Donald Trump's recent firing of the Bureau of Labor Statistics chief Erika McEntarfer has left many uncertain about the direction of the economy and the state of federal data reporting. Betsey Stevenson, economics professor at the University of Michigan and former chief economist of Barack Obama’s Department of Labor and a member of his Council of Economic Advisers, recently joined the New York Times to shed light on the issues of the day.
Alongside contributor Josh Barro and Harvard professor of economics N. Gregory Mankiw, she shared her thoughts on labor data, the Fed's actions, and federal debt.
Stevenson expressed concern over the lack of funding for institutions like the BLS, noting that "lots of economists, myself included, have urged Congress to appropriate the funding needed to modernize and update the U.S. statistical system. But they require funding and staff increases, while the current administration has been looking for cuts." Overall, she expressed confidence that reported data is and will continue to be accurate, but was uncertain about its usefulness for interpreting the economy's health.
"Right now the challenge is to figure out whether lower job growth reflects lower labor demand or lower labor supply because of the administration’s efforts to deport immigrants and discourage new immigrants," she added. This presents a significant challenge, along with tariffs, for the Federal Reserve as they weigh whether cutting rates would bolster the labor market.
Stevenson also weighed in on the ballooning federal debt problem, expressing concern that "the premium the United States has enjoyed as a safe harbor will evaporate, and we won’t be able to get it back very easily." Investors may seek to diversify beyond the United States as a result.
Read the full conversation here.
