The effects of a recent executive order purging advisory boards working with federal agencies include dismantling the Bureau of Labor Statistics’ Technical Advisory Council, and Data Users Advisory Committee. Boards advising Census and the Bureau of Economic Analysis were also dismissed.

These advisors are experts in their fields, with broad understanding of the BLS’s different series, and their strengths and idiosyncrasies. They have significant experience in sample design, modeling, analysis and interpretation of large structured and unstructured data sets, formulating survey questions, and accessibility. In addition, they advise on technicalities, and on changes in what data users need, and on new series that would be more relevant in our changing economy, and less relevant series that could be trimmed, especially important as the BLS is chronically underfunded. The TAC specifically excludes anyone subject to federal registration requirements covering lobbyists. Terms generally last two years, and board members provide their expertise and guidance for free.

We cribbed some of that text from the BLS’s page on the committees yesterday. Today that page is gone.

Of course, accurate data is critical both to policy makers striving for rational outcomes in our disjointed economy, and to investors. Neil Dutta recently highlighted the importance of our federal data, calling it the gold standard, and wondering what a glitch in one of our major economic reports would do to global markets. He’s far from the first analyst to do so.

In an interview with Politico’s Weekly Shift, former BLS commissioner Erica Groshen points out that if senior BLS leadership were to be suddenly serving at the “pleasure of the president,” that might make BLS statisticians afraid to point out data points they consider statistically unsound. And we’ll add that if it became known that the BLS had been politicized, that itself might rattle confidence, built as it is on a fragile structure.

There are always complaints, especially when the actual release throws egg on your forecast’s face. (Don’t tell anyone, but we’ll admit to guiltily checking the birth/death model on such mornings.) In the last decades the tenor of those complaints has become increasingly alarming, including accusations of outright fraud. When asked if the public would have a way of knowing if there were erroneous data, Dr. Groshen, with her usual candor, responded that in addition to ensuring that “every tax dollar is well spent,” by advising on most appropriate technologies, and allowing data users themselves to have a voice, the advisory boards provide transparency. “…if there were attempts to manipulate BLS in some way that was unprecedented, illegal [or] something inappropriate, it would be more obvious in the context of the give and take of an advisory committee than in many other ways.”

Over the years, to address legitimate complaints, say about lagged data, Dr. Groshen has promoted ways to restructure our statistical sources to provide more timely and granular data. Her widely supported suggestions include funding the Department of Labor to reframe the weekly UI claims reports to function as an economic indicator instead of the administrative record those reports were built to be, and to publish the full data set based on UI data, the Quarterly Census of Employment and Wages, with a shorter lag. Despite the complaints, apparently there’s no money for that.

According to Dr. Groshen, in disbanding the TAC, we “lose one more means to counteract baseless accusations…one more means to communicate exactly what you did and why,” and to clarify questions. “I would say that if an administration wanted to try to manipulate data, then they would not want to have these advisory committees around.”

Business owners in the Capitol region are hiring uprooted federal workers, and offering perks, like free yoga classes, discounted degree programs, and medical care for their pets, acknowledging that the “federal workforce is a wildly important part of our economy.”

There will be no free yoga classes or any other form of enlightened self-interest that will offset the damage caused by the degradation of our public data sources. Come to think of it, on the first Friday of the month, instead of fielding calls from clients who suspect the employment report has been manipulated, we may all be wondering about that ourselves.

Federal agencies are required by federal statute to provide 60-day notice of workforce reductions to offset potential strains on state systems and mitigate harms to workers in affected regions. The agencies also reveal to state boards if terminations were performance based or part of a workforce reduction.

As we all know, the new administration has fired workers in the hundreds and thousands without following procedures, perhaps most importantly without notifying the states involved. Apparently, some agencies are citing restructuring, others performance issues, as the reason for terminations, and state agencies have to look carefully at each claim, a process likely to become overwhelming time consuming as purges continue. Until verifications are completed, employees cannot be “released,” meaning that in addition to having no job, they have no benefits. (Lawsuit here.)

It will be a long time before we know the details but, for example, MSN reports that in March 2024, 189 federal workers applied for UI in Maryland. So far this month, offices are receiving 30 to 60 filings a day, which would ratchet up to a 630 to 1,260 total by the end of the month. In the highly unlikely event the current rate remains steady, that is.

federal workers by state

“Economic pain is contagious,” said Michele Evermore, senior fellow at the National Academy of Social Insurance, in a recent interview, so let’s take a look at state concentrations.

