A day after the latest job data was revealed by the United States’ Labor Department, US President Donald Trump fired a top Labor Department official on the basis of accusations of manipulating the figures without evidence.
Trump said Erika McEntarfer, who had been appointed by former US President Joe Biden, had faked the job numbers to show a weak scorecard of the US job market. However, there has been no evidence to back Trump’s claims.
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“We need more accurate Jobs Numbers. I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY. She will be replaced with someone much more competent and qualified,” the President said in a post on Truth Social.
The Bureau of Labor Statistics (BLS), which compiles the closely-watched employment report and consumer and producer price data, did not respond to Trump’s claims.
However, McEntarfer’s firing and Friday’s resignation by Federal Reserve Governor, Adriana Kugler, sent more shockwaves across stock markets. The benchmark S&P 500 Index tanked 1.6 per cent, marking its largest drop in two months.
Trump officials question data collection
Trump administration officials have been voicing dissatisfaction with how recent data has shown large revisions and lower survey responses.
However, the BLS said it already reduced the sample collection for consumer price data as well as the producer price report, citing resource constraints. Usually, the government surveys about 1,21,000 businesses and government agencies that represent 6,31,000 individual worksites for the employment report.
There has been a sharp decline in the response rate since October 2020, when it was 80.3 per cent, and this past July, when it was 67.1 per cent, BLS data shows.
Trump’s latest firing has economists worried as concerns rise about politics influencing data collection and publication.
Michael Madowitz, principal economist at the Roosevelt Institute’s Roosevelt Forward, called politicising economic statistics a “self-defeating act”.
“Credibility is far easier to lose than rebuild, and the credibility of America’s economic data is the foundation on which we’ve built the strongest economy in the world. Blinding the public about the state of the economy has a long track record, and it never ends well,” he stated.
Trump may reshape Fed
Meanwhile, Kugler’s surprise decision to resign is being seen by many as the perfect opportunity for Trump to install a potential successor to Fed Chair Jerome Powell on the central bank’s Board of Governors.
The President has been at loggerheads with the Fed Reserve for refusing to slash interest rates in accordance with Trump’s demands and repeatedly threatened to fire Powell. While Powell’s term expires next May, he could remain on the Fed board until January 31, 2028, if he chooses.
Trump will now get to select a Fed governor whose term will expire on January 31, 2026, and who may then be reappointed to a full 14-year term.
Leading candidates for the next Fed chair include Trump’s economic advisor, Kevin Hassett, Treasury Secretary, Scott Bessent, former Fed Governor Kevin Warsh, and Fed Governor Chris Waller who said he agreed with Trump on lowering interest rates.
Trump said he was happy to have the open slot to fill.
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