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President Trump's pick of a political ally to head the agency in charge of unemployment reports has raised fear among economists about political interference in data collection. NPR's Planet Money podcast has been telling stories from other countries of what happens when people stop trusting economic data. Mary Childs looks at Greece with a story that begins in 2009.
MARY CHILDS, BYLINE: That was the year George Papaconstantinou became Greece's finance minister. His party took office in the wake of the global financial crisis.
GEORGE PAPACONSTANTINOU: We kind of knew things were bad. We just didn't know how bad things were.
CHILDS: The number everyone cared about was Greece's deficit, how much money the government was spending versus how much was coming in the door. This number is an important barometer of a country's fiscal health. The lower the better. And members of the European Union, like Greece, are supposed to keep their deficits under 3% of GDP.
PAPACONSTANTINOU: One of the first things that happened was the person responsible within the ministry for the accounts comes into my office and says, look, things are actually quite bad, much worse than the official announcements.
CHILDS: The prior administration projected a budget deficit of 6% of GDP. So Papaconstantinou has to figure out approximately how much worse it might be. This is the first step to uncooking the books. He calls the people in charge of taxes, in charge of spending, Greece's central bank. He learns that a more realistic projection is at least double what the government had said. So Step 2 - confessing, disclosing that to the public carefully.
PAPACONSTANTINOU: We have to sort of calibrate how you break the bad news because you don't want to completely dash people's hope and expectations, but you also don't want to mislead them.
CHILDS: Then Step 3 - they have to figure out what the true number is. They tally everything up and this process takes over a year. It is so hard to get the information. People drag their feet. Greece hires a new head statistician. The European statistical agency sends in their people. Finally, they have the real number.
PAPACONSTANTINOU: The 2009 deficit ended up being 15% of GDP. So from 6 to 15%. That's 9 percentage points of GDP missing which is what made the financial markets completely freak out.
CHILDS: This is the final step - living through the consequences. In the bond market, investors around the world who'd previously happily lent Greece money suddenly demanded Greece pay up. And Greece needed way more money than it could afford to borrow at these new way higher interest rates. Trust had evaporated.
PAPACONSTANTINOU: That loss of trust, which can happen very quickly and very easily, it is then incredibly difficult to bring back. People don't realize how delicate this is.
CHILDS: Greece had to ask the other members of the eurozone - like Germany, France - for money to fill in the budget hole, billions and billions of euros. In exchange, Greece agreed to cut spending and raise taxes, austerity, which generally means a recession. And for Greece, it did for nearly 10 years because messing with the numbers doesn't shield you from reality. It just delays dealing with it and makes it worse. That lost trust in their credibility ends up being even more expensive.
PAPACONSTANTINOU: Once we lose that starting point and we accept that reality is a very relative concept that can be manipulated at will, then we are on the road to oblivion.
CHILDS: Papaconstantinou says we have to have data, facts we can agree on in order to have a shared reality.
PAPACONSTANTINOU: And then you can decide whether X policy is better than policy Y, right?
CHILDS: Now, more than 15 painful years later, Greece no longer has a budget deficit. In 2024, it had a budget surplus.
Mary Childs, NPR News.
(SOUNDBITE OF SONG, "GREASE")
FRANKIE VALLI: (Singing) Be what we feel. Grease is... Transcript provided by NPR, Copyright NPR.
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