and ultimately, in nineteen thirty five, the 0:05:19.600 --> 0:05:24.599 Supreme Court ruled in Humphrey's favor and awarded those back 0:05:24.640 --> 0:05:28.880 wages to his estate. That the case is incredibly important 0:05:28.920 --> 0:05:34.839 today because it's that legal foundation, that nineteen thirty five 0:05:34.960 --> 0:05:40.279 Supreme Court decision on which rests the employment security such 0:05:40.320 --> 0:05:43.919 as it is that Federal Reserve governors also enjoy. The 0:05:44.000 --> 0:05:46.479 language in the Federal Reserve Act is a little different, 0:05:46.520 --> 0:05:49.359 but the legal principle is exactly the same. 0:05:50.279 --> 0:05:53.479 And to be clear, the firings in this case were 0:05:53.520 --> 0:05:55.960 in a sense similar to the FDR ones because it 0:05:56.000 --> 0:05:58.120 was not based on bad behavior, and there was no 0:05:58.160 --> 0:06:00.320 claim it was based on bad behavior. It is the 0:06:00.320 --> 0:06:04.040 fact that they potentially disagreed with the administration the continued 0:06:04.080 --> 0:06:07.120 service on the FTC. The statement said, the explanation from 0:06:07.120 --> 0:06:11.760 the White House was is inconsistent with my administration's. 0:06:10.880 --> 0:06:15.680 Priorities, exactly right. And I think what we're likely to 0:06:15.720 --> 0:06:19.400 see here can't say with certainty, but likely, I think 0:06:19.560 --> 0:06:23.839 is that this case involving the two FTC commissioners will 0:06:23.920 --> 0:06:27.840 work reasonably rapidly through the court system and will get 0:06:27.880 --> 0:06:32.920 a decision ultimately, probably from the Supreme Court. An extra 0:06:33.080 --> 0:06:36.680 reason for concern is that the Supreme Court has been 0:06:36.760 --> 0:06:41.040 chipping away at that nineteen thirty five decision Humphrey's Executor 0:06:41.160 --> 0:06:46.520 versus the United States. Twenty twenty, for example, they limited 0:06:46.560 --> 0:06:50.240 the reach of Humphrey's Executor so that it no longer 0:06:50.279 --> 0:06:55.040 applies to single headed agencies like the Consumer Financial Protection Bureau. 0:06:55.720 --> 0:06:58.799 They said it did still apply as of twenty twenty 0:06:59.160 --> 0:07:03.000 to multi head agencies like the Federal Reserve Board. But 0:07:03.560 --> 0:07:07.360 I think there's a lot of opinion in legal community 0:07:07.400 --> 0:07:11.840 among legal scholars that Humphrey's Executor hangs by a thread, 0:07:12.040 --> 0:07:16.200 and with it the independence of the Federal Reserve, its 0:07:16.240 --> 0:07:20.000 ability to set monetary policy without fear of being second 0:07:20.000 --> 0:07:21.840 guest by political authorities. 0:07:22.560 --> 0:07:25.920 And it should be said it would put the administration 0:07:26.400 --> 0:07:29.920 in direct opposition to the way that j. Powell himself 0:07:29.920 --> 0:07:32.600 said he saw the situation. In the first press conference 0:07:32.640 --> 0:07:35.320 after the election, he was asked, can you be fired? 0:07:35.360 --> 0:07:37.360 Are you worried about being fired by the president, and 0:07:37.400 --> 0:07:40.000 said no, in a very kind of this is not 0:07:40.040 --> 0:07:43.000 a questioned way. Was that your understanding, David, when you 0:07:43.040 --> 0:07:44.880 were inside the FED that it was just there was 0:07:44.920 --> 0:07:46.760 just not an issue about whether or not the President 0:07:46.760 --> 0:07:47.840 could fire at FED chair. 0:07:48.480 --> 0:07:51.600 Well, as in many things in the legal world, it's 0:07:51.920 --> 0:07:55.880 a little complicated. There are two positions that Jay Powell holds. 