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When President Trump fired the head of the Bureau of Labor Statistics, it set off worries that economic data might not be as trustworthy in the future. The president claimed, without citing evidence, that the latest numbers were rigged. NPR's Planet Money podcast has been looking into trust in economics, including what happened when other governments actually did meddle with the data. Here's Sally Helm.
SALLY HELM, BYLINE: Inflation - no one likes it. Higher prices hurt. Argentina is famous for high inflation. In the mid-2000s, it was around 10%. An election was coming up. Harvard economist Alberto Cavallo told me the government put pressure on the country's main statistical agency to bring that inflation number down.
ALBERTO CAVALLO: I think they basically said, OK, we don't like the number. Who is putting together this number, and how is it being put together?
HELM: Government statisticians fought back against the pressure, and then some of them got fired, including the person in charge of calculating inflation. And pretty soon, the official inflation numbers coming out of Argentina started to look too low. Economists in the country tried to calculate the real inflation number, but it was hard to gather enough data. Plus, the government started slapping these rogue economists with lawsuits and huge fines. Alberto Cavallo was in the U.S., safe from retaliation, and he wanted to help by compiling his own inflation index.
CAVALLO: So I had this idea. I said, I can actually try to use the data that is available online, and build this index using data collected from the web.
HELM: He used online prices from major supermarkets to calculate inflation, specifically something called the supermarket index. And he did this not just for Argentina but also for Brazil, Chile, Colombia and Venezuela. He found that in those four other countries, his online price index matched up well with the official inflation numbers but not in Argentina.
CAVALLO: I was finding levels of inflation that was two or three times higher than what the government was showing. So the government actually ignored me. But I started getting a lot of emails from users of the website that were very thankful.
HELM: Yeah, because people need to know how much inflation to expect so that they can, for example, plan a big purchase, like buy a car now or wait till next year. And people in Argentina fully stopped trusting the government numbers, which is fair because the government kept lying about this number for almost a decade. Some economists, like Cavallo, tried hard to get the real numbers out there, but the whole thing really eroded people's trust.
Alberto Cavallo has been watching what's happening here, after the commissioner of the Bureau of Labor Statistics got fired. The BLS calculates the inflation number here in the U.S. Cavallo told me he thinks that firing is bad for the credibility of the institution and potentially for the quality of statistics in the long run. But in general, he said the U.S. is starting from a really good place, with a lot of solid statisticians. And when it comes to the inflation number in particular, he's not that worried. There are so many private indices now, it would be really hard to mess around.
CAVALLO: I would be more concerned if we are talking, for example, about the jobs report, because that's the kind of thing that the private sector cannot easily replicate because the statistical agency runs these massive surveys all over the U.S.
HELM: He says he'll be watching for signs that the books are starting to get even a little bit cooked. Sally Helm, NPR News.
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