As Trump disbands economic advisory committees, experts raise concerns

Summary

Marketplace Morning Report Summary Episode: As Trump Disbands Economic Advisory Committees, Experts Raise Concerns
Release Date: March 25, 2025
Host: David Brancaccio

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Disbanding of the Federal Economic Statistics Advisory Committee

Claudia Sahm, Chief Economist at New Century Advisors and creator of the Sahm Rule, voiced strong opposition to the Trump administration’s decision to dissolve the Federal Economic Statistics Advisory Committee. Sahm emphasized the committee's crucial role in ensuring the accuracy and timeliness of economic data.

"We want the best data we can have. And that committee was one resource that we had towards getting those data. And to see that taken away, it's a red flag."
— Claudia Sahm (01:20)

Sahm highlighted that the committee provided a platform for experts from academia and the private sector to advise on improving economic statistics. She argued that the committee's dissolution undermines transparency and the integrity of economic data, which is essential for informed decision-making by households, businesses, and the government.

"We need high quality statistics so that people trust the data. This committee, these are people who are really experts... It's a great way to make sure manipulation doesn't happen."
— Claudia Sahm (03:55)

The Trump administration declared that the committee’s mission was "fulfilled," a stance Sahm contested by pointing out the ever-evolving nature of the economy, especially with emerging sectors like artificial intelligence requiring continuous statistical oversight.

The Sahm Rule and Economic Recession Status

David Brancaccio introduced the Sahm Rule, an economic indicator developed by Claudia Sahm to determine in real-time whether the economy is in a recession. When prompted, Sahm confirmed:

"We are not in a recession right now."
— Claudia Sahm (04:56)

This segment provided listeners with an update on the current economic climate, reassuring that, according to this indicator, the U.S. had not slipped into a recession.

Market Reactions to Potential Tariff Changes

The episode reported on the financial markets' response to news that President Trump might withhold imposing tariffs on certain sectors, notably the auto industry. This potential policy shift led to significant stock movements:

• General Motors stock increased by 3.3%
• Ford rose by 2.5%
• Tesla, led by Elon Musk, surged nearly 12%

These reactions underscore the market's sensitivity to trade policy changes and their immediate impact on specific industries.

Wage Growth Among the Lowest Paid Workers

A comprehensive report from the Economic Policy Institute (EPI) was discussed, highlighting that the lowest 10% of workers in the U.S. experienced the fastest wage growth over the past five years. Adjusted for inflation, these workers saw their pay increase by more than 15% between 2019 and 2024.

Samantha Fields delved into the factors contributing to this wage growth, particularly the aftermath of the COVID-19 pandemic:

"A little bit choosier, which meant employers had to pay more. This happened across the economy for those in higher paying jobs, too, just not quite as much."
— Samantha Fields (06:33)

However, Brad Hirschbein from the Upjohn Institute for Employment Research cautioned that despite these wage gains, many low-wage workers continue to struggle due to inflation pressures:

"They tend to buy things that are more subject to inflation... Take rent, for example. We know that rent is a bigger share of people's budget at the bottom than at the top."
— Brad Hirschbein (07:06)

Hirschbein pointed out that rising costs, particularly in housing, have eroded the benefits of wage increases, leaving many low-income workers still facing financial hardships.

Conclusion

The episode of Marketplace Morning Report provided an in-depth analysis of the Trump administration's decision to disband an essential economic advisory committee, the implications for economic data transparency, current recession indicators, market responses to tariff policies, and the nuanced reality of wage growth among the lowest paid workers. Experts like Claudia Sahm and Brad Hirschbein offered critical insights into how these developments shape the broader economic landscape.

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Produced by James Graham, Neal Morrow, Naomi Rainey, Arianna Rosas, Alex Schroeder, and Erica Soderstrom. Senior Producer: Meredith Garretson Morby in Los Angeles.

Transcript

[David Brancaccio]

Hey, it's Marketplace Morning Report host David Brancaccio. When things change quickly and dramatically, Marketplace is here to help you stay grounded and informed. No sensationalism, just facts and context. It's our March fundraiser, though, and you can be part of our mission to raise the country's economic intelligence when you donate to our nonprofit newsroom today, every single donation makes a difference. We need you. Go to marketplace.org donate we're leading with a noted economist who thinks $120,000 a year is a small price to pay to be sure we're measuring the economy in a cutting edge way. I'm David Brancaccio in Los Angeles. New Century Advisors chief economist Claudia Sahm is the one who came up with a closely watched economic indicator that bears her name, the Sahm Rule. Sam Sahm. She's been writing that it's a mistake for the administration to pull the plug on an obscure volunteer committee of experts that had been meeting, meeting once in a while to make sure that economic measures keep up with the times. And she joins us here. Welcome.

[Claudia Sahm]

Great to be here. Thank you.

[Unknown]

Federal Economic Statistics Advisory Committee. Now, this sounds like something an anesthesiologist would use to put you to sleep, but it's. The committee is going away and this is actually keeping you awake.

[Claudia Sahm]

That's right. There's so much uncertainty about the economy where we're headed. And it is so, so important that we have the very best data, the very best statistics on the U.S. economy. And that is no small feat. We have a $30 trillion economy. We have 170 million people in the labor force. It's a very dynamic economy, which is super. But that makes it harder to keep the measurement going. And this advisory committee has been in place for many years. And it is a resource to the main statistical, economic, statistical agencies as a sounding board, as a how could we improve these statistics? What's the best research? And so for me, big picture. We want the best data we can have. And that committee was one resource that we had towards getting those data. And to see that taken away, it's a red flag.

