A president who is obsessed with stopping leaks leaked extremely sensitive economic information about May’s jobs report Friday morning, over an hour before the report was officially released.
“Looking forward to seeing the employment numbers at 8:30 this morning,” President Donald Trump tweeted at 7:21 a.m., hinting the numbers would be favorable. Not only is that an hour before the report’s release, it’s a full two hours before government appointees are legally allowed to say anything at all.
Aside from the sheer hypocrisy of Trump, one, leaking and, two, playing up the importance of a report he used to dismiss as “phony” and “one of the biggest hoaxes in modern politics,” it also makes for deeply problematic economic policy.
That’s according to Justin Wolfers, a professor of economics and public policy at the University of Michigan and an adviser to the Congressional Budget Office, among other things. Wolfers said the president’s disclosure is unprecedented both in the U.S. and among his counterparts in other developed countries. And it’s unprecedented for a handful of really, really good reasons:
Trump is making America Greek again (i.e., bad things happen when data is politicized).
It’s extremely important that the data we use to determine how healthy the economy is remain totally independent and free from political influence. Trump teasing and putting a political spin on numbers ahead of their release casts doubt on whether they’re accurate and honest.
The data in these reports are the result of countless hours of work by a group Wolfers characterized as “nerds in basements.” Markets trust number-crunching nerds who work for government agencies that operate above the political fray. They don’t trust politicians.
“The reason for that is, in many tin-pot countries, autocrats start fiddling with the statistics,” Wolfers said. “When they start doing that, no one believes them, and you end with a situation like in Greece, where nobody wants to loan you money.”
“The original sin that led to the Greek crisis is that they were dishonest with their economic statistics,” Wolfers added. “This is a step toward undermining that. There’s nothing good at the end of that pathway.”
It’s illegal and undermines fundamental trading rules.
A fundamental principle of the economy is the ideal that everyone has access to the same information as everyone else. Information that could send markets skyrocketing, plummeting or even staying the course is tightly guarded, and doled out in a manner meant to ensure everyone has equal access.
Trump was one of a highly select group of people briefed on the jobs report ahead of time. By tweeting about it prior to its release, he turned the system on its head ― and that’s illegal.
“If any public official under any previous administration had issued that tweet, they would get fired within the hour,” Wolfers said.
Former President Barack Obama’s onetime chief economic adviser Austan Goolsbee told Politico, “If the president just tipped that the numbers are good, he broke the law.”
Anyone armed with extra information ― say a friend Trump told while chatting on the phone Thursday night, or someone who saw Trump’s tweet at just the right moment ― can use it to make a lot of money at someone else’s expense.
“If someone makes money in a casino, someone else is losing it,” Wolfers explained, “and that’s likely yours and my retirement account.”
Wolfers hasn’t yet been able to dig into Friday’s pre-market data and conclusively say that’s what happened after Trump tweeted, but he said at first glance it’s “highly suggestive.”
“If you’re a financial market trader and you saw that tweet and you were aware the president has been briefed on the numbers, you’d have to be a fool to not know what was up,” he said. “Traders with millions on the line are doing something.”
Illegality aside, it’s just bad for the economy.
“It’s clear the president doesn’t take his responsibility to treat confidential data seriously,” said Wolfers. “Now every time he speaks we’re going to be wondering, ‘Did we just learn something?’ And if he sounds optimistic, we’ll buy, and if he sounds pessimistic, we’ll sell.
“That’s extra volatility we don’t need.”
In addition to destabilizing the market, Trump’s tweet undermines the White House’s own ability to send legitimate economic signals when they actually matter.
“There are times when the White House needs to speak and be understood,” Wolfers said. “All of this confuses the White House’s message, not in the political sense, but in the economic sense.”
So in the future, if Trump’s economic adviser recommends broadcasting a message that seeks to either boost or cool down the markets, for example, economists may disregard the signal seeing it as Trump crying wolf.
“When it’s time,” Wolfers warned, “the markets will respond less than they should.”