Will DOGE cuts wreck US economic statistics? Would anyone really notice?
At present there’s a suggestion in the US that the DOGE cuts programme being overseen by Elon Musk might lead to a reduction the range or quality of official economic statistics available. How important could that be?
Official statistics are used by governments for all kinds of things: macroeconomic modelling; assessing the impacts of new regulations or evaluating how effective government programmes are; for identifying social and economic issues as they arise; for understanding how many people there are in the country and where they are; and so on.
Some statistics are maintained by the US central banking system and are used for understanding financial flows and for guiding monetary and exchange rate policy decisions. Let’s assume these wouldn’t change.
In addition, private sector data-gathering goes on all the time, including private sector surveys of economic activity, the widely-quoted “Purchasing Managers’ Index” (PMI) surveys being perhaps the best-known – though there are numerous others covering issues including price changes, hiring intentions, confidence metrics, household financial health indicators and so on. If certain US government statistics come to be seen as less reliable, presumably some forecasters and analysts that currently use government data would switch to these private sector sources instead and perhaps some new private sector data-gathering would take place.
It’s not as though government statistics are that much more reliable than these private sector metrics. Official government statistics even clash markedly. One particularly important example at present is that according to the UK trade data the UK runs a large trade surplus with the US (the UK sells the US more than it buys from the US). But according to the US official data it’s the other way around – the US sells more to the UK than it buys from it.
Who’s right? Who knows? And indeed, who cares – we’ve got by for well over a decade without the anomaly being resolved.