[Unknown]

The Commerce Department under the new Trump administration says the work of this committee is done, that its mission is, quote, fulfilled. This is not your view, the work.

[Claudia Sahm]

Of a committee that is advising on statistics, how to make them more accurate, how to make them more timely. That work will never be finished. In some of the last meetings of the committee, the statistical agencies came to them with questions about how to measure artificial intelligence. I mean, this is a huge question going forward. And we want to be able to have data that represents all kinds of businesses. So the data either keep up or we just don't know what's happening. And then that's a really tricky place for anybody who's trying to make a decision, whether it's a household, a business, a government.

[Unknown]

And I think I saw the same statistic as you did. This committee costs like 120,000 a year. Its members are not paid. 120,000 may sound like significant money to somebody, but on the grand scheme of the federal government, it's not an expensive item.

[Claudia Sahm]

$120,000 to get some outside voices. And these are outside independent voices. They're academics, they're people who work in private sector that have a deep sense of expertise. So it's also about transparency. It's great to have some outside eyes on what's happening in these statistical agencies. So it really shows a very short sighted view of the economic statistics and the kinds of investments that need to be made in them.

[Unknown]

I'm hearing you say that less transparency implied by turning off this committee. Less transparency would have its own cost.

[Claudia Sahm]

Absolutely. We need high quality statistics so that people trust the data. This committee, these are people who are really experts. I mean, just love the nitty gritty of the data. So if something were happening, if the data were being manipulated, they're the kind of experts that would notice the statistics aren't being manipulated. I'm not saying that's an intention of this administration at all. But having a committee, having outsiders who are knowledgeable about what's happening in the agencies, that's a great way to make sure manipulation doesn't happen. Because once you lose trust, it is so hard to gain it back. Like, why would we risk that?

[Unknown]

Claudia Somm, chief economist at New Century Advisors, thank you so much.

[Claudia Sahm]

Thank you.

[David Brancaccio]

Dr. Somm came up with a way to track in real time whether we're in a recession. It's about the unemployment rate rising from a low and you can look it up on a Federal Reserve website like an electrocardiogram of the economy. Claudia Sahm of Sahm Rule fame, are we now in a recession?

[Claudia Sahm]

We are not in a recession right now.

[David Brancaccio]

Taking the marketplace economic pulse views from a range of perspectives here now, when news broke yesterday that President Trump might not impose some tariffs on some sectors like the auto industry next week, General Motors stock went up 3.3%. Ford closed up 2.5%. And Tesla, run by the right hand of Trump, Elon Musk, those shares closed up nearly 12%. 12%.

[Unknown]

If you want to be savvy about the economy, The Marketplace newsletter is just what you need. Every Friday you'll get explainers and analysis that make sense of everything from the moving markets to grocery prices. No jargon, no hype, just smart takes delivered to your inbox. Sign up [e-mail] subscribe.

[David Brancaccio]

The Lowest Paid workers in America saw the fastest wage growth by far over the last five years. That's according to a new report from the Economic Policy Institute. Adjusted for inflation, the bottom 10% of workers saw their pay go up more than 15% between 2019 and 2024. Marketplace's Samantha Fields has more.

[Samantha Fields]

This time five years ago, between February and April 2020, about 22 million people lost their jobs, many of them low wage workers.

[Unknown]

Workers in leisure and hospitality and retail, Right? All of those industries were essentially shut down.

[Samantha Fields]

Elise Gould at the Economic Policy Institute says when things reopened and employers started.

[Unknown]

Hiring again, workers had a moment to pause, right? We had one time in history better unemployment insurance programs and they could be.

[Samantha Fields]

A little bit choosier, which meant employers had to pay more. This happened across the economy for those in higher paying jobs, too, just not quite as much. Their wages have risen about 6 or 7% since 2019, compared to 15% for people in the lowest paying jobs.

[Brad Hirschbein]

It's also 15% starting from a very low base. If you're making $10 an hour, 15% growth is a buck 50.

[Samantha Fields]

Brad Hirschbein at the W.E. upjohn Institute for Employment Research says even with that jump in wages, many of the lowest paid are still struggling and inflation has hit them particularly hard.

[Brad Hirschbein]

They tend to buy things that are more subject to inflation, and those things also represent a larger share of all the things that they buy. Take rent, for example. We know that rent is a bigger share of people's budget at the bottom than at the top.

[Samantha Fields]

And rent has gone way up in the last five years, which he says has eaten into those wage gains. I'm Samantha Fields for Marketplace.

[David Brancaccio]

Our producers are James Graham, Neal Morrow, Naomi Rainey, Arianna Rosas, Alex Schroeder and Erica Soderstrom. Our senior producer is Meredith Garretson Morby in Los Angeles. I'm David Brancaccio with the Marketplace Morning Report from APM American Public Media.

[Janelie Espinal]

Consumer confidence had its sharpest monthly decline since 2021, which means we're all in our feels about money. And while uncertainty is the only constant these days, it's also a great reason to get serious about understanding personal finance. I'm Janelie Espinal, host of Financially Inclined, a podcast from Marketplace that makes learning about money simple. Learn about practical skills like negotiating job offers, dealing with money and friendship and love, entrepreneurship and student loans. Get serious about your money and build a life you've always dreamed of. Listen to Financially Inclined wherever you get your podcast.