0:07:56.480 --> 0:07:58.600 One is that he's a member of the Board of 0:07:58.600 --> 0:08:02.000 Governors and they're The Federal Reserve Act language is quite 0:08:02.080 --> 0:08:06.240 clear the President may terminate members of the Federal Reserve 0:08:06.280 --> 0:08:11.440 Board for cause. The other position to which he also 0:08:11.480 --> 0:08:15.360 needs to be confirmed, is as Chair of the Federal 0:08:15.360 --> 0:08:19.560 Reserve Board, and there the drafting of the language, unfortunately 0:08:19.760 --> 0:08:23.720 was rather awkward and leaves ambiguous the question about whether 0:08:23.760 --> 0:08:28.400 the President can demote the chair from his elevated status 0:08:28.440 --> 0:08:31.160 to that of a mere member of the Board of Governors. 0:08:31.680 --> 0:08:34.880 That question has never been litigated. No president has ever 0:08:34.960 --> 0:08:38.760 tried to demote a Federal Reserve chair before. I think 0:08:39.080 --> 0:08:43.560 it's possible that we may see that question resolved here 0:08:43.600 --> 0:08:44.280 in the future. 0:08:44.840 --> 0:08:47.920 But the broader concern which I mentioned at the start, 0:08:48.520 --> 0:08:52.000 was around something which one thinks of as even more 0:08:52.040 --> 0:08:55.440 of a kind of bedrock for US economic policy, and 0:08:55.440 --> 0:08:59.880 that's just economic data, Molly, what's happened in the last 0:09:00.280 --> 0:09:04.000 few weeks, as Doge and other parts of the administration 0:09:04.160 --> 0:09:07.000 have been sort of cutting a sway through Washington, what's 0:09:07.040 --> 0:09:09.520 happened that has raised concerns around statistics. 0:09:10.160 --> 0:09:12.120 So the biggest thing that I could point to so 0:09:12.320 --> 0:09:18.400 far has been the administration terminating these statistical advisory committees. 0:09:18.440 --> 0:09:21.920 And this was part of a broader executive order aimed 0:09:22.000 --> 0:09:25.400 at reducing the scope of the federal government and eliminating 0:09:25.800 --> 0:09:30.680 these committees wherever they were deemed unnecessary. And the thing 0:09:30.760 --> 0:09:34.400 is about these committees, though at least for the statistical agencies, 0:09:34.520 --> 0:09:37.640 is that they're made up of all volunteers. David can 0:09:37.679 --> 0:09:40.079 speak to this also, he is chair of one of 0:09:40.120 --> 0:09:43.040 these committees, so he knows this all too well. They're 0:09:43.080 --> 0:09:46.000 all on a volunteer basis. They are not paid, they 0:09:46.040 --> 0:09:50.120 are not employees of the federal government. And they generally 0:09:50.160 --> 0:09:52.960 a lot of these committees met maybe two to four 0:09:53.000 --> 0:09:56.000 times a year. And since COVID, it's all been virtual 0:09:56.040 --> 0:09:58.480 for the most part, so they really had just about 0:09:58.600 --> 0:10:02.319 zero cost to the government. I think the biggest budget 0:10:02.360 --> 0:10:04.760 of any of them was maybe one hundred thousand dollars, 0:10:04.800 --> 0:10:07.840 so this is certainly not or does is going to 0:10:07.880 --> 0:10:10.760 be zeroing in on for the big for the big 0:10:10.800 --> 0:10:15.280 bucks in terms of savings here. And it's really, if anything, 0:10:15.679 --> 0:10:18.960 you know, these committees were there to advise the statistical 0:10:19.000 --> 0:10:21.960 agencies about a whole range of things, whether it was 0:10:22.520 --> 0:10:24.600 really how to keep up to date with our economy 0:10:24.640 --> 0:10:27.079 which is ever evolving, and to make sure that the 0:10:27.160 --> 0:10:31.040 data was commensurate with that and reflecting these new trends. 