By David Enna, Tipswatch.com
One of the most frequent questions I’ve heard from readers over the last year goes something like this: “Can we trust the government inflation numbers?” Or more bluntly: “Is the U.S. government lying to us?”
My usual answers are: “Maybe” on trust and “probably not” on outright lying.
This sense of fear and doubt erupted on Aug. 1, 2025, when President Trump fired the head of the Bureau of Labor Statistics, Erika McEntarfer, and accused her of “faking” jobs numbers. The firing came immediately after the release of the July 2025 jobs report, which came in lower than expected. But the bigger issue was a huge downward revision in jobs numbers for May and June, seemingly in the wake of April’s tariff-setting “Liberation Day.”
I’ve talked to former officials at the BLS who say they are absolutely confident that these longtime, nonpartisan statisticians would not agree to “cook the books” for any administration. But they also point to severe staff and funding cuts at the BLS, which could result in potential inaccuracies.
One person I trust on economic issues is Claudia Sahm, a former Federal Reserve official who created the “Sahm Rule,” a reliable indicator of recession based on employment data. Sahm, now chief economist at New Century Advisors, is known for being a “bit” outspoken, a rare trait for a macroeconomist.
Sahm writes on economic data on her Substack site, Stay-At-Home Macro, which conveniently abbreviates to her name, SAHM. The site is free to read and I highly recommend it. You can also follow her on X at @Claudia_Sahm, where she freely expresses her opinions.
Sahm wrote a Feb. 20 Substack post with the title “Trust in Numbers,” where she analyzed the U.S. government’s credibility issues. I am going to highlight some of her thoughts, but I encourage you to read her entire post.
There is currently no evidence of manipulation. Even so, it is appropriate to monitor for signs of it.
Sahm noted that fired BLS director McEntarfer rejected the idea of political interference in a recent interview, saying, “You should still trust BLS data. The agency is being run by the same dedicated career staff who were running it while I was awaiting confirmation from the Senate. And the staff have made it clear that they are blowing a loud whistle if there is interference.”
However, the U.S. government shutdown in October 2025 cut off data collection for an entire month and created nearly impossible barriers to accuracy. Sahm noted that the BLS was forced to rely on long-documented methods to estimate inflation:
The BLS chose procedural consistency over discretionary adjustment. That choice matters because the CPI is more than a statistic. It is written into law and contracts, such as those that adjust Social Security benefits, Treasury Inflation-Protected Securities (TIPS), and countless private agreements. …
Safeguarding against manipulation is necessary, but not sufficient for data to be trustworthy. Even when the process is sound, trust can erode if people feel the statistics do not align with their lived experience.
Sahm elaborated on that thought in a recent interview with Yahoo Finance:
Sahm writes that she believes neglect, not manipulation, is harming U.S. economic data:
I am worried about the state of U.S. economic statistics. The current problem is not political interference; it is chronic and intensifying underinvestment. Budgets for statistical agencies have failed to keep pace with inflation for years, and conditions deteriorated further during the first year of the Trump administration.
The Bureau of Labor Statistics lost more than 20% of its staff since the fiscal year 2024, and 13 of its 35 leadership roles remain unfilled. Budget constraints led to a 15% reduction in the CPI sample and to the elimination of three cities from coverage. The federal government shutdown caused the first-ever break in the monthly unemployment and inflation series. …
Lower response rates and smaller sample sizes make the estimates less precise and more volatile. The threat to data quality is not manipulation—it is neglect.
Sahm concludes:
Trust in economic statistics depends on more than guarding against political manipulation. It requires sustained investment and public understanding of what the numbers can—and cannot—tell us. To preserve a reliable lens on the U.S. economy, we must protect both the integrity of the data and the institutions that produce it.
My thoughts
The potential for manipulation remains a threat. Trump’s first nominee to fill the BLS director’s post was an inexperienced economist with strong MAGA connections and a past history of “incendiary rhetoric.” Republican senators quietly joined together to kill that nomination. Trump’s current nominee, Brett Matsumoto, is a highly respected statistician that Sahm has strongly endorsed.
