Last Friday, President Donald Trump fired Dr. Erika McEntarfer from her post as Commissioner of the Bureau of Labor Statistics. That decision followed a weak jobs report that rattled financial markets. The Bureau revised down the addition of nonfarm jobs added in July to just 73,000. This represents a historic deceleration in jobs growth across the United States. Those revisions brought the total number of jobs eliminated to 258,000 over the last two months. Consequently, the three-month growth rate has fallen to a paltry 35,000 jobs.
That disappointing jobs report was the last straw and sent the stock market into a freefall. The panic as markets opened sent the Dow Jones Industrial Average tumbling more than 400 points, with the tech-heavy Nasdaq down more than 2%. Analysts noted that this downward revision was unprecedented. It was the biggest decline since April 2020, when the COVID-19 pandemic was just starting.
Given these recent developments, it’s no wonder that President Trump has been so public about his frustration with the Bureau of Labor Statistics. He has objected in the past to the agency’s data collection practices. This year, he asked for a staff reduction of 8% for the agency.
“Important numbers like this must be fair and accurate, they can’t be manipulated for political purposes,” – Donald Trump.
This wasn’t good enough for Trump, as his social media posts during that month make clear— he was furious that the estimated job loss was so high. He claimed Dr. McEntarfer underreported the net new jobs added. He further acknowledged a major counting error in prior estimates.
“McEntarfer said there were only 73,000 Jobs added (a shock!) but, more importantly, that a major mistake was made by them, 258,000 Jobs downward, in the prior two months,” – Donald Trump.
Popular financial expert Peter Mallouk shared his dismay over the troubling situation. His astonishment echoed that famous Oscar winning short when he yelled, “You ain’t seen nothing yet!” This sentiment is indicative of the overall growing fear from economists and investors alike about the health of the labor market.
Under attack Displeased with the White House’s main economic leader, in 2018, Trump openly attacked Jerome Powell. Jay Powell, chairman of the Federal Reserve. Unfortunately, the president’s comments suggest a pedal-to-the-metal approach to solving the immediate crisis in labor statistics. He’s clearly looking to change the economic leader within his administration, too.
After Dr. McEntarfer was fired, news spread that Trump was moving quickly towards naming a new commissioner. For one, he’s convinced that this candidate will be better prepared and more qualified to oversee the Bureau’s vital functions.
“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,” – Donald Trump.
Now, Congressional Republicans are starting to raise the alarm. They echo Trump’s scorn towards the Bureau of Labor Statistics and its capacity to produce consistent, trustworthy data. Unfortunately, their critiques have mostly matched up with Trump’s narrative on what people should assume are good labor reports.
Dr. McEntarfer’s dismissal exemplifies the rising tide of resentment and hostility by political leaders towards federal employees. These agencies are key to providing timely, accurate and independent economic reporting. Job expansion is running out of gas and market volatility is on the rise. Political and economic wizards will be looking deeply at what the administration does to address these challenges.