Is there a cost if economists face pressure to back up Trump?

Summary

Marketplace Morning Report Summary Episode: Is there a cost if economists face pressure to back up Trump?
Release Date: August 13, 2025

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Economic Pressures on Economists Under the Trump Administration

Opening Discussion: David Brancaccio opens the episode by addressing recent actions by President Trump that may signal increasing pressure on economists to align with the administration's economic narratives. He references two significant events:

1. Firing of the Bureau of Labor Statistics Head: Following job market revisions that portrayed a weaker economy.
2. Pressure on Goldman Sachs’ Chief Economist: After predictions that tariffs would lead to higher consumer prices.

Quote Highlight:

"Is there a cost if economists face pressure to back up President Trump?"
— David Brancaccio [00:31]

Impact on Financial Markets and Investor Confidence

Susan Schmidt’s Insights: Susan Schmidt, Portfolio Manager at Exchange Capital Resources, discusses the unprecedented nature of the administration’s actions to suppress dissenting economic opinions within major financial institutions. She emphasizes that such moves are atypical and potentially harmful to market confidence.

Key Points:

• Unprecedented Pressure: Schmidt notes that in her career, she has never seen an administration single out an economist to suppress contrary views.

  "It's highly unusual. I don't think that I've ever seen this before in my career..."
  — Susan Schmidt [01:13]

• Investor Confidence Erosion: Attempting to alter data calculations or stifle opposing views disrupts investors’ information processing, leading to increased risk aversion and skepticism toward the markets.

  "Stifling any views or perhaps changing the way data is calculated makes it really hard for investors..."
  — Susan Schmidt [01:44]

• Comparison to Chinese Data Practices: Schmidt draws parallels to criticisms of the Chinese market, where data manipulation is alleged, suggesting that similar practices in the U.S. could undermine market integrity.

  "The Chinese government pulls general data that doesn't agree with the overall government's opinion...."
  — Susan Schmidt [02:36]

Broader Economic Implications

Brancaccio probes whether these efforts to control economic narratives might have broader implications. Schmidt responds by highlighting the potential for reduced market confidence, increased investor skepticism, and the leveling out of markets away from all-time highs.

Quote Highlight:

"That tends to make investors risk averse and so it levels out markets, causing investors to look at them with more skepticism..."
— Susan Schmidt [01:44]

Corporate Struggles Amid Economic Uncertainty

The discussion transitions to corporate financial health, spotlighting Spirit Airlines' precarious situation five months post-bankruptcy protection. The airline's stock plummeted by 40% following its quarterly report but has shown some recovery.

Quote Highlight:

"Spirit Airlines indicated it could go out of business completely if it doesn't bring in more money."
— David Brancaccio [02:43]

Global Arms Production and France’s Military Expansion

BBC Report by John Laurenson: The episode shifts to an international perspective with John Laurenson reporting on France's ramped-up arms production in response to the Russian invasion of Ukraine. France aims to double its military spending to 3.5% of its GDP by the following year.

Key Developments:

• Factory Conversions: Civilian factories are being repurposed for military manufacturing. For instance, a Normandy factory switched from producing SIM cards to manufacturing printed circuit boards for Rafale fighter planes.

  "Historically, this site has been producing SIM cards, telecoms, SIM cards.... now making a conversion towards this new."
  — Thierry Charlot, Site Manager [04:33]

• Employment and Investment: Thales has invested approximately €750 million in defense-related capital expenditures over three years, hiring 9,000 people to bolster France’s defense capabilities.

  "We have invested around 750 million euros of Capex capital investments for our factories for defence in France..."
  — Philippe Querer, Thales Director of Strategy [05:28]

• Accelerated Production Rates: Companies like KNDS France and MBDA are significantly increasing their production capacities, reducing lead times from years to months for critical military equipment.

  "The initial production rate, let's say 2023, was around 2, and now they are producing up to 12..."
  — Thierry Charlot [06:15]

• Expansion into Drone Production: Renault is transitioning from automotive components to military aircraft parts and plans to initiate drone production in Ukraine.

Quote Highlight:

"Other companies have been doing the same... the production of the Caesar cannon... accelerating the tempo for the development, especially for drones."
— Thierry Charlot [06:15]

Market Data Update

Concluding the episode, Brancaccio provides a brief update on market indicators:

• Interest Rates: The 10-year interest rate stands at 4.23%, showing a downward trend in the morning.

  "Also, interest rates are down this morning, the 10 years at 4.23%."
  — David Brancaccio [07:10]

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Conclusion: The episode delves into the intricate dynamics between political pressures and economic integrity, highlighting the potential risks to market confidence and investor behavior when economic data and expert opinions are politicized. Additionally, it sheds light on the global repercussions of geopolitical tensions, exemplified by France's significant shift towards military production. Listeners are left with a nuanced understanding of how political and international developments can profoundly impact economic landscapes and market sentiments.

