Trump firing of BLS head imperils trust in economic data

• Economists of all stripes fear a chilling impact.
• The removal "presents risks to the conduct of monetary policy, to financial stability, and to the economic outlook," wrote JPMorgan chief U.S. economist Michael Feroli.

Catch up quick: Friday morning, data came out showing much weaker job growth in the May-through-July period than previously estimated. Friday afternoon, the president fired Erika McEntarfer via a social media post.

• His appointees later argued that this was not punishment for delivering bad news, but driven by a desire for "more transparent and more reliable" data, as National Economic Council director Kevin Hassett put it Sunday on "Meet the Press."
• He said on Fox News Sunday that the data "have become very unreliable with these massive revisions over the last few years."
• The president's own comments on social media evoked more darkly conspiratorial ideas, such as Friday's claim that "today's Jobs Numbers were RIGGED in order to make the Republicans, and ME, look bad."

Reality check: McEntarfer is a two-decade civil servant who was confirmed as BLS commissioner last year with 86 votes in the Senate, including that of now-Vice President JD Vance.

Yes, but: It is true that Friday's revisions were very large by historical standards. That is often true at economic turning points.

• Data revisions are the BLS's commitment to both get its first estimates of what's going on in the economy out promptly, and to make them as accurate as possible once fuller information becomes available.

What they're saying: "These revisions reflect the commitment of statistical agencies to accuracy, transparency, and methodological rigor—not failure or bias," leaders of the American Economic Association said in a statement Friday.

By the numbers: News coverage usually focuses on the change in payroll employment. So when BLS announced Friday that June job growth was 14,000, not the 147,000 originally reported, it looks like a massive failure.

• But what they're really trying to do is estimate the total number of payroll jobs at U.S. employers in that month.
• Turns out, there were 159.466 million jobs in mid-June, not the 159.724 million first reported.

The intrigue: There are ironies in Trump's claim that the data is rigged, in that the numbers Friday affirmed that key parts of the Trump agenda are working.

• It showed that federal government employment has declined by more than previously reported, consistent with DOGE-driven attempts to shrink federal payroll.
• It also included lower job growth in some sectors known to employ many immigrants with uncertain legal status, namely construction, leisure and hospitality.

Of note: The negative revisions weren't particularly surprising to anyone who had followed a quarterly Census data series based on state employment data. Fed governor Christopher Waller flagged the likelihood of big negative revisions in a speech on July 17.

• Moreover, Trump has argued both that negative revisions to jobs data last year reflected a rigging of the numbers to help former President Biden, and now that negative revisions this year amount to an attempt to damage Trump.

Zoom in: If the president's nominee to lead BLS is widely viewed as a partisan actor who will seek to bend data to the president's will, there are big stakes for markets and policy.

• Consider, for example, the $2.1 trillion market for Treasury Inflation Protected Securities. Its returns to investors are determined by the Consumer Price Index, generated by BLS.
• Countless private contracts are indexed to CPI inflation as well.

What's next: The president said Sunday that he expects to name a new BLS commissioner this week. That person will be subject to Senate confirmation.