Podcast Summary: Unhedged - "Lies, Damn Lies and Statistics"

Episode Details:

• Title: Lies, Damn Lies and Statistics
• Release Date: August 12, 2025
• Hosts: Katie Martin and Chris Giles from the Financial Times & Pushkin Industries
• Description: In this episode, Katie Martin and Chris Giles delve into recent tumultuous events in US financial institutions, including political interference with economic data and controversial appointments to the Federal Reserve. They explore the implications of these developments for market trust, Federal Reserve independence, and future monetary policy.

1. Introduction: Political Interference in US Economic Data

Katie Martin opens the discussion by highlighting significant political maneuvers affecting key US financial institutions:

• Firing of the BLS Head: Former President Donald Trump dismissed Erica McEntoffer, the head of the Bureau of Labor Statistics (BLS), citing dissatisfaction with job data.
• Nomination to the Federal Reserve: Trump nominated Stephen Moran, a controversial advisor known for advocating substantial reforms of the Federal Reserve, to a pivotal role within the central bank.

Notable Quote:

Katie Martin [04:29]: "Donald Trump is not really interested in those kind of intricacies...He was just, he looked at this revision, he said, I don't like this, I'm going to fire Erica McEntoffer, who's the woman who runs the BLS."

2. Analysis of July Jobs Data and Revisions

The hosts examine the recent US jobs report, emphasizing the significance of revisions in economic data:

• July Non-Farm Payrolls: Added 73,000 jobs, slightly below expectations.
• Revisions for May and June: A total of 258,000 jobs were removed from previous records, marking the largest two-month revision outside a recession since 1968.

Notable Quotes:

Katie Martin [03:12]: "Payrolls added 73,000 jobs for July. A bit of a miss, but not a big one. But there were some huge downward revisions for the previous data for May and June."

Chris Giles [04:29]: "These were the biggest two month revision since 1968...they have all been revisions downwards since 2023."

3. Trump's Dismissal of Erica McEntoffer and BLS Leadership Changes

The conversation shifts to the repercussions of McEntoffer's firing:

• Reason for Dismissal: Trump claimed the BLS was "politically massaging" numbers to favor Democrats, a notion both hosts refute.
• Replacement: E.J. Anthony, a loyalist from the Heritage Foundation, known for politically charged publications, takes over the BLS.

Notable Quotes:

Chris Giles [05:14]: "He's [Trump] entirely wrong about the politicization. They're not entirely wrong that the data isn't of very high quality."

Katie Martin [07:28]: "He's got rid of Erica McIntofer, who by all accounts was a studious and fine upstanding public servant and has replaced her with a chap called E.J. Anthony."

4. Implications for Data Integrity and Market Trust

Martin and Giles discuss the potential long-term effects of politicizing economic data:

• Trust Erosion: Concerns that data integrity might be compromised, leading to reliance on proxies or alternative data sources, similar to issues faced in China.
• Market Confidence: Potential instability in market confidence if key economic indicators are perceived as biased or manipulated.

Notable Quotes:

Chris Giles [08:36]: "If you have a partisan in charge of statistics because everybody relies on them...then what are people going to do? Well, they're going to look for proxies."

Katie Martin [09:11]: "China famously had a long series of youth unemployment data and a few years back these numbers started to show that youth unemployment was rising. So China just deleted them...Tell me that's not where we're going."

5. Nomination of Stephen Moran to the Federal Reserve

The hosts delve into the significance of Stephen Moran's appointment:

• Background: Moran is known for advocating substantial reforms of the Federal Reserve, including proposals that could undermine the dollar's strength and shift financial burdens internationally.
• Potential Impact: Concerns over Fed independence and the introduction of partisan influences in monetary policy decisions.

Notable Quotes:

Katie Martin [13:25]: "He's the co author of a paper called 'Reform the Federal Reserve's Governance to Deliver Better Monetary Outcomes.'...but elsewhere in the paper he says board members and Reserve bank leaders should be subject to at will removal by the President."

Chris Giles [14:07]: "If you had at will firing of the entire committee that sets interest rates, then that committee is no longer able to set interest rates operationally independent of the President."

6. Potential Consequences for Federal Reserve Independence and Monetary Policy

Martin and Giles explore the ramifications of Moran's appointment on the Federal Reserve's future:

• Institutional Integrity: Risk of diminishing the Fed's autonomy, leading to policy decisions driven by political agendas rather than economic indicators.
• Monetary Policy Direction: Speculation that increased political influence could result in premature or ill-advised rate cuts, potentially destabilizing the economy.

Notable Quotes:

Chris Giles [15:39]: "...come in early summer next year, the Fed might be really quite a different institution...we might have a situation where whoever takes this job in January...the new Fed chair is a very, very persuasive person and everyone falls into line."

Katie Martin [17:31]: "The irony of this whole situation is that Trump wants lower interest rates. If he would just believe that the jobs market is under a little bit more pressure than it previously was."

7. Future Outlook: Trust in Economic Data and Policy Effectiveness

The hosts conclude by contemplating the future landscape of economic data reliability and Federal Reserve policymaking:

• Short-Term Viability: The immediate impact may be manageable, but persistent politicization could lead to significant economic missteps.
• Long-Term Risks: Potential for widespread distrust in economic indicators and ineffective or harmful monetary policies driven by political motivations.

Notable Quotes:

Chris Giles [18:13]: "If we think the Fed is not really an independent institution losing some of its independence...the whole of both economic data and the most important economic institution doing things that I would say the vast majority of economists think is pretty dumb."

Katie Martin [19:27]: "Things don't tend to end well when there's pretty dumb economic policy."

8. Closing Remarks and Additional Segments

While the primary discussion centers on political interference and its impact on economic data and the Federal Reserve, the episode also includes minor segments:

• PGIM Representative: Brief mention of trends in alternative investing, particularly in commercial real estate.
• Long Short Segment: A light-hearted exchange where Chris Giles expresses appreciation for PhDs, and Katie Martin shares her fondness for Mauritius following her holidays.

Notable Quotes:

Chris Giles [20:26]: "I'm going to go long PhDs. These doctorates...seem to be extremely effective at giving credibility to people who otherwise don't seem to meet the test of necessarily being very sensible."

Katie Martin [21:15]: "I am Long Mauritius. Just got back from my holidays there and I am now a one woman Mauritius Marketing board...Beautiful island, incredible beaches, wonderful hiking, dolphins, monkeys, tea plantations, rum, the whole thing. Amazing."

Conclusion: In this episode of Unhedged, Katie Martin and Chris Giles dissect the alarming signs of political interference in critical US financial institutions. The firing of the BLS head and the nomination of Stephen Moran to the Federal Reserve underscore a troubling trend towards the politicization of economic data and central banking. The hosts caution that such actions could erode trust in essential economic indicators and compromise the Federal Reserve's ability to conduct independent and effective monetary policy, potentially leading to unfavorable economic outcomes.

Produced by Jake Harper, edited by Bryant Urstadt, with Executive Producer Jacob Goldstein. Special thanks to Laura Clark, Alistair Mackey, Greta Cohn, and Natalie Sadler.