Transcript

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[David Brancaccio]

Is there a cost if economists face pressure to back up President Trump? I'm David Brancaccio in Los Angeles. If you don't like the economic message, change the messenger. The other day it was President Trump firing the head of the Bureau of Labor Statistics after revisions depicted a weaker job market than first thought. Then this week, President Trump called on the CEO of Wall street giant Goldman Sachs to get rid of his chief econom after the economist predicted, not unreasonably, that tariffs will force consumers to pay extra. Working to discourage economic views that don't fit the administration's narrative can add risk for stock market players. Susan Schmidt is portfolio manager at Exchange Capital Resources.

[Susan Schmidt]

All of the major banks have economists out there espousing what they think might happen. There's always an opinion that's different than the administration's and it's highly unusual. I don't think that I've ever seen this before in my career where the has singled out one economist to say this doesn't fit with my view. I don't agree.

[David Brancaccio]

So if there's an effort to stifle views that may be at odds with what the administration wants, I mean, does it have a wider effect? There's plenty of other views out there.

[Susan Schmidt]

Stifling any views or perhaps changing the way data is calculated makes it really hard for investors because it disrupts how they're used to processing information. Importantly, it makes investors have lower confidence in the market overall. That tends to make investors risk averse and so it levels out markets, causing investors to look at them with more skepticism and potentially lower us from these all time highs that we're seeing right now. Investors like certainty. Comments like that imply that data is changing. We criticize the Chinese market all the time because we believe that the Chinese government pulls general data that doesn't agree with the overall government's opinion. And yet this has the flavor of potentially starting down that same path here.

[David Brancaccio]

In the U.S. susan Schmidt, senior portfolio manager at Exchange Capital Resources, thanks for this.

[Susan Schmidt]

Thank you.

[David Brancaccio]

Five months after Coming out of bankruptcy protection, Spirit Airlines indicated it could go out of business completely if it doesn't bring in more money. The the warning was in its quarterly report yesterday and the stock fell 40% yesterday, but has clawed back at least a little piece of that this morning so far. Some European countries are increasing arms production since the Russian invasion of Ukraine. France, the world's second biggest arms exporter, has set out to double its military spending to 3.5% of its economic output by the year after next. Existing factories are being retooled for weapons and munitions. The BBC's John Lorenson has this report from northern France.

[John Laurenson]

In a factory in Normandy, a worker called Celine peers into a microscope.

[Celine]

I'm controlling visually all my components one by one to see exactly where everything's been set and check the quality of my soldering. If there is a component that's not quite set right, it's me who replaces it.

[John Laurenson]

This factory owned by the Telescompany makes hand finished printed circuit boards for Rafale fighter planes, enabling them to detect an enemy, jam its radar and destroy it. This production line started up in January. Until then, the jobs of Celine and the other 300 employees at this factory were in jeopardy. The switch to military saved them. As site manager Thierry Charlot explains.

[Thierry Charlot]

Historically, this site has been producing SIM cards, telecoms, SIM cards. This industry is declining over long term and so we are now in this plant making a conversion towards this new.

[John Laurenson]

Activity, part of which is being transferred to France from Southeast Asia. Other companies are carrying out similar conversions. Two munitions factories that went civilian have now switched back to military. For example, the owner of the second is buying a car part factory in Brittany to start shellcase production there. Another factory owned by Renault has switched from making car dashboards to military aircraft calcul. Renault is also planning to start drone production, although that would be in Ukraine. Capacity is rising at existing facilities too. Thales director of strategy is Philippe Querer.

[Philippe Querer]

We have hired 9,000 people over the last three years in defence capabilities in France just to take that country. If you look to the investments for production, we have invested around 750 million euros of Capex capital investments for our factories for defence in France over the last three years. And this was before any new stance in Europe about what is happening in the world and how we need to somehow rearm Europe.

[John Laurenson]

Other companies have been doing the same. Boris Cauchet is associate director of the SILAD business consultancy that advises companies in the defence sector on how to improve profitability.

[Thierry Charlot]

So I will take three examples. The first one is the production of the Caesar cannon. It's a mobile cannon that is produced by KNDS France. The initial production rate, let's say 2023, was around 2, and now they are producing up to 12 if we take MBDA, French production of Aster missiles. In fact, they are reducing the lead time to produce one unit from 42 months to 18 months. And we can take examples of smaller companies like Tergis and Gaia that are accelerating the tempo for the development, especially for drones.

[John Laurenson]

Back in the Thales facility in Normandy, a second production line is due to start up at the end of the year in Pont Audomer, France. I'm the BBC's John Laurenson for Marketplace.

[David Brancaccio]

Also, interest rates are down this morning, the 10 years at 4.23%. It's the Marketplace Morning Report from APM, American Public Media.