Trump says he doesn’t trust jobs data, but Wall Street and economists do
Former President Donald Trump dismissed revised US job data as rigged after weak hiring reports, but economists, investors, and government experts maintain trust in the numbers despite survey challenges and political drama.
Washington: The monthly jobs report is already closely watched on Wall Street and in Washington but has taken on new importance after President Donald Trump on Friday fired the official who oversees it.
Trump claimed that June’s employment figures were “RIGGED” to make him and other Republicans “look bad”. Yet he provided no evidence, and even the official Trump had appointed in his first term to oversee the report, William Beach, condemned the firing of Erika McEntarfer, the director of the Bureau of Labour Statistics appointed by former President Joe Biden.
The firing followed Friday’s jobs report that showed hiring was weak in July and had come to nearly a standstill in May and June, right after Trump rolled out sweeping tariffs.
Economists and Wall Street investors have long considered the job figures reliable, with share prices and bond yields often reacting sharply when they are released. Yet Friday’s revisions were unusually large — the largest, outside of a recession, in five decades. And the surveys used to compile the report are facing challenges from declining response rates, particularly since COVID, as fewer companies complete the surveys.
Nonetheless, that has not led most economists to doubt them.
“The bottom line for me is, I would not take the low collection rate as any evidence that the numbers are less reliable,” Omair Sharif, founder and chief economist at Inflation Insights, a consulting firm, said.
Many academics, statisticians and economists have warned for some time that declining budgets were straining the government’s ability to gather economic data. Several government commissions were studying ways to improve survey response rates, but the Trump administration disbanded them earlier this year.
Heather Boushey, a top economic adviser in the Biden White House, noted that without Trump’s firing of McEntarfer, there would be more focus on last week’s data, which points to a slowing economy.
“We are having this conversation about made-up issues to distract us from what the data is showing,” Boushey said. “Revisions of this magnitude in a negative direction may indicate bad things to come for the labour market.”
Here are some things to know about the jobs report:
Economists and Wall Street trust the data
Most economists say that the Bureau of Labour Statistics is a nonpolitical agency staffed by people obsessed with getting the numbers right. The only political appointee is the commissioner, who does not see the data until it is finalised, two days before it is issued to the public.
Erica Groshen, the BLS commissioner from 2013 to 2017, said she once suggested using different language in the report to “liven it up”, but was turned down. She was told that if asked to describe a cup as half-empty or half-full, BLS says “it is an eight-ounce cup with four ounces of liquid.”
The revised jobs data that has attracted Trump’s ire is actually more in line with other figures than before the revision. For example, payroll processor ADP uses data from its millions of clients to calculate its own jobs report, and it showed a sharp hiring slowdown in May and June that aligns with the revised BLS data.
Trump and his White House have a long track record of celebrating the jobs numbers — when they are good
Trump has focused on the revisions to the May and June data, which on Friday were revised lower — with job gains in May reduced to 19,000 from 144,000, and for June to just 14,000 from 147,000. Every month’s jobs data is revised in the following two months.
Trump also repeated a largely inaccurate attack from the campaign about an annual revision last August, which reduced total employment in the United States by 818,000, or about 0.5 per cent. The government also revises employment figures every year.
Trump charged that the annual revision was released before the 2024 presidential election to “boost” Vice President Kamala Harris’s “chances of victory”, yet it was two months before the election and widely reported at the time that the revision lowered hiring during the Biden-Harris administration and pointed to a weaker economy.
Here’s why the government revises the data
The monthly revisions occur because many companies that respond to the government’s surveys send their data in late or correct the figures they have already submitted. The proportion of companies sending in data later has risen in the past decade.
Every year, the BLS does an additional revision based on actual job counts derived from state unemployment insurance records. Those figures cover 95 per cent of US businesses and are not based on surveys but are not available in real time.
These are the factors that cause revisions
Figuring out how many new jobs have been added or lost each month is more complicated than it sounds. For example, if one person takes a second job, should the focus be on the number of jobs (which has increased) or the number of employed people (which has not)? The government measures both.
Each month, the government surveys about 121,000 businesses and government agencies at over 630,000 locations, covering about one-third of all workers.
Still, estimates are required: What if a company goes out of business? It likely won’t report lost jobs. What about new businesses? They may not appear on the government’s radar immediately.
The BLS estimates these trends, and the estimates are revised during the annual review.
Here’s why the May and June revisions may have been so large
Ernie Tedeschi, an economic adviser to the Biden administration, pointed to current labour market dynamics: both hiring and firing have declined, and fewer people are quitting jobs for new ones. Most job gains or losses are likely happening at new or closing businesses — the hardest to track.
Groshen noted that since the pandemic, there’s been a surge in startups, but they may not be generating as many jobs as earlier startups, throwing off BLS models.
Revisions seem to be getting bigger
The May and June revisions, which reduced hiring by 258,000, were the largest outside of a recession since 1967, according to economists at Goldman Sachs.
Kevin Hassett, Trump’s former top economic adviser, said on NBC’s Meet the Press, “What we have seen over the last few years is massive revisions to the jobs numbers.”
Hassett blamed the post-COVID drop in survey responses. But Tedeschi’s analysis shows that while revisions did spike after the pandemic, they’ve since declined and are lower than in the 1960s and 1970s.
Other concerns about the government’s data
Economists have long warned about declining survey response rates. A decade ago, about 60 per cent of companies responded; now only around 40 per cent do.
The UK has even suspended publication of its official unemployment rate due to falling response rates.
Earlier this year, the BLS cut back on inflation data collection due to the Trump administration’s hiring freeze, raising concerns about data reliability as economists assess the impact of tariffs.
According to a July report from the American Statistical Association, US government statistical agencies have seen a 16 per cent inflation-adjusted drop in funding since 2009.
“We are at an inflection point,” the report warned. “To meet current and future challenges requires thoughtful, well-planned investment… In contrast, what we have observed is uncoordinated and unplanned reductions with no visible plan for the future.”