We are in a period of economic and political uncertainty and instability. The jobs numbers released by the Bureau of Labor Statistics (BLS) on Friday add to these concerns. When the President responded by attacking the numbers and firing the BLS Commissioner, Dr. Erika McEntarfer, he made the problem even worse by delivering yet another blow to trust in the integrity of American institutions.
To recap, on Friday, August 1, the federal Bureau of Labor Statistics (BLS) released its monthly jobs report, showing that the economy added 73,000 jobs in July, lower than economists expected. As it often does, BLS also adjusted its jobs estimate for the previous two months. Job gains for those months were revised down by a total of 258,000 jobs. This was the biggest revision since 2020. After accounting for those adjustments, an average of only 35,000 jobs were added per month from May through July. That’s the weakest non-pandemic three-month job creation since 2010.
These numbers were widely interpreted as a sign of an economy at risk. Mark Zandi, the Chief Economist for Moody’s Analytics, cited this data in posting, “The economy is on the precipice of recession.” (Zandi will be Bob Bixby’s guest on the next episode of the “Facing the Future” podcast, publishing Wednesday morning, August 6th.)
While that’s not good news, the analysis was based on a sound process grounded in a transparent methodology. The BLS conducts both a survey of 60,000 households around the country and a second survey of businesses and government agencies, asking them about their workforce and payroll records. If an employer does not respond, the BLS checks back over the following two months to try to get an answer – that’s one factor that leads to updated numbers.
Dr. McEntarfer was appointed in 2023 and confirmed by the Senate with bipartisan support. She and her entire agency are technical staff, mostly economists, and there is zero evidence that anyone else in that role who followed a similar methodology for data collection, given the resources available, would have produced different results.
When the President responded by firing Dr. McEntarfer and accusing BLS of political bias, he was sending a not so nuanced signal that he would use the power of the Presidency to demand numbers that were politically expedient rather than unbiased.
This continues a pattern of attacks on the institutions that provide the impartial data that makes good governance and efficient markets possible. At the least, policymakers need clear feedback loops on whether their policy choices are having positive or negative economic consequences so they can fix problems before they get out of hand. Consider that organizations like the Federal Reserve determine whether to raise or lower interest rates in part based on this and similar data. Congress and the Administration itself sets its budget projections and priorities based on this data. As Ben Casselman pointed out in The New York Times, countries that politicize economic reporting often pay a price. Some, like Greece, built their fiscal policy on distorted statistics, and therefore did not respond in a timely way to looming problems, and faced much more severe economic pain when reality set in.
Given the importance of the integrity of these numbers, the President should appoint a BLS Commissioner who is an employment data expert and respected by policymakers in both political parties. That way, Congress and the administration will be able to make policy decisions based on accurate numbers, and all stakeholders can have faith in future jobs reports.
Conclusion
The U.S. economy is already unsteady and plagued by uncertainty: about tariffs, about our global standing, about our fiscal stability. Our national debt will soon reach $37 trillion. The interest payments on the debt alone consumes around 20 percent of the revenues that our national government collects. Our annual deficit is approaching $2 trillion. Charting a course through these troubled waters requires good data. Importantly, the financial and economic stability of this country also depends on our creditors continuing to have faith in the integrity of this country’s institutions – so that, at the least, they continue to lend us money at low rates.
Beyond this, our global preeminence is built on trust: trust that America will uphold certain values of common good, trust that our institutions are transparent and honest. In the end, this is the true danger of what this Administration is threatening with its attacks on the institutions that provide fair, non-partisan information about our economic and fiscal health, including the Congressional Budget Office, the Governmental Accountability Office and now the Bureau of Labor Statistics. Once trust in our institutions is lost, it is hard to regain. If we continue down this path, we are likely to pay a heavy price.
