China has an economic data problem. Is the U.S. next?

Key takeaways

Trust in economic data is crucial for both public perception and investor sentiment.
China's economic data is often adjusted to meet government-set growth targets, leading to questions about reliability.
Regional officials in China have incentives to inflate economic figures, affecting the authenticity of reported data.
Robust data sources in the U.S. offer a safety net against the complete erosion of trust in economic statistics.

Summary

Trust in Economic Data

The episode opens with a discussion regarding President Trump's recent appointment of a new head for the Bureau of Labor Statistics, a controversial choice that has raised concerns about the integrity of U.S. economic data. This conversation leads to an exploration of the critical importance of trust in government economic statistics and how a decline in trust could significantly distort public and market perceptions of the economy.

Understanding China's Data Reliability Issues

Jennifer Pak, Marketplace's China correspondent, shares insights into the unreliability of economic data coming from China. She explains how the Chinese government sets growth targets, often leading to seemingly perfect data that analysts question. Pak discusses how local officials manipulate figures to appear successful, mentioning jokes among economists about the absurdity of building infrastructure that doesn't add actual value to the economy.

Approaches to Reporting in an Uncertain Data Environment

Pak elaborates on her reporting methodology while navigating unreliable data. She stores context by consulting various analysts and relying on alternative data points, such as electricity usage or freight transport, to gauge economic health. By juxtaposing official data with the sentiments of everyday citizens, she provides a more grounded analysis of the actual economic atmosphere.

U.S. Economic Data Comparisons with China

The conversation also touches on the potential similarities between the economic data trust issues in China and the U.S. Kimberly and Jennifer evaluate concerns that the U.S. might follow a path toward less reliable economic data, particularly in light of potential changes to practices at the Bureau of Labor Statistics. Despite the emerging worries, Pak notes that the U.S. has a more robust array of data sources compared to China.

Show notes

Since President Trump’s firing of the Bureau of Labor Statistics commissioner over a weak jobs report, we’ve been thinking a lot about the trustworthiness of U.S. economic data. Other countries like China can offer a glimpse of what happens when that trust erodes. On the show today, Marketplace’s China correspondent Jennifer Pak explains how she works around unreliable data when reporting on the Chinese economy. Plus, could the United States be headed in the same direction?

Here’s everything we talked about today:

"12 million students in China will graduate this year into a shaky job market" from Marketplace
"China says its unemployment rate is “stable,” but job seekers remain gloomy" from Marketplace
"Is GDP still a useful gauge of China’s economy?" from Marketplace
"How Bad Is China’s Economy? The Data Needed to Answer Is Vanishing" from The Wall Street Journal
"How to deal with untrustworthy government economic data? Look to China" from Marketplace
"Trump taps Heritage economist to lead BLS" from Politico

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