This weekly column is focused on Indiana’s economy, rarely commenting on national issues. But this time, we must make an exception.
Early on the morning of June 1, President Trump tweeted “Looking forward to seeing the employment numbers at 8:30 this morning.” This most unusual national leader was telling his tweetees that he knew the closely guarded monthly employment data and he liked them.
Presidents do get advance looks at all types of key data. Prior to this, presidents kept their mouths shut about economic data until an hour after the official release time. It wasn’t just tradition, it was a policy set down for a wide group of government employees by the Office of Management and Budget to avoid insider trading. But now, this President was wiggling his toes in the stock market bath water.
His words were enough of a favorable hint to send ripples of glee through the regular bathers in those waters where the big boys surf and the little guys drown.
If the president was suggesting that the news to be released at 8:30 a.m. would be favorable, then stock prices would rise. They did, as the eager denizens of Wall Street jumped to that conclusion and stock prices bounced up.
Following Wall Street tradition, good employment news was expected to fuel inflation. This shot interest rates up in the belief that the Federal Reserve Board would continue restoring positive real interest rates.
Higher interest rates mean U.S. dollars are more attractive compared to other currencies and the value of the dollar rose accordingly.
These effects tended to disappear as the day progressed. But there it was: another sign of the intemperate, adolescent presidency.
How far are we from having a Trumpian command to our statistical agencies to give him “good” numbers and to avoid public release of “fake” data? Distortions of reality are the standard tools of many political leaders. But interference with information about reality is a disservice to mankind.
Most of the data produced by government and private parties are subject to question. There are valid disputes about what should or should not be included in any data series. Should we count RVs, autos and boats as they leave the factory or as they leave the dealers’ lots? Is a person released from the hospital after just 23 hours to be counted in the daily census? Should attendance at a sporting event include unused season tickets?
However these issues are decided, they do not have the importance of the employment and unemployment data released monthly for the nation, states and counties.
Meddling with these data for political purposes must not happen. Worse still is violating policies established to protect the public from the ego gratification of the unbalanced mind. It reminds us of Jimmy Cagney saying, seconds before immolation in the 1949 movie, “White Heat,” “Made it, Ma! Top of the World!”
Morton Marcus is an economist, formerly with the Indiana University Kelley School of Business. Send comments to [email protected].