There was a firestorm in Washington when President Trump announced he sent Erica McEntarfer packing. Ms. McEntarfer was the Commissioner of the Bureau of Labor Statistics (BLS), a governmental entity about which Americans know little but happens to be critical to the U.S. economy. While the President muddled his reasons for the firing, it was done for two excellent reasons.
This entity was created in 1884 and has evolved into its current home within the Department of Labor. It bills itself as “the principal fact-finding agency for the U.S. government in the broad field of labor economics and statistics and serves as a principal agency of the U.S. Federal Statistical System.” One might hope that it would provide solid economic information on which the government and our economic leaders can base their financial decisions.
The BLS pours out many different reports. I know this as I receive them. The reports are about worker productivity, average weekly wages, regional hiring activity, national job openings, and many other topics. There is one report that is more important than the others combined. That is because the entire economy waits with bated breath to receive it. It is called the Employment Situation News Release. It tells us how many new job hirings there were in U.S. economy in the prior month and the current unemployment rate.
To give you an indication of how important this report is (released on the first Friday of each month at 8:30 AM EST), let me provide you with some facts. No one is allowed to have the information except a few officials at the BLS. They present the information to the President’s Economic Council. They travel to the Dept. of Labor where they meet in a locked room with the two top officials of the department. They are restricted from any outside contact as their cell phones are impounded during the meeting to preclude anyone receiving premature release of the report. After full review there in which the monthly numbers are explained, the information is released to the world.
If you are watching the business channels like Fox Business news (a morning ritual for me), they are poised and ready to analyze the data. Maria Bartiromo hosts the show at that time. She may normally have two or three guests at a time. For this monthly report, she has a panel of eight experts who will provide analysis of how the report will impact the economy in anticipation of the markets opening in one hour.
In August, the big deal was not the fact that the monthly numbers came in relatively low — an increase of just 73,000 jobs. It was the fact that the numbers were revised downward for the previous two months by 269,000 jobs. Rather than posting nice monthly increases, the job gains for those two months decreased to 19,000 for May and 14,000 for June.
The impact of that was immense for two reasons. For the past two months people have based their investments on a strong economy producing a lot of jobs. The numbers were particularly good especially because they were devoid of the significant increase of government jobs that occurred during the Biden years. In fact, there was a reduction in jobs in the government sector. That represents a swing of between 50,000 to 80,000 jobs monthly from the jacked-up reports of the Biden years instead showing a strong private industry employment picture.
And who else relies heavily on the accuracy of these numbers? The Federal Reserve. If they had known the correct numbers, they may well have reduced their interest rate in their July meeting, which would have helped the job market and particularly the real estate market. Because of believing false information from the BLS, they did not reduce rates as so many had hoped.
This major reduction was not the first under McEntarfer. In March of 2024, she announced the BLS had a revision of 818,000 for the prior year. That was an estimated 25% of the prior year increase. In July 2024, she announced another revision of 111,000 jobs for April and May of that year.
The BLS produced a 31-minute video explaining the root of these screw-ups. When you realize just how long the video is, you just know they are covering their butts with schmaltz. McEntarfer never announced how she was going to revamp the process to provide more responsible economic data. She was just doing things like they had always been done. That is akin to 1970’s terminology – “keep on chugging.” Someone might think they were on stoner highs at the Bureau and told the world, “It’s basically good enough for government work.” And that is the main reason she got fired.
The second reason (if you follow this administration’s mantra’s) – we aren’t doing things the way they were done just because they were good enough before. They are looking at every aspect of our government in each department and asking if it makes sense for the American taxpayers and all citizens. A perfect example is Secretary Noem announcing we no longer must take our shoes off to get through security at the airport. It was a stupid and outdated mandate. She killed it but I bet it would have gone on another 50 years in other administrations without this administration’s type of analysis. It is a relatively small thing, but symbolic of how issues are now done, aiming towards the needs and the pocketbook of the people.
We have not even addressed the Consumer Price Index (CPI) which is also produced by the BLS. That is likewise an extremely vital economic statistic about which we don’t know the reliability of the monthly releases for the BLS. Many businesses rely on that calculation as well and many employment contracts and leases are reflective of those numbers.
You now know why she was fired. It wasn’t to satisfy some perverse need of President Trump as the legacy press would lead you to believe. McEntarfer wasn’t a saintly government employee being unjustly fired. She was an incompetent individual who would have been canned ages ago in private industry. We might just begin to get reliable numbers in the near future.
