Washington DC, August 5, 2025 --  

America is on the edge of politicizing its economic statistics. Argentina shows why it is such a bad idea.

Bad news in economic data is never popular with the ruling party, no matter what hemisphere it is in.

When soaring inflation compounded the problems of Argentina's populist government in 2007, President Nestor Kirchner decided to cook the books. He fired the statisticians at the INDEC agency who calculated official numbers and found new people willing to publish new lower inflation rates.¹ His wife, Cristina Fernandez de Kirchner who succeeded him in 2009, doubled down by moving the responsibility of calculating inflation statistics from career statisticians to a political appointee in the Ministry of the Economy.²)

Dodgy numbers understated Argentine inflation by a factor of up to 4:1 according to independent analysts. Nobody believed the official stats. The Economist magazine began publishing unofficial inflation data for Argentina and kept the source anonymous in order to avoid prosecution of honest statisticians for violating laws against contradicting government data.³ After years of pretending high inflation s didn't exist, Argentina faced an economic crisis, then punishing austerity brought by today's Libertarian administration of Javier Milei.

Last week, America took a disturbing step down that same path. President Trump abruptly fired Erika McEntarfer as the head of the Bureau of Labor Statistics for publishing a monthly job market report he deemed unflattering⁴. The bureau is the premier collector of economic statistics for the United States government, and highly regarded for quality data including the critical Consumer price Index measuring inflation.

McEntarfer will be replaced with her deputy William J. Wiatrowski who will serve until a new commissioner is appointed by a Trump and Confirmed by the Senate. While Wiatrowski is a non-political professional who has served as acting commissioner several times before, Trump's message for him is loud and clear: releasing numbers that Trump doesn't like is a firing offense. The effect on the reliability of US economic data will not be good.

Trump can appoint a replacement commissioner willing to do his bidding, but the appointment is subject to Senate approval. It is unclear if the Republican majority will be willing to go a long with abandonment of honest economic data. Backers on Wall Street will not be happy if they do.

Combine this with Trump's attempts to bully Federal Reserve Chairman Jerome Powell into lowering interest rates or face illegal termination, and the Argentine comparison becomes disturbingly apt. Powell and his board have this far refused to lower rates because doing so can be inflationary, and Trump's tariff threats risk doing exactly that.

Now that the BLS employment numbers suggest a weakening job market, the Fed is more likely to lower rates per Trump's wishes. But how will we know if lower rates and ongoing tariff pressure spark higher inflation? Will the BLS and Wiatrowski (or his Trump appointed successor) fudge the numbers to please Trump and save their jobs?

If they, do, the consequences will be severe. Social security benefits will decline in real terms as cost of living adjustments based on the BLS' consumer price Index understate inflation. Inflation-adjusted salaries will similarly decline in real terms. Likewise, Treasury Inflation Protected Securities will lose value.

One factor that may prevent America from following the Argentine path is the bond market. While presidential appointees set the overnight Fed Funds interest rate used by banks, they do not set bond rates. Investors decide those during Treasury auctions, and investors are unlikely to believe faked government unemployment and inflation numbers when other evidence exists to the contrary.

While a lesser consequence than the damage to the American economy, the damage to the integrity of the Bureau of Labor Statistics is an awful shame. The bureau has for many years been an excellent source of quality data for this column and countless other writers and analysts. That we should sacrifice this gem for the sake of the president's fragile ego is a horrible reflection of America's self-destructive trajectory.

Notes:

1. Business Insider, The IMF Has Put Argentina On The Road To The Worst Punishment It Can Possibly Give, February 2, 2013

2. Significance Magazine, Inflation in Argentina -- A Controversial Figure, August 2020

3. Ecoonomist, Don't Lie to Me, Argentina, June 20, 2014

4. CNN, Trump Fires a Senior Official Over Jobs Numbers, August 1, 2025