0:10:31.200 --> 0:10:34.320 And it was really just a huge benefit to them 0:10:34.360 --> 0:10:37.960 to have people on these committees that maybe were formerly 0:10:38.120 --> 0:10:41.600 on these agencies themselves that maybe now work in academia 0:10:41.800 --> 0:10:45.080 or our business economists work on Wall Street, in all 0:10:45.120 --> 0:10:50.120 different real corners of economics and providing this free advice. 0:10:50.400 --> 0:10:53.840 So if anything, now maybe you'd think, oh, well, not 0:10:53.960 --> 0:10:56.200 that the government is going to be spending money on this, 0:10:56.360 --> 0:10:59.920 but if they were to want a value of that back, 0:11:00.120 --> 0:11:02.920 it would be through hiring consultants. But these people did 0:11:02.920 --> 0:11:07.319 it for free. So committees. The committees that were terminated 0:11:07.480 --> 0:11:10.680 include one to the Bureau of Economic Analysis, that's the 0:11:10.840 --> 0:11:14.839 agency that pulls together the GDP report as well as 0:11:14.840 --> 0:11:19.400 the Fed's preferred inflation gauge, the personal consumptions expenditures price index. 0:11:19.800 --> 0:11:22.960 So the BA advisory committee was one. Another was the 0:11:23.000 --> 0:11:27.120 one that David shared, which advised across the BA as 0:11:27.160 --> 0:11:30.200 well as Bureau of Labor Statistics and Census. And I 0:11:30.240 --> 0:11:33.440 also just learned that in the past week two of 0:11:33.480 --> 0:11:37.440 the advisory committees to the BLS were also terminated, effective 0:11:37.520 --> 0:11:39.680 actually a month ago, but those people only just found 0:11:39.720 --> 0:11:40.480 out last week. 0:11:40.880 --> 0:11:43.280 So just to tease this out, and it's just to 0:11:43.320 --> 0:11:47.560 demonstrate how all over this story, David Wilcox is you 0:11:47.640 --> 0:11:50.760 were personally, as Molly mentioned, you were personally running one 0:11:50.760 --> 0:11:54.600 of these committees. Briefly, in terms of the value of 0:11:54.640 --> 0:11:57.880 these organizations. I mean, it sounds like you were giving 0:11:57.880 --> 0:12:00.480 them advice on improvements in the data, but I guess 0:12:00.480 --> 0:12:03.160 there was also a little bit of an informal oversight 0:12:03.240 --> 0:12:07.000 by the academic and sort of stakeholder community of changes 0:12:07.040 --> 0:12:09.080 that were being considered by these bureaus. 0:12:09.160 --> 0:12:12.680 Is that right, Yeah, that's right. It's important to note 0:12:13.080 --> 0:12:16.840 that for all of these committees, the word advisory was 0:12:16.920 --> 0:12:20.080 right in their title. We had no decision making power, 0:12:20.920 --> 0:12:23.679 but we were populated by people who were at the 0:12:23.840 --> 0:12:27.760 top of their fields with incredible expertise on the committee 0:12:27.760 --> 0:12:31.439 that I was privileged to serve as chair for. One 0:12:31.440 --> 0:12:35.000 of our members was Droona Jimoglu. You may have heard 0:12:35.000 --> 0:12:38.480 his name because he's a recent recipient of the Nobel 0:12:38.559 --> 0:12:42.120 Prize in economics. He was the only Nobel Prize winner. 0:12:42.160 --> 0:12:47.880 But the committee was chock full of members. 0:12:47.480 --> 0:12:50.320 Who were free. As Molly has underlie, they were getting 0:12:50.360 --> 0:12:51.559 a value for money. 0:12:51.280 --> 0:12:54.359 They were getting nothing in the way of an honorarium. 0:12:54.480 --> 0:12:58.240 They were serving for the purpose of advancing the public good. 0:12:59.120 --> 0:13:03.480 They came from a range of different areas of subspecialty. 0:13:04.040 --> 0:13:07.000 What they had in common were two things. One was 0:13:07.040 --> 0:13:12.320 a conviction that economic measurement is difficult, ever changing, and 0:13:12.559 --> 0:13:18.320 super important for decision makers across society. And secondly, they 0:13:18.400 --> 0:13:21.840 had the conviction that what they were doing had a 0:13:21.920 --> 0:13:24.880 risk of making a difference if they said something smart. 