While numbers often appear to represent hard evidence, they are remarkably malleable depending on how they’re utilized. Politicians and bureaucrats are particularly skilled at manipulating data to frame narratives that serve their interests.
Consider a common statement: “Our initiative to ensure that no child sleeps hungry has decreased hunger levels by 10 percent.”
This sounds promising, but what if hunger rates were at an unprecedented high just before the initiative launched? A 10 percent reduction from a peak may still leave hunger levels above what they were five years ago.
This phenomenon is known as “cherry-picking” timelines, allowing political figures to create a more favorable depiction of reality. It’s worth noting that similar tactics are often employed in mutual fund brochures that selectively choose timelines to showcase favorable results.
Another effective strategy involves presenting various metrics. A politician might highlight “record-low unemployment,” but what if this statistic derives from many individuals who have abandoned their job searches and thus are no longer counted in the official data?
In this scenario, while the numbers may be technically correct, they obscure a more complex and troubling reality about the economy.
Additionally, misleading comparisons can be another tactic. For example, a claim like “Our state’s educational outcomes are 20 percent better than the national average” can sound impressive. However, if the national average includes numerous smaller, underfunded rural districts while your state is primarily composed of affluent suburbs, the comparison loses its value.
Such comparisons might be technically valid, but they fail to accurately depict the true quality of education.
Economic statistics, which aim to summarize various aspects of the economy into singular figures, are highly susceptible to manipulation. Take Gross Domestic Product (GDP), for instance. It is intended to gauge the size and health of a national economy but can be misrepresented through excessive deficit spending, skewing it away from true economic growth toward a mere measure of debt accumulation.
You’re Fired!
Former President Trump is aware of how government statistics can be wielded to either support or undermine his administration. His goal is to ensure the numbers reflect positively, indicating low unemployment, controlled inflation, and robust GDP growth.
This issue came to a head with the release of the July employment report by the Bureau of Labor Statistics. The report revealed a mere addition of 73,000 jobs in July, alongside a downward revision of 258,000 jobs in total created during May and June, dropping from 291,000 to just 33,000.
Trump was dissatisfied with these numbers, alleging they were ‘rigged’ for political motives. Consequently, he dismissed BLS Commissioner Erika McEntarfer. Here’s an excerpt from his post on Truth Social:
“I was just informed that our Country’s “Jobs Numbers” are being produced by a Biden Appointee, Dr. Erika McEntarfer, the Commissioner of Labor Statistics, who faked the Jobs Numbers before the Election to try and boost Kamala’s chances of Victory. This is the same Bureau of Labor Statistics that overstated the Jobs Growth in March 2024 by approximately 818,000 and, then again, right before the 2024 Presidential Election, in August and September, by 112,000. These were Records — No one can be that wrong? We need accurate Jobs Numbers. I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY.”
He further suggested that Federal Reserve Chair Jerome Powell “should also be put ‘out to pasture.’”
Did McEntarfer truly manipulate the employment data for political gain? Or was the timing of these significant discrepancies merely coincidental?
Depending on Flawed Data
Larry Summers, the former Treasury Secretary, weighed in with his opinion and feigned outrage regarding the matter. He commented:
“These numbers are put together by teams of literally hundreds of people following detailed procedures that are in manuals. There’s no conceivable way that the head of the BLS could have manipulated this number.
“The numbers align with what we’re seeing from various private sector sources. This is the behavior of democracies slipping into authoritarianism. Firing statisticians resembles threats against the press, universities, and law firms defending unpopular clients. This is truly alarming.”
Former BLS Commissioner William Beech asserted that “there’s no way” McEntarfer rigged the statistics. Perhaps this is true. However, the drastic revisions underscore the folly of attempting to condense the complexities of the economy into numerical data and highlight the inefficiencies of government statisticians.
If jobs reported for May and June can be adjusted from 291,000 down to 33,000, then the reliability of these numbers becomes questionable. Alarmingly, these manipulated figures are utilized by policymakers to strategize the economy.
For instance, Fed Chair Powell relies heavily on data when deciding on the federal funds rate. Apart from consumer price inflation, employment statistics are among the key metrics guiding the Federal Reserve.
In the recent FOMC meeting statement, robust labor market conditions were cited as justification for maintaining the current interest rates. Yet just two days later, the BLS report revealed downward revisions that painted a different picture, indicating a less-than-stable labor market, thus casting doubt on Powell’s decision.
The Fed, in effect, is establishing monetary policy through guesswork in the midst of uncertainty. Its reliance on dubious data can lead to misguided policies.
How the Fed’s Reliance on Questionable Data Could Lead to Catastrophe
While we cannot claim to know the ideal federal funds rate any better than Powell or Trump, we believe that such decisions should be left to the banks engaged in interbank lending who are directly connected to the market dynamics.
These banks possess the closest insight into the economy and are best suited to determine what the overnight rate should be. This is crucial because interest rates, essentially the price of credit, play a fundamental role in the economy. Delegating control over interest rates to unelected bureaucrats is a recipe for disaster.
Historically, the Fed has struggled to execute effective interest rate policies. Over the last three decades, its actions have led to three significant boom-and-bust cycles. As the current economic expansion shifts toward a contraction phase, the Fed is poised to repeat past errors.
Undoubtedly, fluctuations in the business cycle are natural, yet the Fed’s attempts to stabilize them through alterations in the money and credit supply tend to exacerbate these oscillations.
As the impact of trade tariffs permeates the economy in the coming months, it’s likely that Powell or his successor will panic and reduce rates. The Fed may even resume quantitative easing, effectively generating credit from nothing to purchase Treasuries and mortgages.
The purported aim would be to mitigate the economic downturn and ensure liquidity for major banks. However, the actual result will likely be the creation of yet another economic bubble.
As this unfolds, new price distortions will arise, leading to an unequal distribution of benefits and consequences, leaving many Americans behind once more.
These are the underhanded tactics at play, involving manipulated statistics and controlled interest rates.
[Editor’s Note: Are you aware of Henry Ford’s vision for a southern utopia? If not, I encourage you to explore my recent special report titled, “Utility Payment Wealth – Profit from Henry Ford’s Dream City Business Model.” This report delves into how this often-overlooked chapter of American history can offer lucrative opportunities. You can get your copy for less than a penny.]
Sincerely,
MN Gordon
for Economic Prism
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