Economists from various political backgrounds are expressing concerns over President Trump’s decision to dismiss key statisticians at the Labor Bureau, especially following a July employment report that revealed disappointing job growth compared to May.
These economists spent the weekend emphasizing the implications of politicizing data from agencies like the Bureau of Labor Statistics (BLS).
“It’s a troubling sign that undermines democracy in favor of authoritarianism… it’s genuinely alarming,” said Lawrence Summers, a Harvard economist with ties to both the Clinton and Obama administrations, during an interview with ABC News on Sunday.
Some conservative economists echoed similar sentiments.
Michael Strain, the director of economic policy research at the American Enterprise Institute, remarked that the president’s actions jeopardize the integrity of the information essential for policymakers, businesses, and households to make informed decisions that impact the nation’s welfare. He stressed that it’s crucial for the public to trust the U.S. economic statistics.
“By questioning the data, the president is causing harm to the United States,” he added.
Trump criticized the latest employment figures—showing 73,000 jobs added in July with revisions of 258,000 jobs for May and June—claiming they were “manipulated for political reasons.”
Many observers noted that, without evidence to back up his claim, it would be challenging for anyone to manipulate the figures due to the extensive process involved in compiling the data.
Summers dismissed Trump’s assertion as “silly,” explaining, “These numbers are generated by a large team of people following strict guidelines. No one at the BLS has the power to manipulate these figures.”
The employment data from the BLS serves as foundational information for businesses and economists. It’s derived from a nationwide survey of companies and informs various economic models and forecasts.
Experts argue that the political attack on this data is more concerning than Trump’s pressure on the Federal Reserve.
“This poses a greater risk than what we see with the Fed,” commented Jay Kedia, a researcher at the Cato Institute. “Labor and inflation statistics are critical for other federal agencies dealing with economic challenges.”
The revisions that prompted Trump’s anger are part of the normal reporting process.
Since the pandemic, response rates to the BLS survey have declined, leading to increased volatility in major revisions, like those seen in May and June’s employment figures.
The response rate for the Employment Statistics Survey, which includes around 631,000 workplaces, dropped from about 59% in 2020 to roughly 43% as of March.
Labor economist Kathryn Edwards indicated that Trump’s actions, including the firing of the BLS commissioner, could have “devastating” consequences.
“The BLS creates thousands of statistics regarding the U.S. labor market. Without their reliability, we are essentially operating in the dark,” she noted. “The most concerning aspect is that, by firing the commissioner, he implied she was manipulating the data for political purposes.”
For months, economists have cautioned that Trump’s tariff policies could have adverse effects on economic activity.
Despite a healthy Jobs Report following the initial “mutual” tariffs in April, many officials celebrated prematurely.
“Where are the so-called ‘experts’ now?” asked Commerce Secretary Howard Lutnick last month.
However, the July employment report raised new questions regarding these tariffs.
“Many of us assumed Trump’s tariffs would seriously harm the economy, impacting work and prices. It didn’t seem to be happening,” he remarked.
Economists also point out that Trump’s crackdown on immigration might have significant repercussions for the labor market.
“Tight immigration policies could lead to higher unemployment rates and slower job growth, potentially harming the labor market,” stated Oxford economist Matthew Martin.
The influence of tariffs is becoming evident in consumer prices as well.
June marked the second straight month of increases in the personal consumption expenditure price index, which rose to 2.6% annually, up from 2.4% in May and 2.2% in April. Similarly, the consumer price index reflects this trend, increasing from 2.4% in June to 2.7% in April.
While Trump has advocated for tariffs to revive American jobs and bolster manufacturing, recent reports indicate ongoing declines in those sectors. Since May, the manufacturing industry has lost 37,000 jobs, despite prior growth in construction and manufacturing in 2020.