0:13:25.880 --> 0:13:28.880 The agency heads were in the room, the subject area 0:13:29.120 --> 0:13:31.800 experts were in the room, and there was a risk, 0:13:32.360 --> 0:13:36.920 just a risk, that the agency might change direction as 0:13:36.960 --> 0:13:38.680 a result of their advice. 0:13:39.440 --> 0:13:41.200 So I guess you have to wonder a little bit 0:13:41.240 --> 0:13:44.560 why you wouldn't want a free and very well founded, 0:13:44.679 --> 0:13:48.760 deeply researched views by members of that broader community that 0:13:48.920 --> 0:13:52.280 uses economic statistics. But if you were making a change, 0:13:52.320 --> 0:13:55.240 for example, I don't know. We've heard the COMMA Secretary 0:13:55.280 --> 0:13:59.880 Howard Lutnik suggest take the government's share of the economy 0:14:00.080 --> 0:14:02.760 out of GDP. Would that be something that the Advisory 0:14:02.760 --> 0:14:04.040 Committee would have had views on? 0:14:04.080 --> 0:14:06.760 Do you think, David, absolutely, we would have had views. 0:14:06.800 --> 0:14:09.520 Whether they would have come and asked us, I think 0:14:09.600 --> 0:14:13.760 that's open to question. It's such a basic question. It's 0:14:13.800 --> 0:14:17.840 been long settled. It was debated fifty sixty years ago 0:14:17.960 --> 0:14:21.360 when the whole concept of national income and product accounts 0:14:21.840 --> 0:14:26.760 was being invented. But that's been resolved literally for decades. 0:14:27.240 --> 0:14:31.120 It is now a matter of both national norms and 0:14:31.280 --> 0:14:38.600 international standards that government demand is included in the field 0:14:38.600 --> 0:14:42.080 of activity that's taken into account for purposes of tallying 0:14:42.400 --> 0:14:45.680 gross domestic product or what we all know as GDP. 0:14:46.160 --> 0:14:48.360 And of course it's true. It makes reporters immediately think, 0:14:48.440 --> 0:14:51.120 oh my god, and economists think, how could you possibly 0:14:51.120 --> 0:14:54.040 start comparing countries if you suddenly had a totally new series. 0:14:54.320 --> 0:14:57.080 You know, David and I have spoken about this extensively 0:14:57.160 --> 0:15:01.160 as well, and something that when I about this a 0:15:01.200 --> 0:15:03.600 couple of weeks ago, that really stood out to me 0:15:03.800 --> 0:15:06.920 that he said was there's this one idea of like 0:15:07.200 --> 0:15:10.360 maybe Lutnik was just floating the idea of how the 0:15:10.440 --> 0:15:14.880 data is presented, as in, maybe the government spending figure 0:15:15.000 --> 0:15:17.320 is still there in the GDP report, but they publish 0:15:17.760 --> 0:15:20.360 let's call it, like a maybe so called core GDP 0:15:20.800 --> 0:15:22.960 that excludes it, so that you can still see it. 0:15:23.000 --> 0:15:24.840 You can add it back in if that's how you 0:15:25.000 --> 0:15:27.640 choose to calculate it, which is the still standard way. 0:15:27.960 --> 0:15:31.400 That's one thing, not great, but you would still have 0:15:31.520 --> 0:15:34.040 the data there. It's not like it's been eliminated that 0:15:34.080 --> 0:15:37.520 you could calculate it yourself. The real concern, which I 0:15:37.520 --> 0:15:39.960 don't know that this is what Lutnik was implying, but 0:15:40.120 --> 0:15:44.560 certainly you could make this inference, was that what if 0:15:44.600 --> 0:15:47.360 the GDP report just did not publish government spending it 0:15:47.400 --> 0:15:49.880 all anymore? What if that data just simply was not 0:15:49.960 --> 0:15:53.440 collected anymore, and that calculation then could not be made 0:15:53.560 --> 0:15:56.640 