U.S. Steps Into New Economic Territory with Next Jobs Report

The Changing Landscape of Economic Reporting

In the usual flow of events, the first Friday of every month brings a routine release of government data known as the monthly jobs report. Markets react, politicians make statements, and most Americans go about their day focused on getting to the weekend. However, these are not normal times, and the Bureau of Labor Statistics (BLS) has moved away from its traditional non-partisan stance due to actions taken by former President Donald Trump.

Trump's decision to fire the BLS commissioner, Erika McEntarfer, was based on her team revising downward the job numbers for May and June. He accused the BLS of trying to embarrass him, fueling conspiracy theories that suggested the revisions were part of a plot to manipulate data. This action is akin to firing a National Weather Service meteorologist for predicting a hurricane.

This development is more than just a change in personnel; it reflects a broader shift in how economic data is perceived and valued. The BLS, an independent entity within the Department of Labor, plays a crucial role in shaping various aspects of the economy. Its reports influence interest rates, investment payouts, contracts, and business decisions. The 2,000-strong team of experts at the BLS holds significant sway over the global economy, largely due to the trust placed in their unbiased reporting.

On September 5, the federal government will release its first jobs report since McEntarfer’s departure. The reaction to these numbers is likely to be influenced by the recent changes. If the next BLS report shows a surge in hiring, will investors worldwide believe it? By chasing short-term gains, Trump may have inadvertently denied himself a potential victory.

Thousands of invisible, far-reaching decisions are made based on the reports compiled by the BLS. When trust in these reports is shaken, chaos can ensue. For example, anti-science sentiments contributed to the prolonged impact of the COVID-19 pandemic and a decline in vaccine rates.

Historically, Trump's predecessors prioritized stability over showmanship, understanding the importance of projecting a steady hand from Washington. Many of Trump's erratic decisions, such as his trade and tariff wars and threats to fire the Federal Reserve chairman, have undermined this perception. Global leaders now view U.S. influence as diminishing, with many decisions appearing to serve only Trump's desire for chaos and affirmation.

In Washington, the daily shifts in policy have become routine. However, the BLS situation represents a new challenge. Presidents, while not always pleased with the reports they receive, could rely on the accuracy of the data. This trust extends to Wall Street, which depends on the BLS as an apolitical barometer.

Federal Reserve Chair Jay Powell emphasized the importance of accurate data, stating that it benefits not only the Fed but also the government and the private sector. The United States has been a leader in this area for over a century.

Trump's abrupt firing of McEntarfer threatens this standard. As he considers naming a new BLS chief, it is expected that he will seek someone who aligns with his belief that only information portraying him as successful is acceptable. This approach is risky, as historical examples show that such actions often lead to negative outcomes. The Greek debt crisis and Argentina's default on international loans were both linked to manipulated data.

Looking back in history, the role of government statisticians in holding leaders accountable is evident. In 1937, Josef Stalin had his census chief shot when his numbers contradicted the Soviet leader's claims. These unflattering numbers remained hidden until 1989.

Trump has long admired strong-man bravado but also seeks the approval of Wall Street, which values accurate, stable, and honest data. If they look to Trump-blessed statisticians for these numbers, they may soon find themselves skeptical of a report that, before being politicized, was an indispensable service produced by Washington for decades with little drama.