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Every month, the federal government serves up a steady diet of economic reports on everything from the price of groceries to the unemployment rate. These reports are closely followed: They can move markets — and the president's approval rating. Businesses and investors put a lot of stock in the numbers, which are rigorously vetted and free from political spin.
Now the Trump administration is calling that trust into question. The government recently disbanded two outside advisory committees that used to consult on the numbers, offering suggestions on ways to improve the reliability of the government data. At the same time, Commerce Secretary Howard Lutnick has suggested changing the way the broadest measure of the economy — gross domestic product — is calculated.
Those moves are raising concerns about whether economic data could be manipulated for political or other purposes.
Erica Groshen is one of the outside experts who received a terse email last week saying her services were no longer needed, because the committee she'd served on — the Federal Economic Statistics Advisory Committee — had been folded. Groshen cares deeply about the reliability of government data, having previously overseen the number crunching as commissioner of the Bureau of Labor Statistics. "Statistical agencies live and die by trust," she says. "If the numbers aren't trustworthy, people won't use them to make important decisions, and then you might as well not publish them."
The email to Groshen said the commerce secretary had terminated the committee because its purpose had been fulfilled. A second committee that advises the government's Bureau of Economic Analysis was also discontinued.
That puzzled Groshen, who's now a senior labor market adviser at Cornell University's School of Industrial and Labor Relations. She says taking an accurate measure of a dynamic economy is an ever-evolving process. "It is part of the mission of statistical agencies to be continually improving," Groshen says.
The email Groshen received came just days after Lutnick said he planned to alter the formula for calculating gross domestic product (GDP). Such a change, however, would be a major break from both long-standing practice and international standards. It could also serve to mask any negative effects of the Trump administration's spending cuts.
Even without any deliberate meddling, government number crunchers have their hands full. Fewer people are answering their surveys these days. Their budgets have steadily eroded. And some staffers have accepted the administration's offer to quit in exchange for seven months' pay.
"They've been really working on a shoestring budget," says Tara Sinclair, a professor at George Washington University's Center for Economic Research. "Now they're facing additional concerns and uncertainty about what their budgets are going to be going forward. Sinclair says those worries were top of mind during a panel discussion last week hosted by the National Association for Business Economics.
"If the data were manipulated, even in a small way, that will affect the credibility of our entire statistical system," she says. "And that's going to have global financial implications, because people around the world rely on the quality of U.S. economic data to make decisions."
@Devo, and while we understand, we miss your monthly articles!in a world of "research" and financial journalism, the team at Mutual Fund Observer, are always a refreshing read. You walk away learning something new EVERY time. Love it.
The Consumer Financial Protection Bureau has dropped its lawsuit against the operator of payment platform Zelle and three of its parent banks, in the latest move by the Trump administration to undo actions of the bureau's prior leadership. The bureau had filed the lawsuit in late December against the operator of Zelle, Bank of America, JPMorgan Chase and Wells Fargo "for failing to protect consumers from widespread fraud." Customers of the top three banks lost more than $870 million over seven years due to the banks' failures to protect them, according to the CFPB.
"This is about financial institutions fulfilling their basic obligations to protect customers' money and help fraud victims recover their losses," then-CFPB Director Rohit Chopra said at the time. "These banks broke the law by running a payment system that made fraud easy, and then refusing to help the victims."
However, that was then. On Tuesday the administration dropped its case against Zelle, according to a filing in U.S. District Court in Arizona.
Zelle and its parent banks are just the latest enforcement target to be abandoned by the CFPB, which is currently led by acting director Russell Vought. Last week the bureau dropped cases it was litigating against five companies including Capital One, Rocket Homes and others. It had earlier dropped its case against online lending platform SoLo Funds.
The CFPB has also been decimated in a matter of weeks, with agency's employees ordered to stop essentially all work, while some 150 employees have been fired. The bureau's D.C. headquarters has also been shuttered.
The US Consumer Financial Protection Bureau on Thursday dropped a legal action against Capital One, which the agency had accused last month of cheating consumers out of more than $2bn in interest payments on savings accounts.
The dismissal continues Donald Trump’s rapid moves to dismantle the agency, which he has said should be eliminated, but comes the same day as his nominee to head the CFPB, Jonathan McKernan, testified before the Senate in a confirmation hearing. The action pointed to a broader retrenchment of CFPB enforcement actions under the Trump administration.
The agency earlier on Thursday had already dismissed a lawsuit brought last year against the student loan servicer Pennsylvania Higher Education Assistance Agency (PHEAA) accused of illegally collecting on student loans discharged in bankruptcy, and last week dropped a case against the online lender Solo Funds, which the agency had said deceived borrowers about loan costs.
Since taking office, Trump and his associate Elon Musk have vowed to destroy the CFPB, firing scores of staff, shutting its Washington offices and moving to cancel its lease, while placing virtually all agency workers on temporary leave, actions which employee unions and consumer advocates have challenged in court.
The administration has said in court filings, however, that it intends to operate a more streamlined and efficient CFPB, which Democrats say will be one wholly inadequate to meet the agency’s legal mandates.