the same way. That's more the concern when I talk 0:15:56.760 --> 0:16:00.600 to people who are at the statistical agencies in the 0:16:00.840 --> 0:16:03.880 let's call it the alumni community of the agencies, that 0:16:03.920 --> 0:16:07.440 they're really worried looking from the outside in and I know. 0:16:07.440 --> 0:16:09.920 For various reasons, Molly, You've been sort of calling around, 0:16:11.000 --> 0:16:13.440 particularly in the last few weeks, people who work at 0:16:13.440 --> 0:16:16.960 these agencies insofar as you know them, and also people 0:16:17.040 --> 0:16:20.560 who've formerly worked there. I mean, how nervous are they 0:16:20.680 --> 0:16:24.840 specifically around this question of the statistical agencies? What are 0:16:24.880 --> 0:16:25.680 you picking up. 0:16:26.360 --> 0:16:28.560 The thing that the biggest thing is to what extent 0:16:28.640 --> 0:16:32.600 can the government interfere with statistics? And I don't want 0:16:32.640 --> 0:16:35.800 to be here fear mongering, because I think that's you know, 0:16:35.880 --> 0:16:37.840 a lot of what has happened in the last two 0:16:37.880 --> 0:16:40.640 months is really, of course, as Trump is really pushing 0:16:40.640 --> 0:16:43.880 the boundaries of what the executive branch can do, and 0:16:44.040 --> 0:16:46.120 it's created a lot of questions of, oh, if he 0:16:46.160 --> 0:16:48.800 did X, can he do why? Or does X then 0:16:48.840 --> 0:16:51.280 apply to something else? And I certainly don't want to 0:16:51.280 --> 0:16:54.480 be out here raising concerns that are unfounded. But these 0:16:54.520 --> 0:16:57.560 are just questions that people have and are very much 0:16:58.240 --> 0:17:00.880 spoken about in this community of people who I talk to. 0:17:01.160 --> 0:17:05.080 So one of them is definitely seeing political interference in 0:17:05.119 --> 0:17:08.520 the numbers. And one of the reasons why US economic 0:17:08.600 --> 0:17:11.560 data is considered among the gold standard for the rest 0:17:11.560 --> 0:17:15.080 of the world is because it's largely impartial that the 0:17:15.119 --> 0:17:19.400 people who produce these numbers are mostly civil servants. They 0:17:19.520 --> 0:17:24.359 are not political appointees. Certainly the heads of the agencies are, 0:17:24.400 --> 0:17:27.560 but everyone is there with just a real commitment to 0:17:27.640 --> 0:17:30.440 producing a public good. And as David was saying, you 0:17:30.480 --> 0:17:33.520 know that the value of these numbers for making decisions 0:17:33.520 --> 0:17:37.440 across all levels of decision making and policy making, that's 0:17:37.520 --> 0:17:40.000 really what the core of the mission is all about. 0:17:40.520 --> 0:17:43.720 And you know, people have raised ideas of seeing how 0:17:43.720 --> 0:17:47.399 in other countries that have more authoritarian regimes, where the 0:17:47.480 --> 0:17:51.959 numbers can be politically influenced, like in Russia, like Argentina 0:17:52.040 --> 0:17:55.280 has had a past with this during the Greek debt crisis. 0:17:55.280 --> 0:17:58.960 There have been other examples where politicians have found the 0:17:59.000 --> 0:18:04.600 way to somehow insert themselves in the data to varying extents, 0:18:04.680 --> 0:18:07.720 and that seems to be the real concern here or 0:18:08.080 --> 0:18:11.400 something else that people raise too is especially now as 0:18:11.800 --> 0:18:14.960 we're starting to get a better idea of how tariffs 0:18:14.960 --> 0:18:19.520 would impact the economy, namely through slower growth and faster 0:18:19.760 --> 0:18:22.800 or at least more elevated inflation. The idea of what 0:18:22.840 --> 0:18:25.199 if Trump's he's a report that he doesn't like and 0:18:25.640 --> 0:18:28.960 could would the agencies just simply not report it that one. 0:18:29.080 --> 0:18:32.360 I don't know if that really has a material risk 0:18:32.400 --> 0:18:33.400 of happening. 