The World Trusts US Economic Data. Trump’s BLS Firing Could Change That.

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1:27I can clear my search history, but I can never unsee that. Don't go down the rabbit hole. Amazon Health AI gets you the right care, fast. Health care just got less painful. Bloomberg Audio Studios. Podcasts, radio, news. On Friday, the U.S. Bureau of Labor Statistics released its monthly jobs report. So the jobs data was not good. Let's just put it lightly. Molly Smith is an editor on the U.S. economy team at Bloomberg. Not only did we get a weak number for the jobs added in July, the bigger problem in this report is that there were really big downward revisions to the prior two months. They were actually the biggest since the pandemic.

2:14For the BLS, revisions are normal. It can take businesses a while to respond to the agency's surveys. So a fuller picture of the labor market comes with time. But Trump and his administration have really seized on these revisions as a sign that BLS as an institution is incompetent and its data is inaccurate. So Trump was not happy with these numbers. We had no confidence. I mean, the numbers were ridiculous. He said that they were rigged to make him and Republicans look bad. It's a scam, in my opinion. And he immediately fired Erica McIntyre, who's the commissioner of the Bureau of Labor Statistics.

2:53She was appointed by Biden in 2023, confirmed on a bipartisan basis in 2024, including then-Senator J.D. Vance, now our vice president, voted to confirm her. How did you react when you heard the news? I was stunned for sure. I remember I thought that, like, we had just gotten through the big rush of covering the jobs report that day. And the day took on a whole other meaning. In the scope, though, of being a journalist during Trump's presidency, it hasn't been uncommon to see him go after figures who he deems to be people who are after him or saying things that don't flatter him, even though, again, the numbers are completely apolitical, nonpartisan, and frankly have nothing to do with him.

3:41Molly says there's no evidence that the data coming out of the BLS was inaccurate or manipulated for political reasons. The BLS is designed to be independent, nonpartisan. It's tasked with collecting and releasing data that reflect reality. But after the firing of Erica McIntyre for critics are concerned that could change.

4:06I'm Sarah Holder and this is The Big Take from Bloomberg News. Today on the show, what firing the head of the Bureau of Labor Statistics could mean for the integrity of U.S. economic data?

4:24Molly, let's take a step back. What kind of data is the Bureau of Labor Statistics responsible for and how is that data typically used to make decisions about the economy? BLS puts out some of the most important numbers on employment and inflation in the U.S. And BLS, in addition to some of its counterparts at the Census Bureau and the Bureau of Economic Analysis, have a gold standard reputation globally for producing some of the really the most quality and nonpartisan, free of political influence statistics in the world. And some of the data that we're talking about here, the jobs report, also the Consumer Price Index, the widely followed CPI for the inflation data.

5:06These are really important reports for businesses and governments at all levels for setting information about wages, prices, hiring decisions, adjusting social security benefits. It really has a whole range of uses to people at all levels of business and government. I want to dig into some of that data that the BLS was releasing this year. What was the BLS data showing about the early months of Trump's presidency and the U.S. economy? So, so far, the labor market has really been fairly resilient throughout Trump's presidency and even, you know, coming out of the COVID years as well. It's been a lot of the reason why the Federal Reserve has not felt the need to cut interest rates yet, because there hasn't really been a market deterioration in the labor market.

5:56That unemployment is still pretty low. job gains are still pretty decent. Granted, this report, though, really changed a lot of how we thought about the labor market, especially because just a few days before we had Fed chair Jerome Powell saying that the labor market is solid. It's broadly balanced, very good. And to then see this report two days later really cast a lot of doubt on those characterizations. Remember, there were also two Fed governors who wanted to cut interest rates at that meeting, and they said it was because the labor market was much weaker under the surface than what the data suggested.

6:31And one of them in particular, Fed Governor Chris Waller, had said that there were expected data revisions that were going to show that. So they were anticipating what eventually happened, which was a revision to the past few months of data coming out of the jobs report that showed that things were weaker under the surface. Right. Yeah. And there has been some pattern of that in the latest jobs report. You have to understand, this is a report that has so many statistics in it. It's maybe like 30-something pages with a lot of numbers, a lot of rows on every page. And you look at the headline numbers for the most part, right?

7:09We look at nonfarm payrolls, what happened in the month. We look at the unemployment rate. And we look at the change in wages of wage gains. Those are the three primary numbers. But there's so much more beyond that that come from the jobs report. So that's what a lot of people have been taking notice of, that maybe the headline numbers look good, but under the surface, there's reason for concern. So for several months, even as Trump's trade policies created uncertainty that rocked the markets, those headline jobs numbers weren't raising any major alarms. But in the July report, that changed. What kinds of reactions did you see immediately after the report was published?

7:52What did it mean about the job market, the effects of the trade war? So I think that this was just more showing that the labor market broadly is weakening and certainly a lot weaker than we thought, particularly through the earlier months of the summer. Remember coming out of COVID, it was so, so strong, like unsustainably strong. You know, it inevitably had to come back to Earth. And now it's just more of seeing that, you know, consumers have been dealing with years and years of inflation and that how is that now maybe starting to affect the job market more broadly. And certainly Trump's policies are playing a part in this, too.