In his confirmation testimony on Thursday, McKernan criticized the agency’s past enforcement actions as excessive but said if confirmed he would work to uphold the agency’s legal mandates.
“I’m fully committed to following the law fully and faithfully,” he said.
A key concern with generic quality strategies is that they use poor definitions, which are
sometimes even blended with other factors. For example, quality is often measured by
financial leverage or earnings stability, which are actually more related to the low volatility
factor. Other quality definitions – such as growth in profitability or earnings growth, but
also an oft-used measure like return on equity (ROE) – have weak or no predictive power for
future returns.
As shown in Figure 7, our research 9 also shows that measures based on academic studies
(blue bars) outperform industry-based measures (magenta bars) in global markets.
‘Academic’ measures are accruals, gross profitability and net stock issues, while ‘industry’
measures include ROE, margins, ROE growth, leverage, and earnings variability.
And with respect to that 90% who most likely are not MFO readers-Many Americans are pinching pennies, exhausted by high prices and stubborn inflation. The well-off are spending with abandon. The top 10% of earners—households making about $250,000 a year or more—are splurging on everything from vacations to designer handbags, buoyed by big gains in stocks, real estate and other assets.
Those consumers now account for 49.7% of all spending, a record in data going back to 1989, according to an analysis by Moody’s Analytics. Three decades ago, they accounted for about 36%. All this means that economic growth is unusually reliant on rich Americans continuing to shell out. Moody’s Analytics has estimated that spending by the top 10% alone accounted for almost one-third of gross domestic product.
Between September 2023 and September 2024, the high earners increased their spending by 12%. Spending by working-class and middle-class households, meanwhile, dropped over the same period.
Taken together, well-off people have increased their spending far beyond inflation, while everyone else hasn’t. The bottom 80% of earners spent 25% more than they did four years earlier, barely outpacing price increases of 21% over that period. The top 10% spent 58% more.
The buying power of the richest Americans, who tend to be older and more educated, stems in part from the swelling values of homes and the stock market over the past several years. Rising asset prices are widening the gap between those who own property and stocks, and those who don’t.
During the pandemic, Americans across the spectrum saved at record levels. Then inflation struck, and prices rose sharply. Most Americans turned to their extra savings to keep up with their rising bills. But the top 10% of earners kept most of what they had saved up.
Comment: So here we have yet another disconnect: the majority of voters are not in that lucky top 10%, and many within the Trump party that they voted for would cut their Medicaid so as to transfer even more wealth from the 90% to that top 10%.President Trump cautioned lawmakers earlier this month about making cuts to Medicaid. But just after Trump left the room, one budget hawk remarked: “We could get $2.5 trillion if we cut Medicaid.”
House Republicans are deeply divided on Medicaid, split between spending hard-liners who want big savings and pragmatists who warn against angering voters. Steve Bannon recently warned about the dangers of cutting Medicaid. “A lot of MAGAs on Medicaid,” he said. “Just can’t take a meat ax to it, although I would love to.”
House Freedom Caucus members and other budget hawks successfully pressed for an amendment that directly ties $2 trillion in spending reductions over 10 years to the party’s tax-cut effort. Under that provision, the more the GOP pulls from Medicaid and other programs, the more financial room Republicans have.
States help fund and manage the program, which provides health insurance for roughly 72 million people, or about one in five Americans, including children and people with low incomes or disabilities. The federal government spends about $600 billion annually on Medicaid.
Republicans aren’t allowed to touch Social Security in the fast-track legislative process they are using, and Trump has said he opposes reducing Medicare benefits, leaving Medicaid as one of the remaining ways to significantly shrink spending. Within a 24-hour period, Trump stated that Medicaid shouldn’t be touched but also posted on X that he backs the House-led package that is likely to rely on cuts to Medicaid to meet its targets.
White House spokesman Kush Desai said that the Trump administration is “committed to protecting Medicaid while slashing the waste, fraud, and abuse within the program—reforms that will increase efficiency and improve care for beneficiaries.”
Some House Republicans say keeping Medicaid intact is essential if they want to hold the House majority in 2026. Some are privately warning party leadership that there are scores of members—including some in safe GOP districts—who oppose deep cuts. Rep. David Valadao (R., Calif.) argues that the Trump coalition now includes many Medicaid recipients.
The program is popular. A recent poll by the Kaiser Family Foundation found nearly 80% of respondents—and 65% of Republicans—think the federal government spends about the right amount or not enough on Medicaid. But budget hawks believe now is their best chance to address deepening federal deficits, which have ballooned the U.S. debt to $34 trillion.
@Mark - To the extent I’ve attempted this in the past (under the guise of ”speculation”) it quickly became very time consuming. Got to the point where it wasn’t worth the time and effort.While I thought at one time that I was smart enough to do that successfully I learned that it takes a lot of time and more financial skills and knowledge than I had. I also spent a lot of time second guessing my choices. I now let the folks at Avantis take care of that for me using AVGE. I do hold certain CEF's, BDC's and dividend paying bluechips but they're more for the income produced than any other reason.
https://youtu.be/A3DmGfXgDggSocial Security guru Mary Beth Franklin discusses the program’s financial challenges and outlook, plus individual strategies to maximize its benefits.
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