On Tuesday morning, Squawk Box, the venerable early morning finance news show, welcomed as a phone-in guest one of its long-time listeners: president Donald J Trump. The finance world was mainly interested in what host Joe Kernen might ask the president about what has quickly become one of the most disquieting federal dismissals since he took office.
Trump’s decision to dismiss Bureau of Labour Statistics (BLS) chief Erika McEntarfer was taken on Friday afternoon, just hours after that body released a jobs report which included heavy revisionism of earlier data for jobs created in May and June.
The brusque dismissal, delivered on social media and accusing McEntarfer of having “faked” the jobs report prior to last November’s election to boost Kamala Harris’s chances, left current and former employees at the bureau reeling. By Tuesday morning, it was reflected in the financial publications’ reports of fresh jitteriness among investors.
Trump, though, was unrepentant, firing back a quick response to the suggestion that while the BLS methodology for collecting data-phone surveys and questionnaires has struggled to adapt to post-Covid work practices, it was always held as unimpeachably fair.
RM Block
“It is antiquated but it is also very political. Just days before the election they put out numbers that the country was on fire, it was doing so well. Then two weeks later they put out a revision that was down by almost 900,000 jobs. They gave phoney numbers and then revised them a week-and-a-half later.”
Trump’s logic was simple. McEntarfer was a Biden appointee, ergo the numbers were manipulated to reflect badly on the White House. As it turned out, his claim about the November numbers was inverse: the BLS pre-election report reflected badly on the Biden/Harris White House.
But Friday’s report made for sombre reading. The July data reflected a modest total of 73,000 jobs created for the month. But the June data was revised from 147,000 to a dismal 14,000 and the May numbers were revised from 144,000 to 19,000. It was a combined reduction of 258,000, an erosion which directly refuted the official narrative of the unassailably strong Trump economy.
Worse, the report stated that manufacturing, and by association the industries which the Trump administration has promised to restore to former glories, lost 11,000 jobs in July. The numbers were unpalatable: it was the biggest BLS report revision since 1968. So, Trump decided to get rid of the messenger bearing the bad news. The response has been one of disquiet.
William Beach, the previous commissioner at the BLS and a Trump appointee, stated on social media that the firing was “totally groundless” and that it sets “a dangerous precedent and undermines the statistical mission of the bureau”.
In a statement, ‘Friends of the BLS’ pointed out that “the president seeks to blame someone for unwelcome economic news. The commissioner does not determine what the numbers are but simply reports on what the data show. Every month, BLS revises the prior two months employment estimates to reflect slower arriving more accurate information. US official statistics are the gold standard globally.”
The data is collected by hundreds of staffers and then approved by a group of 40. The commissioner, in this case McEntarfer, does not typically even see the report until two days before it is presented to the White House.
On Sunday, the White House sent Kevin Hassett, its chief economic adviser and leading contender to succeed the under-siege Jerome Powell as chair of the Federal Reserve, on the morning talkshows to defend the sacking.
“The evidence is that there have been a bunch of revisions,” Hassett said.
“The revisions are hard evidence. There was an 818,000 revision making the Biden job record a lot worse after he withdrew from the election campaign. There have been a bunch of patterns that can make people wonder. The bottom line is that there were people involved in creating these numbers and if I were running the BLS and if I had a number that was a critically important revision, I would have a really long report explaining exactly what happened. And we didn’t get that. And so right now people – Goldman Sachs, people on Wall Street – are wondering where these numbers came from.”
But this week, people on Wall Street are also wondering about the identity of the next BLS commissioner, and whether he or she will be expected to deliver only reports which flatter the performance of the Trump economy. Amar Reganti, a former treasury official turned bond strategist, told the Financial Times that the dismissal represented a “long-term structural risk for the US securities market” and pointed out that the $29tn Treasuries market is reliant on the “transparency and quality of US data”.
More broadly, the firing of McEntarfer, who has a long, distinguished reputation as a public service data specialist, has been interpreted as another small, vital elimination of a figurehead whose independence was held as sacrosanct to the normal functioning of the US democratic system. Trump’s explicit accusation that the numbers are “rigged” is a new version of what has been a constant undermining and weakening of federal institutions.
The dismal numbers may very well prompt Trump’s nemesis at the Federal Reserve, Jerome Powell, to implement the interest rate cut that Trump has demanded for months. And the final irony is that Erika McEntarfer’s final act as commissioner might have been to deliver a report that signals approaching tariff storms for a US economy that the White House has been showcasing as evidence of the new golden age.
