Billionaire investor Ray Dalio has weighed in on President Donald Trump's decision to dismiss Bureau of Labor Statistics Commissioner Erika McEntarfer, following last week's sharp downward revision to U.S. jobs data.
What Happened: On Monday, in a post on X, Dalio said that he “probably would have fired the head of the Bureau of Labor Statistics too,” citing what he called an outdated and flawed system for producing economic estimates, with no clear strategy in place to fix it.
Dalio’s comments come just days after an extraordinarily large downward revision was made to the Jobs reports of May and June. At 258,000, this marks the biggest revision since 1978, barring the early months of the COVID-19 pandemic, according to a report by Reuters.
While he acknowledged that the revisions highlight several structural issues with how economic data is collected and reported, Dalio believes that Trump must clarify the rationale behind his move.
“It would be good if President Trump made his thinking clear,” he says, since if it were a politically motivated move, as some media reports suggest, then “that would be a big problem.”
“Leaders manipulating numbers that distort the truth to suit their political objectives is a classic sign of the loss of a functioning system with rule of law and checks and balance[s],” he says.
Other prominent experts and economists have echoed similar views, with venture capitalist David Sachs also criticizing the BLS for its poor data quality.
He says, “No hedge fund manager, or even associate, would keep their jobs if they routinely produced errors ("revisions") as large as BLS.”
Economist Jeremy Siegel from the University of Pennsylvania doubled down on this criticism of the BLS while appearing on CNBC’s “Squawk Box” on Monday, asking why there wasn’t any explanation given despite making the “biggest mistake in 50 years.”
Siegel also adds that had these figures been made available before, “there would have been a rate cut at the July meeting,” referring to the Federal Open Market Committee (FOMC) meeting last week, when the decision was made to keep benchmark interest rates unchanged.
Why It Matters: On Sunday, investor Chamath Palihapitiya made the case for an “oracle-like data provider for this critical information,” adding that “Non-Farm Payrolls are total garbage,” given the number of revisions that have taken place “in both directions” over the years.
Palihapitiya’s proposal, however, received pushback from investor Mark Cuban, who called the plan impractical, asking, “Who is going to pay for the implementations?”
Photo Courtesy: Mark Van Scyoc on Shutterstock.com
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