Why Is Economic Data Disappearing?

What matters more: actual economic performance or the perception of it? Fundamentals clearly influence public opinion: if the economy is growing rapidly, people tend to notice. Yet perception can both lead and lag reality, and the disconnect between the two can profoundly shape the economy’s future trajectory.

A more relevant question, then, might be: Which is easier—and cheaper—to change, performance or perception? Improving fundamentals often demands vast resources, long time horizons, and the political will to confront entrenched interests. Perceptions, by contrast, can shift with a meme—sometimes at no cost at all.

Today, both of the world’s superpowers appear less focused on measuring real economic performance than on managing its appearance.

China’s case is more brazen and has been underway longer. As the Wall Street Journal summarized a few months ago, after the government’s broad data crackdown, the country no longer publishes hundreds of national statistics. “In most cases, Chinese authorities haven’t given any reason for ending or withholding data,” the Journal reports. “But the missing numbers have come as the world’s second biggest economy has stumbled under the weight of excessive debt, a crumbling real-estate market and other troubles—spurring heavy-handed efforts by authorities to control the narrative.”

Fixing China’s fundamentals is a gargantuan task—think building a $170 billion dam on Tibet’s Yarlung Zangbo River. Fixing perceptions of those fundamentals is much easier. Delete certain data sources and funnel narratives through a controlled and compliant press, and the economy becomes (or seems to become) whatever the authorities in Beijing want it to be. What those authorities want right now is for everyone to think the economy is growing briskly and remains a competitive destination for investment. Pesky aggregates like “inflation” and “GDP growth” are incendiary sparks that could burn down the Potemkin cities that litter China’s countryside.

America’s white-hot economy, with stocks at all-time highs, wouldn’t seem to need the same massaging. Yet we find ourselves traveling down the early steps of a similar path.

Thanks to cuts in federal government employment, America’s own economic data are becoming increasingly unreliable. As the New York Times reported late last month, the Bureau of Labor Statistics is “reducing its collection of data on consumer prices, and had stopped gathering data entirely in several areas.”

The news offers a good Rorschach test on one’s view of the Trump administration. Is the reduction in data collection the result of benign neglect and the White House’s chainsaw approach to slashing government functions, or is it an effort to manage the economic narrative through a turbulent time?

We now know the answer. Last week, President Trump fired the director of the Bureau of Labor Statistics for what he said in a social media post were “RIGGED” jobs numbers. That was a dramatic intervention, but it fits with other evidence pointing to a managerial effort. Americans are deeply concerned about consumer price inflation, which is also the president’s worst issue in polls. Trump wants the numbers to parallel his economic message.

The same management approach can be seen with economic development announcements. Take Project Stargate, which Trump touted at a White House press conference in January. OpenAI’s Sam Altman and SoftBank’s Masayoshi Son announced a $500 billion AI infrastructure project that would be the greatest compute buildout in U.S. history. There’s just one problem: it’s not happening. As the Wall Street Journal reported last week, “While the companies pledged at the January announcement to invest $100 billion ‘immediately,’ the project is now setting the more modest goal of building a small data center by the end of this year, likely in Ohio, the people said.”

This is economic narrative management par excellence. Offer an incredible development story covered widely in the press with massive headline numbers—then conduct a massive pullback when none of those numbers is realized. The aura of boundless growth lingers. All it costs is a press conference at the White House.

The presidents of both China and America have reached a similar conclusion: Omitting or massaging data is the path of least resistance for growing their respective economies. Both are taking a page from Turkey’s president, Recep Tayyip Erdogan, who fired the head of the Turkish statistical institute in 2022 when the country’s inflation hit record highs.

Both leaders need performance now, not later. For Trump, strong economic news is pivotal to building support for his tariff negotiations in the face of American fears about inflation. For Chinese president Xi Jinping, who is staring down a multitrillion-dollar debt crisis, narrative management offers the country’s only chance, and a slim one at that, to avoid a period of economic chaos.

We thus seem to be entering a new postmodern period of economic statistics, where the importance of influencing vibes outweighs generating quality empirical evidence. It’s one thing for voters to vote their feelings at the ballot box. It’s another for asset allocators to lack market fundamentals for their investment judgments. Both Xi and Trump understand that by omitting rigorous counterevidence, they can project their desired image of the economy and give allocators little choice but to follow along.

Few private entities have the wherewithal to offer competing statistical profiles of nations as large and variegated as the United States and China. It’s no coincidence that the words “state” and “statistics” derive from the same root. The rise of modern states coincides with the increasing ability of governments to manage their people and territories, from censuses and tax assessments to land mapping and zoning. Nascent threads of modern measurement emerged in the seventeenth and eighteenth centuries, but only in the last 100 years have we seen the arrival of comprehensive and reliable aggregate statistics, particularly in macroeconomics. These data are an incredible innovation—but one that we’re losing.

Shenanigans with data can work—at least in the short run—but they come at a high cost. Objective truth in economics is expensive to attain, but it is essential for aligning all actors in a free-market society around reality. We each may have our own purchase on certain local facts, as Friedrich Hayek noted in his essay on “The Use of Knowledge in Society.” Yet, we also need to know what’s happening everywhere else, given the interconnections of the global economy.

I wish this postmodern moment were an aberration, and that a few political leaders wouldn’t undermine the basic functioning of the economic system. But the costs of acquiring objective truth are mounting, too. As the New York Times observed, “Economists have become increasingly concerned about the federal statistical system in recent years. Response rates to government surveys have fallen steadily, gradually eroding the reliability of statistics based on that data. The agencies have been working to develop new techniques that rely less on surveys, but have been hampered by shrinking budgets.”

That challenge mirrors a similar crisis around economic data brewing in the United Kingdom, where the Office of National Statistics has acknowledged that its core publications, including on inflation, are increasingly inaccurate. In April, the office cut back on a range of publications to shore up some of its most important work, with the hope that the retrenchment will help the office recover accuracy and stability. That’s a more practical response than that of Italy, where, during a budget spat in the early 2010s, the statistical agency threatened to stop publishing all national statistics.

Unfortunately, most leaders seem to be moving the same direction. One exception is South Korea, where the new president, Lee Jae Myung, is looking to reform the country’s statistics bureau and potentially make it independent of the powerful Ministry of Finance and Strategy. As an article in the local press noted in June, “the independence of Statistics Korea is considered important because it may be ‘resistant to political winds when producing statistics,’” which “is due to past accusations that Statistics Korea aligned its statistics with the government’s preferences.”

Statistics are the means by which leaders evaluate the outcomes of their decisions. With a shrinking set of increasingly unreliable metrics, countries are reducing their ability to make the right calls at critical moments of uncertainty. Quality statistical collection and analysis will never get the same airtime as a sex scandal, but they are the kernel for high-quality and effective governance.

Photo: Tom Williams/CQ-Roll Call, Inc via Getty Images