The economist stated that rigging job numbers would be a complicated process, with whistleblowers most likely to flag any potential impropriety.
President Donald Trump’s recent tirades against Federal Reserve officials and statisticians have not gone down well with economist Paul Krugman.
Krugman said in his Substack post, published on Tuesday, that given Trump’s dismissal of unfavorable economic news as “rigged,” he won’t admit that bad things are happening when the economy starts to encounter serious problems. Thus, the president wouldn’t make any serious effort to fix those problems, the economist said
His comments came as part of a blog post about Friday’s July non-farm payrolls data and the revision the Bureau of Labor Statistics (BLS) made to its May and June estimates.
Krugman, who received the Nobel Memorial Prize in Economic Sciences in 2008, said, “The official numbers now show a slowing economy — not a recession, at least yet, but a marked slowdown.”
The market reacted negatively to the report on Friday, with the major averages declining sharply before making a comeback on Monday.
Even amid the uncertainties, the Invesco QQQ Trust (QQQ), an exchange-traded fund (ETF) that tracks the Nasdaq 100 Index, and the SPDR S&P 500 ETF (SPY) are up 9.88% and 7.79%, respectively, for the year. On Stocktwits, retail sentiment toward the QQQ ETF turned ‘bearish’ by late Tuesday from ‘neutral a day ago, while the retail mood stayed ‘neutral’ toward SPY.
Krugman defended the BLS’s revisions. Referring to fellow economist Jared Bernstein’s view that “revisions are normal,” Krugman said, “Revisions tend to be especially large around turning points; what we saw Friday is exactly what we’d expect if the economy is in fact experiencing a significant slowdown, which would show up more strongly in revised data than in the initial reports.”
He also said that rigging job numbers would be a complicated process, with whistleblowers most likely to flag any potential impropriety. To make his case, Krugman noted that the ADP private payrolls data also doesn’t show any “hidden Trump boom.”
“Trump’s claim that disappointing economic numbers are fake news disseminated by radical leftists is ugly nonsense. But it was also predictable,” he wrote.
“Every accusation is a confession,” Krugman said, pointing to Trump crying foul over unfavorable data. “I predicted even before Trump took office that his administration would do what he falsely accused Democrats of doing, and begin manipulating economic data.”
Krugman said Trump’s firing of BLS Commissioner Erika McEntarfer took him by surprise, and so did the Trump officials’ blatant intention to politicize the statistical agency.
Incidentally, Trump has also taken cudgels against Fed Chair Jerome Powell for not lowering interest rates. The central bank has since seen division among the rate-setting committee members. Fed Governor Adriana Kugler, whose term was set to expire in January, has prematurely resigned, potentially allowing Trump to replace her with an official amenable to him.
The president also said Tuesday that he is considering four potential candidates to replace Powell as Fed chair when his term ends in May.
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