Update 887 – Data, Policy Independence:
Implications of BLS Firing, Fed Nomination
President Trump is set to shape two key economic institutions – the Bureau of Labor Statistics and the Federal Reserve – this week following his dangerous, unprecedented dismissal of Commissioner of Labor Statistics Erika McEntarfer and the unexpected resignation of Fed Governor Adriana Kugler last Friday. Trump is set to nominate replacements to fill both vacancies in the coming days.
This turn of events comes as inflation is rising and the labor market is weakening under the weight of the Trump administration’s economic policy agenda. As the economy tries to adjust, Trump has chosen to undermine the independence and credibility of the BLS, which is charged with reporting job creation data and the Fed, which relies on data like this as it seeks to fulfill its mandate of keeping prices and employment in balance. Members of Congress, the business community, and everyone concerned about the nation’s economic future should take steps to preserve economic data and monetary policy independence.
Best,
Dana
President Trump’s move to fire Dr. Erika McEntarfer, the head of the Bureau of Labor Statistics, following Friday’s weak jobs report is a dangerous, unprecedented attack on the independence of the nation’s federal statistical agencies.
The firing undermines the integrity of government data on the economy – the international gold standard – as the Trump administration’s reckless tariff policy hurts consumers, businesses, and workers across the country. Instead of acknowledging his tariffs’ damage to the labor market reflected in the report and amending his trade policy, Trump instead chose to gaslight the nation to evade blame. He chose to baselessly accuse a career government economist of manipulating legitimate data in a poor attempt to manufacture a conspiracy theory to justify his attack. Trump would rather remove the beeping smoke detector than put out the fire he started; now he’s installing his own while the fire keeps burning.
No matter what Trump would prefer, the data reflects reality: the labor market is notably weakening. This weakening puts the Federal Reserve’s dual mandate of maintaining maximum employment and stable prices in tension, with inflation rising at the same time due to Trump’s tariffs. Trump has pushed the Fed to lower interest rates and threatened to similarly attack its independence if Fed officials do not cut rates. Now, Trump has an earlier-than-expected opportunity to shape the committee that decides the level of interest rates, as the unexpected resignation of Fed Governor Adriana Kugler this week allows him to nominate a replacement to fill her unexpired term, which ends in January.
Trump’s firing of the Commissioner of Labor Statistics and Fed Governor Kugler’s resignation create two key vacancies, respectively, at an institution responsible for reporting our economic reality and another charged with keeping prices and employment in balance. Trump has said he will nominate his picks for both positions this week. Trump’s record of pressure campaigns and attacks suggests that he will prioritize loyalty to himself over an unbiased commitment to each institution’s mandate as he makes his selections.
Trump’s Firing of BLS Commissioner McEntarfer
The Bureau of Labor Statistics (BLS) published its monthly jobs report on Friday, showing that a weaker-than-expected 73,000 nonfarm payroll jobs were added to the economy in July, while job gains in May and June were revised down by a combined 258,000 job gains. The BLS reports data but does not interpret it. Analysts subsequently noted that the report revealed the labor market to be weaker than previously estimated.
Hours after the report was released, Trump announced his decision to fire Commissioner of Labor Statistics Dr. Erika McEntarfer and accused her without evidence of manipulating jobs reports “before the Election to try and boost Kamala’s chances of Victory.” He later claimed that Friday’s report was “rigged.”
McEntarfer is a PhD economist with a long career specializing in economic data at the U.S. Census Bureau, the Treasury Department, the BLS, and the White House Council of Economic Advisors. She was confirmed by the Senate in January of last year in an 86-8 vote, with a majority of Republicans, including now-Vice President JD Vance, voting in favor of her confirmation. McEntarfer’s four-year term was set to end in 2028.
Revisions are not, as Trump has suggested, a statistical tool for political manipulation, but rather the routine result of additional data coming in over time, making initially estimated figures more and more accurate. Large upward and downward revisions have occurred under both Democratic and Republican-led administrations.
Job gains reported by the BLS each month are based on the establishment survey, a national survey of about 121,000 non-farm private employers and government agencies representing approximately 631,000 individual worksites. Typically, about 60 percent of establishments in the sample respond during the month and these initial responses are used to provide a preliminary figure. Over a three-month window, the response rate usually increases to 90 percent. Later responses disproportionately reflect smaller firms, which can be more sensitive to the adverse effects of tariffs.
The Commissioner of Labor Statistics also does not collect data or compile numbers included in the report, but reviews these numbers after they are finalized. McEntarfer’s firing undermines confidence in government economic statistics, which legislators, businesses, and the Fed use to make decisions, and will have a chilling effect on statisticians throughout the government.
Resignation of Fed Governor Kugler
Fed Governor Adriana Kugler announced her unexpected resignation from the Fed Board of Governors on Friday after being absent from the Federal Open Market Committee’s (FOMC) last meeting in July. Kugler’s resignation will take effect at the end of this week. Governor Kugler has served as a governor since September 2023, when she was confirmed to fill an unexpired term ending in January 2026.
Trump has reportedly shortlisted four candidates: Director of the National Economic Council Kevin Hassett, former Fed Governor Kevin Warsh, and two unnamed others.
Her resignation will allow Trump to nominate a member of the Fed’s Board of Governors for the remaining five months of Kugler’s term, after which the selection could be reappointed to serve a full fourteen-year term. As governor, Kugler’s replacement will also serve as a member of the FOMC, which votes on the committee’s interest rate decisions. The current two Trump-appointed Fed Governors, Christopher Waller and Michelle Bowman, dissented from the majority at the FOMC last meeting, supporting cuts to the interest rate instead of holding rates steady. Kugler’s replacement could join Waller and Bowman in pushing for lower rates in meetings later this year.
Trump’s nominee could also become a candidate for Federal Reserve Chair, a position Trump is set to fill when Chair Jerome Powell’s four-year term as chair ends in May 2026.
A Moment for Broad United Opposition
Unbiased economic data is necessary for our understanding of the economy. Legislators, regulators, and monetary policy officials rely on trusted data to make decisions that protect economic strength and stability, and businesses nationally and internationally rely on this data to plan ahead. Federal economic data is the gold standard and is regarded as more comprehensive and reliable than private data sets.
Historic and international examples have shown the inherent danger of political meddling in economic statistics. Cases in point:
- Argentina – In the 2000s, Argentina’s inflation was systematically understated in figures officially reported by the government, leading the international community to lose confidence in the Argentine government. This increased Argentina’s cost of borrowing and led to the nation’s debt default.
- Greece – Greece was found to have significantly underreported its budget deficit figures for years leading up to the nation’s debt crisis in 2009 to 2010.
Congress should look into the dismissal of McEntarfer, who was prematurely removed despite being overwhelmingly confirmed by the Senate. Congress should also seek independence pledges from and refuse to confirm any candidate for either Commissioner of BLS, Fed Governor and independent agencies who is not committed to opposing attempts to exert political influence on their work. Legislators on both sides of the aisle and the business community should be united in opposing Trump’s attack on accurate data collection and reporting at this uniquely dangerous juncture.