Erika McEntarfer was dismissed following Friday’s jobs report, which revealed weak hiring in July and an almost complete halt in May and June, shortly after Trump’s implementation of widespread tariffs.
The monthly jobs report, already a focal point for Wall Street and Washington, gained heightened significance after President Donald Trump dismissed the official responsible for overseeing it. Trump asserted that June’s employment data were “RIGGED” to damage his and other Republicans’ reputations, though he offered no evidence for this claim. Even William Beach, whom Trump appointed during his first term to oversee the report, criticized the dismissal of Erika McEntarfer, the Bureau of Labor Statistics director appointed by former President Joe Biden. Her firing followed a jobs report on Friday indicating weak hiring in July and an almost complete standstill in May and June, coinciding with Trump’s introduction of extensive tariffs.
Economists and Wall Street investors have traditionally viewed job figures as dependable, with stock prices and bond yields often showing significant reactions upon their release. However, Friday’s revisions were notably substantial—the largest outside of a recession in the past fifty years. The surveys used to compile the report are encountering issues due to declining response rates, especially post-COVID, as fewer companies participate.
Despite these challenges, most economists maintain confidence in the data.
“I wouldn’t interpret the low collection rate as evidence that the numbers are less reliable,” said Omair Sharif, founder and chief economist at Inflation Insights, a consulting firm.
For some time, numerous academics, statisticians, and economists have cautioned that reduced budgets are hindering the government’s capacity to collect economic data. Several government commissions had been exploring methods to enhance survey response rates, but these groups were disbanded by the Trump administration earlier this year.
Heather Boushey, a senior economic adviser in the Biden administration, remarked that if it weren’t for Trump’s dismissal of McEntarfer, more attention would be on last week’s data, which indicates a slowing economy.
“We’re discussing fabricated issues to divert attention from what the data reveals,” Boushey commented. “Revisions of this scale in a negative direction might suggest troubling developments ahead for the labor market.”
Here are some key points about the jobs report:
Economists and Wall Street have confidence in the data. Most believe that the Bureau of Labor Statistics is a nonpartisan agency comprised of individuals dedicated to accuracy. The agency’s only political appointee is the commissioner, who receives access to the data only after it is finalized, two days prior to its public release.
Erica Groshen, the BLS commissioner from 2013 to 2017, recalled suggesting more engaging language for the report but was overruled. She was informed that if asked whether a cup were half-empty or half-full, the BLS would describe it as “an eight-ounce cup with four ounces of liquid.”
The revised jobs data that has drawn criticism from Trump now aligns more closely with other figures than prior to the revision. For instance, payroll processor ADP, which uses data from its extensive client base to produce its own jobs report, indicated a significant hiring slowdown in May and June, correlating more closely with the revised BLS data.
Trump and his administration have consistently celebrated positive job numbers in the past.
These are the figures Trump is criticizing. He has targeted the revisions to the May and June data, which were adjusted downward last Friday. Job gains for May were reduced from 144,000 to 19,000, and for June from 147,000 to just 14,000. It is standard for each month’s jobs data to be revised over the following two months.
Trump also reiterated a largely inaccurate claim from his campaign regarding an annual revision last August, which lowered total U.S. employment by 818,000, or about 0.5 percent. The government routinely revises employment figures annually.
Trump alleged that this annual revision was released ahead of the 2024 presidential election to enhance Vice President Kamala Harris’s “chances of Victory.” However, the revision occurred two months before the election and was widely reported at the time to indicate reduced hiring during the Biden-Harris administration, suggesting a weaker economy.
Here’s why the government revises the data: Monthly revisions are necessary because numerous companies submit their responses to government surveys late or update the figures they have already provided. Over the past decade, the number of companies submitting data later has increased.
Additionally, each year, the BLS conducts a further revision using actual job counts sourced from state unemployment insurance records. These figures encompass 95 percent of U.S. businesses and are based on actual data rather than survey responses, though they are not available in real-time.
These are the factors that lead to revisions: Determining how many jobs have been added or lost each month is more complex than it might appear. For instance, if a person takes on a second job, should the focus be on the increase in the number of jobs or the unchanged number of employed individuals? (The government tracks both: the unemployment rate is determined by the number of people with or without jobs, while the count of jobs added or lost is reported separately).
Each month, the government conducts surveys involving approximately 121,000 businesses and government agencies across over 630,000 locations, which include multiple sites for some businesses. This process covers about one-third of all workers.
Nevertheless, the government must also make estimates: What happens if a company goes out of business? It probably won’t submit any forms indicating the jobs lost. And regarding new businesses, it may take some time before they are noticed by the government.
The BLS attempts to account for these trends by estimating their impact on employment. Naturally, these estimates can be inaccurate until corrected by the annual revisions. The revisions are often more significant around economic turning points. For instance, during economic growth, there may be more startups than anticipated, leading to upward revisions. Conversely, if the economy is slowing or entering a recession, the revisions might be significantly downward.
Here’s why the May and June revisions might have been substantial: Ernie Tedeschi, an economic adviser to the Biden administration, highlights the current labor market dynamics. Both hiring and firing rates have significantly decreased, and fewer Americans are leaving their jobs for new ones. Consequently, most of the monthly job gains or losses are likely happening at new companies or those closing down.
These are the businesses that the government estimates using models, which can lead to increased volatility.
Groshen further notes that since the pandemic, there has been a surge in new startup companies, as many Americans lost their jobs or pursued greater independence. However, these startups might not have generated as many jobs as those before COVID, disrupting the government’s models.
Revisions appear to be increasing in size. The adjustments to the May and June job figures, which reduced hiring by 258,000, were the largest seen outside of recessions since 1967, according to economists from Goldman Sachs.
Kevin Hassett, Trump’s chief economic adviser, stated on NBC’s “Meet the Press” that “What we have witnessed in recent years are massive revisions to the jobs numbers.”
Hassett attributed this to a significant drop in response rates to government surveys during and after the pandemic: “When COVID happened, response rates dropped significantly, leading to a surge in revision rates.”
However, calculations by Tedeschi indicate that while revisions did spike post-pandemic, they have since decreased and remain much smaller than those in the 1960s and 1970s.
Concerns About the Government’s Data
Many economists and statisticians have raised concerns about issues like declining response rates over the years. A decade ago, around 60 percent of companies surveyed by the BLS responded, but now that figure has fallen to about 40 percent.
This decline is an international trend, particularly since COVID. For instance, the United Kingdom has even paused the publication of its official unemployment rate due to decreasing response rates.
Earlier this year, the BLS announced it was reducing the collection of inflation data because of a hiring freeze implemented by the Trump administration, sparking worries about the reliability of price data at a time when economists are assessing the impact of tariffs on inflation.
According to a July report by the American Statistical Association, U.S. government statistical agencies have experienced a 16 percent decrease in funding, adjusted for inflation, since 2009.
“We are at a critical juncture,” the report stated. “Addressing current and future challenges requires thoughtful, well-planned investment… Instead, we have witnessed uncoordinated and unsystematic reductions with no apparent plan for the future.”
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