0:18:33.000 --> 0:18:35.560 Probably more than most places. We're very sort of hardwired 0:18:35.600 --> 0:18:38.680 for the time and date of the release of these 0:18:38.720 --> 0:18:41.640 numbers exactly all hell would break. Well, well, maybe we'll 0:18:41.640 --> 0:18:43.320 find out, but I mean we should say none of 0:18:43.320 --> 0:18:46.040 these things have happened yet. And I guess you know, 0:18:46.080 --> 0:18:49.600 one further thing to mention to you, Molly, is you 0:18:49.600 --> 0:18:52.240 know it's true you can talk about the Argentina examples 0:18:52.280 --> 0:18:54.480 and the Russia examples, but we know that governments are 0:18:54.480 --> 0:18:58.560 perfectly capable of sort of distorting and messing up economic statistics, 0:18:58.600 --> 0:19:01.000 not through any kind of ideological agenda, but just by 0:19:01.040 --> 0:19:04.280 not giving these agencies enough money and enough people. I 0:19:04.400 --> 0:19:07.240 noticed that. I mean, the UK has been getting itself 0:19:07.240 --> 0:19:09.879 into trouble recently on this, both on its labor statistics, 0:19:09.920 --> 0:19:13.000 which have been endlessly questioned, and they've had massive issues 0:19:13.000 --> 0:19:15.600 with the surveys. Just this week, I think they've announced 0:19:15.640 --> 0:19:18.919 that the main producer price index in the UK is 0:19:18.960 --> 0:19:21.320 going to be suspended for a few months because of 0:19:21.720 --> 0:19:23.760 nothing to do with the politics, but just because of 0:19:23.800 --> 0:19:26.919 concerns about the surveys. So you did a piece that 0:19:27.000 --> 0:19:29.840 rather sounded the alarm about this before any of this happened, 0:19:29.840 --> 0:19:34.119 before the inauguration, just looking at the long standing underfunding 0:19:34.320 --> 0:19:36.719 of these agencies, which I guess is what would make 0:19:36.760 --> 0:19:39.720 you a little bit more worried now is because they're 0:19:39.760 --> 0:19:43.160 not coming into this in fine fettle. They're actually already 0:19:43.280 --> 0:19:45.720 kind of being quite scrimped and tailed. 0:19:46.440 --> 0:19:50.640 Yeah, but these agencies have been underfunded for quite some time, and. 0:19:50.480 --> 0:19:52.480 That by administrations of both parties. 0:19:52.800 --> 0:19:55.800 Yes, the topic that really got me looking into this 0:19:55.880 --> 0:19:59.280 issue more broadly was last year when the BLS said 0:19:59.720 --> 0:20:01.880 it was going to have to cut the sample size 0:20:01.920 --> 0:20:04.639 of one of the surveys in the Jobs Report, and 0:20:04.680 --> 0:20:07.280 this is the survey that produces the unemployment rate and 0:20:07.320 --> 0:20:11.160 the participation rate, among others, and that's still a concern. 0:20:11.200 --> 0:20:14.000 They were able to stave off that sample size cut 0:20:14.040 --> 0:20:18.359 temporarily through some short term funding last year, but still 0:20:18.400 --> 0:20:22.199 TBD going forward. And this is exactly something that was 0:20:22.240 --> 0:20:25.720 coming up in these Advisory Committee meetings that how can 0:20:25.760 --> 0:20:30.439 we get that survey to be conducted online versus in person, 0:20:30.520 --> 0:20:32.680 And that's something the BLS has been trying to do. 0:20:32.760 --> 0:20:35.800 But guess what it costs money, So you need at 0:20:35.880 --> 0:20:39.000 least an initial investment before these things will cost less 0:20:39.000 --> 0:20:39.760 in the long run. 0:20:40.119 --> 0:20:43.760 Stephanie, I think our listener's list of concerns is probably 0:20:43.800 --> 0:20:46.560 not long enough, so can I add one more big one? 0:20:46.880 --> 0:20:47.360 Always? 