Nationally, federal workers make up under 2% of total nonfarm employment, about the same as “insurance carriers and related activities.” A fifth work in DC and environs, constituting 5.8% of total nonfarm employment there. Many states are working to bring federal workers into their own offices, yet some states may not be able to accommodate willfully terminated employees in either private or public sectors. States with largest shares of federal workers, over 2.5%, include Alaska, Hawaii, and New Mexico. In Oklahoma, Wyoming, and West Virginia shares run from 2.0% to 2.5%, followed by 1.5–2.0% in Alabama, Georgia, Mississippi, Maine, Montana, Puerto Rico, and Washington. In the rest of the country, the rates are lower than the national average, with South Dakota’s <0.5% the smallest share. To us, that’s a worrisome mix.

Michael Hiltzik has a piece buried in this morning’s Los Angeles Times, with the catchy title, “Wall Street Can Now Bet on the Price of California Water: Watch Out,” but more staid content.

Amid questions about how such an index would work “anywhere outside California,” he mentions that people who have tried to make money from California water rates have often lost their shirts. In one such plot, Texas’s Bass brothers fell far short of their goal of $92 million in revenue in the first year when they bought farmland in California’s Imperial Valley, which entitled them to buy water at a federally subsidized $12.50 an acre-foot. The plan was to let the land lie fallow and sell the water to thirsty San Diego at $400.00 an acre-foot. Not so said the Metro Water District amid public uproar, and the Bass brothers sold off the land, making a profit, but.

Those who put together the index claim it’s “doing good,” and Hiltzik says they are correct on the locking in of prices for farmers, “as far as it goes.”

To him, the problem is not the speculation, it’s that an index can’t address the underlying causes of water scarcity, including climate change and wasteful agricultural practices, which are expected to deteriorate further.

Another problem we’re underscoring—it probably won’t make headlines—is a potential hit to our beleaguered, bottom-line essential agricultural workers. Hiltzik suggests that using markets to try to manage things like water shortages excludes certain affected players who can’t participate, in this case, the environment, and farmworkers. If farmers are in the position where they are better leaving their fields fallow and selling their water, the farmworker is “out of luck.” And a job.

Ellen Hanak, water expert at the Public Policy Institute of California who pointed out the missing shirts above, also cautioned that water is a “heavy commodity with a lot of restrictions on how it can be moved… People talk about water as the new gold, but that’s just a metaphor.”

Cormorants on Malibu Lagoon

Consumer credit demand and availability took a sharp hit in recent months, according to the New York Fed’s latest Credit Access Survey. The hit was sharpest in credit cards, followed by auto loans. Mortgage refinancing, especially for creditworthy borrowers, was an exception to the trend.

In the four months ending in October, just 35% of surveyed consumers applied for one or more types of credit, down from 39% in the four months ending in June, and the 46% average for 2018–2019. The pullback was broad-based across age and credit score groups. Despite the decline in applications, the rejection rate for at least one type of credit rose from 15% to 18%, though that 18% is little different from the 19% average of 2018–2019. (See first graph below.) Rejections were highest for applicants with credit scores below 680. As the New York Fed points out in its write-up of the findings, these results are consistent with the Fed’s latest loan officer survey, which showed a tightening of lending standards on consumer credit.

The pullback in applications and rise in rejections was sharpest in credit cards, both for new applications and raising of existing limits. (Second and third graphs below.) Just 16% of respondents applied for a new credit card, down from 19% in the previous period, and the lowest since the series began in 2013. Application for higher credit lines fell from 10% to 7%, a series low, and just over half the series average of 12%. A substantial 37% of the applications were rejected, down from the previous period’s 38%, the series high. Applications for mortgages were steady at 5%, tying the low for the series—though rejections were also at a low.. Just 12% of respondents applied for an auto loan, tying the series low, and 9% were rejected, at the high end of the series’ historical range.

Not graphed, to avoid visual overcrowding: applications for mortgage refinancing. Those rose to 16% of households in October, its highest level in seven years. The 6-point rise from February was driven by consumers with credit scores above 760.

Consumers mostly expect credit card availability to remain tight, especially among those with low credit scores. Expectations of availability for other kinds of credit are within historical norms, however.

Households are concerned about meeting unexpected expenses. Just two-thirds, 66%, of households thought they could come up with $2,000 in a pinch, a series low, and down from 70% in 2019.

Tight credit card conditions will probably be a drag on spending in the coming months, especially if the job market recovery continues to cool. But housing finance looks secure for now, especially for high-end borrowers.