8:29But it wasn't really one category that stood out and was like, boom, that's tariffs right there. In the hours after the jobs report dropped on Friday morning, markets slumped. We're having the worst day on the Nasdaq 100 since April, the worst week since May. And that's as we get that so-called resilient jobs market with some cracks showing. Just after 2 p.m. Eastern on Friday afternoon, Trump posted on Truth Social that he was directing his team to fire Erica McIntyre for. And that set off its own chain reaction. I think you've seen economists and statisticians from both sides of the aisle of both political ideologies come to McIntyre for his defense, as well as that of the BLS as an institution.

9:13To say that she's a very well-respected economist who did serve in the Biden administration, but she's also was in the Census Bureau. She was at the Department of Treasury over the course of 20 years under presidents of both parties. So she has a very, very good reputation in the community. And to see economists, again, of both political ideologies say that this has does not reflect on her as a person or her competencies whatsoever, that this is a normal part of the data collection process. And what Trump has done here has now undermined confidence in the institution, which really, what good are statistics if we can't trust them?

9:54Is he now going to put somebody in place at the top that makes us doubt whether the figures are really free of political influence? That's really now what the concern is. We dig into that concern and what this all means for policymakers like the Fed after the break.

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12:33The Bureau of Labor Statistics is responsible for collecting and analyzing some of the most foundational data to the U.S. economy. The Federal Reserve, for example, looks to the BLS's inflation and unemployment figures to make interest rate decisions. So I asked Bloomberg's U.S. economy editor, Molly Smith, how Trump's firing of the head of this critical agency could undermine public trust in the data it produces. I think what this does is really plants a seed that there's reason now to think that the numbers may not be free of political influence going forward, which is something that we've all understood to be true up until this point.

13:12And that the BLS will tell you that the data that it produces is nonpartisan and independent, and that is so much of where the value in it comes from. And if we lose that understanding, then what good are these numbers anymore? People across the political spectrum reacted to the move with concern. On Friday, shortly after Trump's announcement, Republican Senator Tom Tillis told reporters he wanted more information about the president's motivations. If it was just fired because the president or whoever decided to fire the director just did it because they didn't like the numbers, they had to grow up.

13:49Former Treasury Secretary Larry Summers disputed Trump's accusation of data manipulation on ABC's This Week. This is a preposterous charge. The Trump administration has continued to defend McIntyre for his firing, saying the move comes on the heels of the biggest downward revision in years. Here's Trump's National Economic Council director Kevin Hassett on NBC's Meet the Press. And what we need is a fresh set of eyes over at the BLS. In the short term, who is running the agency and will we get an August jobs report? So yes, the man who was the deputy commissioner is now acting commissioner in the interim.

14:28And I think even before the August employment report, we're all probably looking more to the July CPI report first. So that's what's going to be coming out over the course of the next week. I mean, who knows? We also could have a new commissioner before then. Trump did say Sunday night that he'd be looking to name somebody in the course of the next few days. Granted, though, that person is subject to Senate confirmation, which I'm sure is not going to happen in the next week. So it will take some time to see how this plays out. In the meantime, the July jobs report could have its own real-world implications.

15:05When the Federal Reserve meets in September to discuss interest rates, it'll use that BLS data to inform its decisions. Trump has made his intentions very clear. He wants interest rates lower. Ironically, the July jobs report, for all of the flaws that the president pointed out, actually helps advance that directive, that it was so poor that people immediately rushed to put bets that the Fed would lower rates in September. So if anything, actually, the worst jobs numbers help advance the idea that the Fed is going to cut interest rates. The Federal Reserve is another historically apolitical agency that has become a major target for President Trump.

15:45He's repeatedly threatened to replace Fed Chair Jerome Powell over his interest rate decisions. And on Friday, just after Trump fired McIntyre from BLS, a member of the Fed's Board of Governors resigned. Replacing that board member gives Trump an opportunity to appoint someone new who shares his views on lowering rates. And it's possible that the new board member could be Trump's preferred pick to ultimately replace Powell as Fed chair. I asked Molly what these coinciding events might mean for the economy and for the integrity of our economic data. Well, it gives Trump now this opportunity to put two people in place who are going to be responsible for overseeing really important economic data and making decisions that shape monetary policy.

16:33The U.S. has a really sprawling statistical system. It's 13 principal agencies in total spread throughout the government that, you know, compile statistics on everything from education to health to agriculture in the economy and goes far beyond unemployment rate and inflation and a lot of the numbers that we care about primarily here in financial news. The trust in the data and to understand that it's not meant to serve anything but a public good is really paramount to the foundation of what federal statistics are. And did Trump's act of firing the head of the BLS shake that foundation? Totally.

17:12Yeah. I mean, this is really where the crux of this centers around is, is the BLS still going to be respected as a nonpartisan institution going forward? that can we still trust its data will be free of political influence. And I think a lot of the consensus around that so far is yes, that remember, the commissioner is one person in, you know, what's an agency of roughly 2000 people similar to the Fed, that it's not like Fed chair Jerome Powell is the sole person who has control over what interest rates are. It's a collective process in both of these institutions. But the second that you make a position that is perceived to be apolitical, political, a lot of that trust comes into question.

17:59Well, Molly, thank you so much for joining us. Thanks for having me.

18:05This is The Big Take from Bloomberg News. I'm Sarah Holder. To get more from The Big Take and unlimited access to all of Bloomberg.com, subscribe today at Bloomberg.com slash podcast offer. If you liked this episode, make sure to follow and review The Big Take wherever you listen to podcasts. It helps people find the show. Thanks for listening. We'll be back tomorrow.

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