0:20:48.119 --> 0:20:51.399 Last week, the IRS was reported to be close to 0:20:51.680 --> 0:20:56.240 reaching an agreement with Immigrations and Customs Enforcement, and under 0:20:56.359 --> 0:21:01.639 that agreement, that Customs Enforcement they agency known as ICE, 0:21:02.200 --> 0:21:06.359 would send names and addresses to the IRS, which is 0:21:06.440 --> 0:21:09.719 our tax collecting authority in the United States, and the 0:21:09.800 --> 0:21:14.440 IRS would verify the names and addresses. What on earth 0:21:14.440 --> 0:21:18.600 does that have to do with economic data. It strikes 0:21:18.640 --> 0:21:22.320 at the heart of the trust relationship between the government 0:21:22.480 --> 0:21:26.359 and respondents because when respondents agree to participate in a survey, 0:21:26.400 --> 0:21:30.120 they are assured in no uncertain terms that their responses 0:21:30.160 --> 0:21:35.680 will be used quote for statistical purposes only. That's exactly 0:21:35.800 --> 0:21:41.040 because respondents fear turning over valuable data to the United 0:21:41.040 --> 0:21:45.320 States government and having it potentially used for an enforcement purpose. 0:21:45.359 --> 0:21:49.400 They don't want to become criminally liable because they took 0:21:49.440 --> 0:21:53.760 the public spirited action of participating in an economic survey. 0:21:54.160 --> 0:22:00.720 So this IRS action risks setting a very damaging that 0:22:00.800 --> 0:22:04.680 could strike at the heart of the trust foundation of 0:22:05.200 --> 0:22:06.440 US economic data. 0:22:06.920 --> 0:22:09.560 And actually to that note, there was a note from 0:22:09.640 --> 0:22:12.520 Goldman Sachs, I think in the past week saying that 0:22:12.560 --> 0:22:16.520 the response rate to the Job's Household Survey by foreign 0:22:16.520 --> 0:22:19.840 born workers has already declined. So I mean, I don't 0:22:19.880 --> 0:22:21.920 think it would have been because of this already, since 0:22:21.960 --> 0:22:24.880 the IRS development that David was just talking about only 0:22:25.000 --> 0:22:28.000 just happened in the past week, but certainly reason to 0:22:28.240 --> 0:22:31.560 think that foreign born people in this country would have 0:22:32.040 --> 0:22:34.880 certainly less incentive to reply to government surveys. 0:22:35.240 --> 0:22:37.640 I mean, I guess we should say, Molly that the 0:22:37.640 --> 0:22:40.800 heads of these agencies have not been appointed or replaced 0:22:40.920 --> 0:22:42.040 by Donald Trump yet. 0:22:42.800 --> 0:22:46.719 That's correct. So the heads of these agencies, those are 0:22:46.880 --> 0:22:50.120 roles that are politically appointed. The vast majority of people 0:22:50.160 --> 0:22:52.800 who work in these agencies are civil servants, but the 0:22:52.920 --> 0:22:57.640 leads are political appointees. And right now there is actually 0:22:57.800 --> 0:23:02.800 one vacancy the Census direct Rob Santos. He's resigned from 0:23:02.800 --> 0:23:06.640 his role shortly after Trump was inaugurated, so Trump will 0:23:06.640 --> 0:23:09.640 have the chance to fill that role. I haven't heard 0:23:09.640 --> 0:23:12.520 anything yet about where the progress on that stands. But 0:23:13.080 --> 0:23:16.399 Census is really interesting because that was seems like in 0:23:16.400 --> 0:23:19.359 his first term, that was the agency that Trump seemed 0:23:19.359 --> 0:23:22.400 to square in on the most. Trump certainly has done 0:23:22.400 --> 0:23:25.240 that a lot, has said the jobs numbers are phony 0:23:25.320 --> 0:23:28.760 and fake. But when he's gone after census, it really 0:23:28.800 --> 0:23:32.120