Beyond the threat of manipulation is the difficult issue of trust. I now sense widespread, bipartisan distrust of U.S. inflation numbers. That’s a difficult problem for the BLS to solve in the aftermath of funding and staffing cuts. The October shutdown left a crater of missing inflation data, which very well could be causing U.S. inflation to be under-reported. This will take time to fix. Meanwhile, the distrust grows.
Bonus Sahm coverage
Claudia Sahm was a guest last week on the “On Investing” podcast hosted by Schwab’s Kathy Jones and Liz Ann Sonders. She discussed the Fed’s balance sheet, the impact of AI on labor markets and touched on trust in economic statistics. Here is the podcast:
In closing
Yes, I have just returned from Australia, suffering from terminal jet-lag. Please excuse any typos and nonsensical sentences in this article. Readers are invited to be my editors, as always!
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Treasury Inflation-Protected Securities 
Welcome back David. Hope you had a great trip. We hope you stick around for a while, but I am sure you will be “on the move” soon.
The government is collecting economic data like its the 1950’s. The current data is much too granular for today’s economy. You likely could get 90% of the data with 50% of the work. The short term data is out of date by the time it is collected. There are also predictably unpredictable events that mess with the data (i.e. disasters). The data should be reported every 3 months rather than monthly and the overall accuracy would probably be better than what we have now. Trump actually postulated this kind of thing when he noted that quarterly reporting for public corporations leads to a lot of short term manipulations. The Fed should meet less often as well. They have also been caught up in short term trends.
Just the fact this is a question, Fortunes will be made the next 3yrs in GLD. Tell me who she voted for and I can tell you if she is lying.
Welcome back to the US! We are at war, if you were not aware. Thanks for the reference to Dr. Sahm. I have started reading her writings today. Very insightful. I would offer that the “neglect vs manipulation” comment ends up at a similar place. Look at the IRS as an example. Strangle the IRS or BLS from staff and technology and you make it easily ignored, ineffective and manipulated.
Inflation is a lived experience. It is a function of age, location, lifestyle choices, etc. In other words, it’s a given that inflation indexing is an imperfect hedge. Therefore, while there is a need to protect the purchasing value of one’s wealth, the lack of a reliable hedging instrument is a compelling reason for diversification in one’s asset allocation. Since social security is indexed to the CPI, that would logically diminish, not eliminate, the need for inflation indexed debt. A broad global mix of stocks and hard assets make eminent sense. Looking too hard into the weeds of inflation indice components and weights seems to me an exercise with diminishing returns.
I was diversified till the chaos started with tariffs. Chaos = GLD obesity overweight. These are the same who came up with DOGE, find little, declare victory to make the fraud and waste legit in the he system legit.
I had the psychological misfortune–i.e., my coworkers were treasurable and the mission of the agency itself was admirable and necessary, but morale was chronically low–to work for a federal government agency under multiple Republican presidents for whom that agency was the very opposite of a priority. In fact, they were hostile to it but, in political terms, didn’t dare abolish it.
Claudia Sahm: “The threat to data quality is not manipulation—it is neglect.”
Ultimately I’m not convinced that this is a meaningful distinction. A standard political maneuver by presidents and congresspeople hostile to an agency, when they haven’t got the votes or the public opinion support to destroy it outright, is to starve it of funds. Give it just enough to keep it alive, but deny it the funding and staffing it needs to thrive and to actually accomplish its mission.
So, aside from the issue of outright manipulation by this administration, which has demonstrated a habit of tormenting “facts” to fit predetermined policy, BLS statistics have the potential to become unreliable simply because BLS itself just doesn’t get the resources it needs to make them as accurate as possible. One sign is all the times when BLS has already announced, i.e., in situations where it didn’t have to so in the past, that it has “estimated” a number.
I acknowledge that my view may be colored by my own experience in a federal agency with a completely different purpose from BLS. But I did watch it happen.
My wife and I nevertheless continue to hold a substantial stash of I Bonds, although in our more cynical moments we also continue to wonder why.