President Donald Trump has dismissed Erika McEntarfer, the head of the Bureau of Labor Statistics (BLS), following the release of a weaker-than-expected July jobs report. The move has drawn national attention due to its timing, coming amid both economic uncertainty and ongoing discussions about the Federal Reserve’s interest rate policy.
Jobs Report Shocks Wall Street
The July employment report, published by the BLS last Friday, indicated that the U.S. economy added only 73,000 jobs, with prior months’ figures revised downward by over a quarter million jobs. The unemployment rate edged up to 4.2%, as expected. These results, seen as an indicator of a cooling job market, create additional pressure for the Federal Reserve, which has a dual mandate to maintain both price stability and optimal employment - but so far has opted to keep interest rates steady in response to concerns over inflation and global economic conditions, since the job market has been holding up well.
Typically, the Fed will feel comfortable keeping rates high when there are signs of a strong economy, in order to give itself room to lower rates during times of reduced economic activity, like recessions. Lowering rates while the economy is strong, especially during periods of heightened inflation, will exacerbate price pressures and take away a valuable tool needed to fight recessions. (This is why positive economic data, such as an upside surprise on payrolls, can sometimes result in stocks going down.)
So while July’s poor job numbers, on their face, paint a grim picture for the labor market, many are cheering the news as it essentially secured the case for an interest rate cut in September. Investors are now predicting an 83.8% chance of an interest rate cut in September, according to CME’s FedWatch Tool.
Given President Trump’s ongoing campaign against Fed Chair Jerome Powell to pressure him to lower interest rates, the wide miss on July payrolls should have come as welcome news for the White House. This data, which points to a weakening labor market, gives the Oval Office everything they need to essentially guarantee rates go down at the next board meeting. But on the other hand, it could also be used to criticize the administration’s policies for negatively impacting job creation. This paradox makes the situation difficult to navigate from a political perspective, and makes the subsequent firing of the BLS official even more peculiar.
White House Cites Data Concerns as Reason for Firing
Shortly after the release of the report on Friday, President Trump announced the dismissal of McEntarfer. In statements to the media, Trump expressed skepticism about the reliability of the BLS data, saying he believed the numbers were inaccurate and calling into question the competence of McEntarfer.
In a post on Truth Social, Trump said, without citing evidence, “I was just informed that our Country’s ‘Jobs Numbers’ are being produced by a Biden Appointee, Dr. Erika McEntarfer, the Commissioner of Labor Statistics, who faked the Jobs Numbers before the Election to try and boost Kamala’s chances of Victory.” He continued later in that same post, “We need accurate Jobs Numbers. I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY. She will be replaced with someone much more competent and qualified.”
Amid the inevitable criticism, Trump continued to clarify the situation in two follow-up posts. In one post later that same day, Trump clarified his concerns regarding the integrity of the data saying, “In my opinion, today’s Jobs Numbers were RIGGED in order to make the Republicans, and ME, look bad.”
Sunday afternoon, he reiterated similar sentiments, including his concern that these revisions were some of the largest in the nation's history, and cited unconfirmed theories regarding BLS numbers being manipulated for political gain.
In that post, President Trump said, “Head of the Bureau of Labor Statistics did the same thing just before the Presidential Election, when she lifted the numbers for jobs to an all time high.” He continued, “I then won the Election, anyway, and she readjusted the numbers downward, calling it a mistake, of almost one million jobs. A SCAM! She did it again, with another massive ‘correction,’ and got FIRED! She had the biggest miscalculations in over 50 years.”
The Administration’s Response
White House economic adviser Kevin Hassett emphasized that the firing was intended to address concerns about data integrity rather than influence Federal Reserve policy directly. In an interview with NBC posted Sunday, Hassett said “the President’s highest priority is that the data be trusted” and they’re simply wanting to “get to the bottom of why these revisions are so unreliable.”
In that interview, NBC noted how the prior Labor Commissioner, a Trump appointee, criticized the decision to fire the commissioner because they have little control over the numbers. Rather, there are hundreds of people who assemble the data, 40 who confirm, and the commissioner largely just releases the data.
Former Commissioner William Beach said specifically, “These numbers are constructed by hundreds of people. They’re finalized by about 40 people. These 40 people are very professional people who have served under Republicans and Democrats. And the commissioner does not see these numbers until the Wednesday prior to the release on Friday.”
Can We Trust the BLS Numbers?
There may be a valid concern regarding the data integrity of BLS numbers, albeit not the one being circulated on social media. According to Hassett, response rates post-COVID have dropped substantially, making the numbers difficult to trust or predict. Notably, this is an ongoing problem across the world.
Importantly, this is an issue that needs to be tackled by the Labor Commissioner, and has not yet been solved for in the five years since the start of the pandemic. So, with the position now ready to be filled by a new candidate, addressing this weakness in the data collection should presumably be a top priority.
On the date of publication, Caleb Naysmith did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
