The lie that could finish Trump

When the Greek economy was on the very brink of collapse during the credit crunch, I was reporting from Athens. It was almost impossible to be sure that even the government really knew what the economy was doing, let alone anyone else.

The Greeks had rigged their own data in order to get into the euro. Inflation seemed to be dropping; budget deficits mysteriously shrank. But now they were desperately searching for a way to get out of a self-created mess, there seemed to be very few statistics they could trust.

In the end, they had to resort to going to the Greek equivalent of HMRC and counting how much cash was left in the current account, so to speak. Those figures could not be fiddled, so it was just about the only way to get a true picture of the real state of affairs, one you could use to judge the accuracy of the other statistics.

For me, this was the classic example of what happens if you let the politicians fiddle with the statistics, corrupt the data and lie about the economy. In the end, even the government doesn’t know what is going on, let alone anyone else.

Which brings us to Donald Trump.

This week I thought, for probably the first time in my life, about the Federal Reserve of Atlanta’s labour stats. Their sudden importance was because they could be used to check on a controversial piece of government data – the Bureau of Labor Statistics that showed the US economy adding far fewer jobs than expected in July and revising down by a combined 258,000 the estimates for new jobs created in May and June. Those pieces of bad news led Trump to fire Erika McEntarfer, the BLS commissioner, because he claimed they were “rigged”, an obvious but standard Trump lie.

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The figures from Atlanta seem to vindicate McEntarfer. They showed that wage growth for the poorest workers in America has slowed far more than for wealthy workers. This is what you would expect if the labour market is worsening, as the poor have less ability to negotiate higher wages when jobs are scarce.

So for Trump’s America, Greece is now the word. In future, just like in Greece during its darkest days, we will now have to check America’s stats against other figures that can confirm or deny the reliability of the official data. When Trump tells you the sun is shining, best pack an umbrella.

That America has been reduced to this state is deeply worrying. There is no point trying to claim that this is just a “one-off”, that it affects just one statistic. There is no such thing as only slightly losing your virginity.

Everyone in US institutions now knows that if they want to keep their jobs, they need to lie to the president about bad news. That means that the rest of us can no longer trust American data. Economists will increasingly check one set of figures against others, to be certain.

So, if Trump claims the economy is booming, the experts will look at things like house prices, company profits, bankruptcy rates, fuel sales, shipping costs, and individual states’ revenue from sales tax, which are set and gathered locally. American statistics can no longer be believed, even though the vast majority of them are likely to turn out to be 100% accurate.

As Greece discovered, that kind of reputational damage is extensive and very difficult to reverse. And that was just in a minor European economy. Trump has corrupted the information used by millions of investors with billions of dollars in assets, and so undermined faith in the most powerful economy in the world. The more this continues, the more Trump-pleasing fake data is generated, the more chance that the US will follow Greece and Argentina – which serially cheated on its financial health from 2007-2013 – into long and painful years of economic crisis and wild political instability.

All just to massage his fragile ego. At least the Greeks desperately wanted to join the Euro; they didn’t do it because their leader could not accept that his economic plans were already backfiring, making his boasts about the Trump boom look even more hollow.

From now on, there are lies, damned lies and Donald Trump’s statistics.