The Commerce Department eliminated two advisory committees on economic statistics gathering (see Marketplace). BLS received some additional funds in March as part of a continuing resolution; however the Trump budget proposal includes an 8% reduction in budget in nominal terms.
The BLS, tasked with compiling the CPI as well as other labor market indicators (employment, wages) has been already stretched by stagnant funding colliding with escalating costs.
Recently, this has affected compilation of the CPI. More and more prices are imputed.
Source: Economist.
Of course, none of this should come as a surprise. A lot of this was prefigured in the Project 2025 (as I documented here).
There’s hardly any money to be saved by slashing in real terms funding for the statistical agencies, so one has to wonder what the underlying philosophy of the Trump administration is.
Perhaps, it’s the philosophy of “if a recession occurs, and it’s not measured, will anybody notice?” Perhaps, given Trump’s assault on the Fed’s independence, my guess is that it’s more likely “if inflation accelerates and inflation is not measured, will anybody notice?”.
In any event, June’s FT-Booth survey of macroeconomists was interesting insofar as no one thought that the Administration’s measures would improve data quality.
Source: FT-Booth June Survey of Macroeconomists.
I was in the “very worried” category. Apparently, one macroeconomist would not be worried. I think he/she is in denial.
