"Rigged" and "concocted" are how President Donald Trump described the July jobs report. Days after abruptly firing Bureau of Labor Statistics (BLS) Commissioner Erika McEntarfer, Trump and senior administration officials defended the decision, arguing that it is critical to ensure the numbers are "as transparent and as reliable as possible." While the insinuation is that the abysmal data of the last three months are political, it could be Hanlon's razor: "Never ascribe to malice that which is adequately explained by incompetence."
The Manipulative BLS?
Was the July jobs report manipulated to make Trump look bad? At first glance, the BLS figures raised some eyebrows. As Liberty Nation News recently reported, not only did the US economy create a worse-than-expected 73,000 new jobs last month, but the federal agency also adjusted the May and June readings downward by a total of 258,000. Outside of the pandemic, a two-month revision of this size has not been seen since 1979.
National Economic Council Director Kevin Hassett suggested that it was a vast conspiracy committed by the unelected bureaucrats. “All over the US government, there have been people who have been resisting Trump everywhere they can,” Hassett told CNBC in an Aug. 4 interview.
The challenge is that asserting a nefarious plot to undermine the president’s economic agenda overlooks the BLS’ dismal track record for the last several years, which is something Trump also pointed out. “I've had issues with the numbers for a long time. But today, we're doing so well. I believe the numbers were phony, just like they were before the election,” he told reporters.
The most notable deletion of phantom jobs occurred in the pre-election annual benchmark revisions to the non-farm payroll. According to the report, employment gains were exaggerated by 818,000 in the 12 months ending in March 2024. Of course, economic observers can select random times to illustrate how the bureau has struggled to report accurate numbers. In October 2024, the bureau confirmed downward revisions of more than 100,000 in the August and September prints.
At the time, the theory was that the bureau attempted to make former President Joe Biden look good before quietly revising the data, giving the financial markets a boost, garnering favorable media coverage, and improving the Bidenomics brand. However, because it became too frequent and too large, changes to previous months’ figures could no longer be accomplished clandestinely. The argument made sense at the time, but several months into a new administration, the same issues are arising: putrid data collection efforts, unreliable measurements, and volatile readings.
What’s Going On?
If it is not politics infiltrating the Bureau of Labor Statistics, what is happening then? Experts have presented various reasons explaining the erratic month-to-month readings, including a lack of resources, outdated methodologies, and declining response rates. Others argue that the pandemic has disrupted conventional economic models, whether it be key recession indicators or monthly government reports.
Whatever the cause, the BLS continues to disappoint, forcing market watchers to take these reports – you can throw the Consumer Price Index (CPI) into the basket of skepticism as well! – with a grain of salt. Some will argue that Trump's proposal to reduce the agency’s budget by 8% could further erode data quality. If that were the case, then why are private alternative metrics becoming more reliable tools that can be compiled and published with fewer resources, labor, and capital?
Indeed, economists have recently pointed out that the Conference Board’s employment trends index might be a worthwhile alternative for measuring the US labor market each month. That said, public information about the job market can be found in a trustworthy manner on the Federal Reserve Bank of Philadelphia's website. The regional central bank will release a report using the Quarterly Census of Employment and Wages (QCEW) data, shedding a much more realistic light on the labor situation.
Inflation is another subject that the bureau has essentially admitted it has been guessing for the past couple of months. Therefore, experts are homing in on metrics like Truflation, a running real-time estimate of consumer prices, which shows the annual US inflation rate running below the Fed’s 2% target, signaling the Eccles Building is behind the eight ball (again!).
While the administration is updating various parts of the US government, like air traffic control, it may be time for the White House to also invest in updating the data collection efforts.
Incompetence, Not Rigging
Do the corridors of power loathe Trump? Absolutely. If the intelligence community, unelected bureaucrats, and politicians can concoct odious schemes to oust the real estate billionaire from behind the Resolute Desk, why wouldn’t the number crunchers do the same thing but on the data front? Critics have a right to be skeptical, but ineptitude is a more suitable explanation for what is happening in the nation’s capital.
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