Weak non-farm data, Trump shifts blame: Officials appointed by Biden are responsible, dismisses the director of the Bureau of Labor Statistics!

Local time on Friday, U.S. President Trump stated that he has instructed officials to immediately fire the Director of the U.S. Bureau of Labor Statistics (BLS), Erika McEntarfer. Earlier that day, the agency released a non-farm payroll report showing that job growth in the U.S. has significantly slowed over the past three months.

According to the report released by the U.S. Bureau of Labor Statistics on Friday, non-farm payrolls increased by 73,000 in July, with data from the previous two months being significantly revised down by nearly 260,000. Over the past three months, non-farm payrolls have averaged only 35,000, the worst since the COVID-19 pandemic.

In response, President Trump stated on social media on Friday that the non-farm employment data was compiled by officials appointed by former President Biden, claiming that the data was manipulated to make him look bad. He described the recent revisions to the data as a "complete scam" and instructed his team to fire the BLS director:

I have instructed my team to immediately fire this Biden political appointee. She will be replaced by someone more capable and qualified. Such important data must be fair and accurate, and cannot be used for political manipulation.

Trump also mentioned that there are many candidates for the next BLS director, and he has three individuals in mind, insisting that the next BLS director must be an "honest person."

On the same day, Trump stated that Federal Reserve Chairman Powell should also "retire," as Powell's performance is no better than the "manipulated" employment data.

McEntarfer was nominated by former President Biden in 2023 to lead the Bureau of Labor Statistics and was confirmed by the Senate in January 2024 with a vote of 86 in favor and 8 against, with the current Vice President Vance voting in favor.

The U.S. Department of Labor oversees the Bureau of Labor Statistics. U.S. Labor Secretary Lori Chavez-DeRemer subsequently stated that the current Deputy Director of the BLS, William Wiatrowski, will temporarily serve as acting director.

Media reports indicate that Trump accused McEntarfer of politicizing the employment report without providing any evidence.

It is important to note that while the BLS director is appointed by the president, the Bureau claims that its work is "independent" and "nonpartisan." Economists and statistical experts point out that this neutrality is crucial for public and market trust in the data, as trillions of dollars may be traded based on this data. The U.S. is often regarded as the "gold standard" for economic statistics.

Julia Coronado, founder of research firm MacroPolicy Perspectives, stated: "If this decision takes effect, which I think is very likely, it would be a very serious event. We would find it difficult to maintain a high level of confidence in the integrity of the data. This data is an extremely valuable public service, and its integrity is crucial."

Recent Data Revisions

The U.S. Bureau of Labor Statistics stated that the downward revision of employment data for the previous two months was primarily due to seasonal adjustments for state and local government education sectors. Previously, these areas had significantly inflated overall employment in the June employment data, which was then almost entirely revised down a month later However, economists point out that the revisions also reveal a deeper issue: the low response rate of the survey.

The Bureau of Labor Statistics conducts a three-month survey of businesses to obtain more complete data as more companies respond. However, the initial response rate has continued to decline, with the initial response rate repeatedly falling below 60% in recent months, while the pre-pandemic norm was over 70%.

In addition to rolling revisions, the Bureau of Labor Statistics also releases a larger annual revision every February to align with more accurate but lagging data. A few months ago, the Bureau of Labor Statistics released preliminary estimates that last year's annual revision is expected to be the largest since 2009.

Trump mentioned these revisions in a post on Friday, while also facing condemnation from some Republican senators.

Trump's call to fire McEntarfer quickly drew criticism from Democrats. Prominent Senator Elizabeth Warren accused Trump of not helping people find good jobs, but instead firing a "statistician who became a scapegoat for reporting employment data he didn't like."

Ernie Tedeschi, former head of the Council of Economic Advisers during the Biden administration, praised McEntarfer's loyalty to data and public service:

"I have worked closely with McEntarfer. I don't know of any economist who is more focused on data and more loyal to statistical truth than she is. Even when the data is disappointing, she has never shied away from telling the truth to power. Nothing undermines America's credibility more than political interference in our economic data."