Economic statistics to start cutting out some smaller cities

Summary

Marketplace Morning Report: Economic Statistics to Start Cutting Out Some Smaller Cities Release Date: August 11, 2025

Host: David Brancaccio
Guest: Russell Weaver, Research Director at Cornell University School of Industrial and Labor Relations

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Major US Chip Makers Agree to Revenue Sharing with the US Government

In the opening segment, David Brancaccio reports on a significant development involving two leading American microchip manufacturers, Nvidia and AMD. These companies have entered into an unusual agreement to allocate 15% of their revenues from sales in China to the US Treasury. Nancy Marshall Genser, Marketplace reporter, provides an in-depth look into the agreement:

“[0:20] Nancy Marshall Genser: Chip makers Nvidia and AMD will be sending 15% of the revenues from selling computer chips in China to the US Treasury. This was first reported by the Financial Times, which goes on to say the two companies made the deal in order to obtain export licenses to sell in China and the licenses were issued shortly after the agreement.”

The agreement was a precondition for obtaining export licenses tailored for chips specifically designed for the Chinese market. While Nvidia released a statement emphasizing compliance with US government regulations, AMD did not respond to requests for comment.

The context of this agreement traces back to the Trump administration's initial plans to ban Nvidia chip exports to China—a decision reversed under current administration pressures. Concerns persist about the potential for Chinese military access to these advanced chips. Furthermore, former Biden administration official Peter Harrell criticized the deal on social media, stating:

“[0:51] Nancy Marshall Genser: ...in a post on X, former Biden administration official Peter Harrell said the 15% deal would also violate the Constitution which forbids export taxes.”

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China’s Allegations Against Nvidia and Broader Economic Implications

Brancaccio continues by addressing a social media campaign linked to China's state-run media, which alleges that Nvidia's N20 chip poses security risks:

“[1:21] David Brancaccio: A social media account affiliated with China's state-run government influenced media claims Nvidia's N20 chip is unsafe for China, asserting it gives its US makers backdoor access and could be shut down remotely.”

Nvidia has firmly denied these claims, stating there is no such backdoor. Additionally, the Chinese account criticized the Nvidia model for environmental concerns and questioned its technological advancement.

The discussion shifts to the broader economic landscape, highlighting remarks from Federal Reserve Governor Michelle Bowman:

“[1:40] David Brancaccio: ...Federal Reserve Governor Michelle Bowman said over the weekend that she expects three interest rate cuts during the rest of this year.”

With only three more interest rate meetings scheduled for the year, Bowman's outlook suggests a possible easing of monetary policy in response to weaker economic indicators.

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Bureau of Labor Statistics Cuts Data Collection in Select Cities

The conversation then pivots to a critical issue affecting economic statistics—the Bureau of Labor Statistics (BLS) decision to cease data collection in three specific cities: Provo, Utah; Lincoln, Nebraska; and Buffalo, New York. This move impacts key economic indicators, including the Consumer Price Index (CPI).

Russell Weaver provides insight into the rationale and repercussions of these cuts:

“[3:16] Russell Weaver: ...researchers at the Bureau had engaged in statistical simulations. The claim was basically made that research had been done that showed in Buffalo, Lincoln and Provo, Utah, that actual numbers through data collection did not differ very markedly from the numbers that they were imputing for that same time period using their statistical techniques.”

The BLS cited resource constraints as the reason for the data collection reductions. Weaver emphasizes the significance of these cuts:

“[4:33] Russell Weaver: We're not capturing that inflation accurately? ... Social Security payments are adjusted for a cost of living index based on CPI. And so if we're not capturing really the dynamism of CPI and how prices are changing because we're not collecting in regions that could potentially reveal something useful to the eventual estimates ...”

Weaver warns that excluding major metropolitan areas like Buffalo could distort the CPI's representation of inflation, thereby affecting cost-of-living adjustments critical for programs like Social Security. He further cautions about the erosion of trust in federal data:

“[5:12] Russell Weaver: ...we're starting to get a lot more skepticism about the quality of federal data. ... if we're going to weaken the federal statistical system, that's going to create maybe even more tension, divisiveness and polarization in society because we'll be arguing about whether or not we can trust the numbers.”

Brancaccio shares a personal perspective, expressing concern for communities like Buffalo that may feel marginalized by the BLS's decision:

“[5:43] David Brancaccio: ...I worry that they're going to feel, I don't know, marginalized by this.”

Weaver concurs, underscoring the importance of diverse data collection for accurate economic measurement:

“[6:02] Russell Weaver: ...by not having that representation in the CPI ... that might not be the reality for a lot of folks who are living here.”

The segment concludes with Brancaccio thanking Weaver for his expertise, highlighting the profound impact of the BLS's decision on economic policy and everyday financial realities for Americans.

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Looking Ahead: Upcoming Economic Reports

Brancaccio wraps up the episode by previewing imminent economic releases:

“[1:50] David Brancaccio: ...tomorrow we get the government's monthly report on inflation, the Consumer Price Index, which is linked to all sorts of cost of living related matters, including the yearly adjustment to Social Security payments.”

Listeners are encouraged to stay informed as these reports will provide further insights into the current economic climate and the effectiveness of recent policy adjustments.

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Conclusion

This episode of Marketplace Morning Report delves into critical intersections of technology, international trade, and economic policy. The agreements between Nvidia and AMD with the US government reflect ongoing tensions in global markets and national security concerns. Simultaneously, the BLS's data collection cuts raise urgent questions about the accuracy of economic indicators like the CPI, with direct ramifications for federal programs and public trust. As the economic landscape continues to evolve, these discussions underscore the importance of robust data and transparent policymaking in navigating complex global and domestic challenges.

