In a dramatic political stroke, President Donald Trump just laid off Erika McEntarfer. She is the former Commissioner of the Bureau of Labor Statistics (BLS) and her ouster came just days after the release of the July jobs report. This decision is the culmination of Trump’s long-standing disdain for the BLS, which Trump has claimed has been politically biased in their reporting. At a time when the nation is trying to make sense of a changing and uncertain job market, William Wiatrowski has been serving as the acting BLS commissioner.
The BLS’s recent Monthly Employment Situation report indicates a significant deceleration in job growth. In August just 22,000 payrolls were added – a stunning collapse from the upwardly revised 79,000 increase in July. In an otherwise healthy labor market, this would be an unambiguously positive trend. That’s a huge disappointment after last month’s net gain of 13,000 jobs in June. That’s against a revision that had dropped earlier estimates down by 27,000.
Among those rosier numbers, health care was one of the brightest spots. It added 31,000 jobs in the August report. Social assistance had a hand in this growth, with an addition of 16,000 jobs. Wholesale trade and manufacturing took the brunt of the pain. On a sector basis, all three sectors lost 12,000 jobs during this period. The manufacturing sector continues to be under siege with four straight months of job losses.
The overall employment landscape is showing signs of improvement. On net, we’re witnessing the effects of 288,000 more Americans finding jobs and a modest increase in the labor force participation rate, which has ticked up to 62.3%. Also, average hourly earnings rose by 0.3% on the month, which works out to a 3.7% annual gain.
E.J. Antoni, a Trump loyalist from the Heritage Foundation known for previously criticizing BLS numbers as politically distorted, has been nominated by Trump to replace McEntarfer. This nomination illustrates the administration’s desire to continue to remake the BLS’s leadership as the agency faces continued bad faith attacks on its data quality.
Further intensity is being introduced into this already difficult economic picture by the new political backdrop. Trump’s dismissal of McEntarfer highlights his administration’s focus on controlling narratives around employment statistics.
Daniel Zhao, an economist at Glassdoor, commented on the current job market situation:
“The job market is stalling short of the runway.”
Olu Sonola, an economist at Fitch Ratings, echoed this sentiment by stating that the recent jobs report serves as a warning signal for the labor market:
“The warning bell that rang in the labor market a month ago just got louder. A weaker-than-expected jobs report all but seals a 25-basis-point rate cut later this month.”
The implications of these developments are felt well beyond the track record of statistics. As the labor market shows signs of weakness, economists and policymakers are closely monitoring trends that could affect monetary policy and economic recovery efforts.