The concern for the credibility of future macroeconomic statistics in the United States has grown since Donald Trump has decided to fire Erika Mcedarfer, head of the American statistics and employment office (BLS), accused by the white house tenant of having “faked employment figures” for political purposes. Without providing any evidence.
The question arises even more from the appointment of your successor. Economist of the very conservative Foundation of the Center for Reflection, Erwin John Antoni III crystallizes the concerns related to their deficiencies in economic matters, but also to its political orientation. For observers, their ability to handle the data to adapt them to their own point of view and that of the US president raises a problem. Because lying or manipulating economic statistics for political purposes is far from harmless.
“Nothing replaces reliable government data,” adds Michael Heydt, main analyst of sovereign questions at the Morningstar Dbrs qualification agency.
In Greece, a manipulation that led to an unprecedented crisis
Because there are the previous ones. Greece is a school case. In 2009, the large -scale manipulation of the country’s figures has been revealed since 2004, which causes an unprecedented crisis of trust. It was then for the previous government to camouflage an abysmal deficit of almost 16% of GDP to be able to enter the euro zone.
The revelation of this manipulation submerges the country in financial agitation, its debt is attacked and the country is placed a year later under the tutelage of the “troika” composed of the International Monetary Fund (IMF), the European Central Bank (ECB) and the European Commission. It follows a long cure of austerity marked in particular by a fall in salaries in public service and retirement pensions. Measures that arouse the anger of citizens.
Especially because these falsifications considerably aggravated the effects of the global financial crisis of 2008 and 2009 in Greece. If the official figures are perceived again as reliable by the European Commission of 2010, the country will take years to recover after its original lie.
In Argentina, no one believes in inflation figures
Also in Argentina, the State has tripled its macroeconomic statistics, including growth and inflation figures. And doubts about their reliability still weigh on the third economy in Latin America. The story is quite close to what is happening in the United States. In 2007, the president of the time, Nestor Kirchner, decided to sanction the responsible person to prepare data on inflation. Your fault? They have reported (correctly) an outbreak at prices.
This decision then showed doubts about the credibility of data on the increase in prices in the country, whether it is the simple citizen but also international investors. Since 2007, the INDC figures, the National Statistics Institute, have been disputed. Example with the 2011 inflation announced at 9.5% according to the index, while it is valued at about 23% by private institutes.
Enough to encourage qualification agencies to maintain the country’s credit note in the speculative area for years and, therefore, to extract the interest rates from their credits. And in the end, it was the Argentine citizen who paid the price, the country could no longer finance its investments given the high cost of access to credits.
Trump’s administration wants to reassure
However, Greece and Argentina are not the United States given their position as the world leader. Risk? That investors, markets and/or creditors of the United States sanction the country and, due to domino effect, cause a new international crisis given the weight of the US economy. Therefore, the White House has proposed to ensure and extinguish the beginning of a fire that agitates financial circles since the appointment of Erwin John Antoni.
Robert Shapiro, president of the Economic Council of Sonecon and former Undersecretary Secretary of the Commerce of Economic Affairs under the presidency of Bill Clinton, also reminds our colleagues that the economic situation of Greece and Argentina was very different from that of the United States today with its annual growth and inflation of 3% around 2.5%. “We are the world’s largest economy. We are, with much, the world’s largest financial center,” he said.
He also recalls that other public and private statistical institutes, such as the Office of Economic Analysis, constitute safeguards in case the BLs are tempted to manipulate the figures for the benefit of Donald Trump. “These institutions are composed of almost 100% of statistics and economists. His work is completely apolitical,” he said.
Source: BFM TV