Transcript

[David Brancaccio]

Some big AI chip makers will pay the US Government a major cut of their sales to China. I'm David Brancaccio in Los Angeles. Two American microchip makers have agreed to give the US Government a cut of their sales in China. Marketplace's Nancy Marshall Genser has the details on this unusual agreement.

[Nancy Marshall Genser]

Chip makers Nvidia and AMD will be sending 15% of the revenues from selling computer chips in China to the US Treasury. This was first reported by the Financial Times, which goes on to say the two companies made the deal in order to obtain export licenses to sell in China and the licenses were issued shortly after the agreement. The licenses will be for chips Nvidia and AMD designed specifically for China. In a statement, Nvidia just says it follows rules the US Government sets for its participation in worldwide markets. AMD didn't respond to her request for comment. The Trump administration initially said it would ban Nvidia chip exports to China in reverse course, but there are concerns the Chinese military will get a hold of these chips. In a post on X, former Biden administration official Peter Harrell said the 15% deal would also violate the Constitution which forbids export taxes. I'm Nancy Marshall Genser for Marketplace with all of this.

[David Brancaccio]

A social media account affiliated with China's state run government influenced media claims Nvidia's N20 chip is unsafe for China, asserting it gives its US makers bank backdoor access and could be shut down remotely. Nvidia says there is no backdoor. The China posting casts other shade, saying the Nvidia model is bad for the environment and not all that technologically advanced. In an acknowledgment, the economy may be weaker than we thought. Federal Reserve Governor Michelle Bowman said over the weekend that she expects three interest rate cuts during the rest of this year. There are only 3 more interest rate meetings at the Fed left this year. Tomorrow we get the government's monthly report on inflation, the Consumer Price Index, which is linked to all sorts of cost of living related matters, including the yearly adjustment to Social Security payments. This spring the Bureau of Labor Statistics announced it would stop gathering data in three parts of the country Provo, Utah Lincoln, Nebraska and Buffalo, New York. That last one the 49th largest metro area in the country. The BLS says the cuts are about available resources. Will anyone miss the data? Russell Weaver is research director at Cornell University School of Industrial and Labor Relations and a quantitative geographer.

[Russell Weaver]

Welcome to thank you for having me.

[David Brancaccio]

What's your sense of why the Bureau of Labor Statistics is going to now bypass places Like Buffalo, Lincoln, Nebraska, Provo, Utah. Do you have any sense of why they're picking on those places?

[Russell Weaver]

Well, interestingly, there was no justification. There was a supplementary release a couple of weeks after the initial notice saying that researchers at the Bureau had engaged in statistical simulations. The claim was basically made that research had been done that showed in Buffalo, Lincoln and Provo, Utah, that actual numbers through data collection did not differ very markedly from the numbers that they were imputing for that same time period using their statistical techniques.

[David Brancaccio]

And so we fully understand this affects Consumer Price Index or more than the cpi.

[Russell Weaver]

The CPI mainly is where the cuts have been made, but it is going to affect the housing survey as well as the Commodity and Services Pricing Survey. And so that is a little bit of a problem because inflation is a huge issue right now, as everybody is well aware. And so not collecting in Buffalo is probably going to present some problems because that's one of the largest population centers in this region at which the numbers eventually get summarized. And so we're going to be missing a good component there.

[David Brancaccio]

Now, I use this data in our work in financial journalism all the time, and you do too. But is it so terrible if we cut some corners or screw crimp a little bit on our statistical modeling, if.

[Russell Weaver]

We'Re not capturing that inflation accurately? That has a lot of meaning for folks who are receiving, say, Social Security payments through the government, which is another program that's under attack. Social Security payments are adjusted for a cost of living index based on cpi. And so if we're not capturing really the dynamism of CPI and how prices are changing because we're not collecting in regions that could potentially reveal something useful to the eventual estimates that's going to affect people's bottom line and ability to survive who are dependent on wage increases or Social Security benefit increases that are generally tied to cost of living changes. But maybe the longer term and bigger picture issue here is that through a lot of these changes that we're seeing, we're starting to get a lot more skepticism about the quality of federal data. And federal data underlie effectively all policy making and decision making at all levels of governments in the U.S. so if we're going to weaken the federal statistical system, that's going to create maybe even more tension, divisiveness and polarization in society because we'll be arguing about whether or not we can trust the numbers.

[David Brancaccio]

I mean, maybe at the personal level too. I have a lot of friends and relatives by marriage in the Buffalo area. These are folks who want to be seen statistically speaking, they want a consumer price index in their image. I worry that they're going to feel, I don't know, marginalized by this.

[Russell Weaver]

Not only do we want representation in these data sets but we acknowledge that because of the data collection protocols and processes we need to collect this information from a ton of different locations inside of a region with the goal of capturing information that looks common or typical for that region. And so by not having that representation in the cpi, you know, we in Buffalo can sit and watch all the headlines that inflation might be easing or prices might be coming back down but that might not be the reality for a lot of folks who are living here.

[David Brancaccio]

Speaking indeed from Buffalo, New York, Russell Weaver, research director at Cornell University School of Industrial and Labor Relations. Professor, thank you.

[Russell Weaver]

Thank you so much.

[David Brancaccio]

And in Los Angeles, I'm David Brancaccio. You're listening to the Marketplace Morning Report from apm, American Public Media.