President Donald Trump on Friday abruptly dismissed the head of the U.S. Bureau of Labor Statistics and welcomed the surprise resignation of a Federal Reserve governor—actions that critics warn could undermine confidence in economic stewardship even as they hand the White House greater influence over interest-rate policy. By firing Labor Department official Erika McEntarfer and inheriting an unfilled Fed Board seat sooner than expected, Trump has amplified his power to reshape two pillars of U.S. economic governance.
Data Integrity Under Scrutiny
In a Truth Social post shortly after the Labor Department’s July report revealed payroll gains of just 73,000 jobs—and downward revisions totaling 258,000 positions for May and June—Trump accused McEntarfer of manipulating employment figures and ordered her immediate removal. He claimed, without presenting evidence, that the monthly sample surveys underpinning the nonfarm payrolls and unemployment statistics produce “inaccurate” and “rigged” results.
McEntarfer, a career statistician appointed under the previous administration, had overseen a period of strained resources at the agency. The BLS has cited budgetary constraints for cutting back on survey collection, reducing its sample size for the Consumer Price Index and producer-price data. Response rates for the monthly establishment survey have dipped from over 80% in late 2020 to about two-thirds today, raising questions about data reliability. Internal officials have privately warned that sustained low participation and staff reductions could impair the agency’s ability to track the economy.
By publicly blaming a single bureaucrat for broader structural issues, the president has deepened longstanding concerns that politics may taint statistical independence. Economists caution that undermining trust in the nation’s primary gauges of inflation and employment risks confusing market signals and potentially destabilizing investment decisions. Some former BLS directors have decried the move as a “dangerous precedent,” arguing that objective data are essential for informed policy and public confidence.
A Sudden Fed Vacancy
Just hours after the firing, Fed Governor Adriana Kugler—also a Biden appointee—announced her plan to leave the central bank next week, more than a year before her term was to expire. With President Trump publicly lambasting Fed Chair Jerome Powell for not cutting interest rates, the open seat accelerates the administration’s ability to place an additional ally on the Federal Reserve Board. Under the Federal Reserve Act, the president can fill unexpired terms and later renominate governors for full 14-year tenures, affording Trump a pathway to influence monetary policy beyond his term.
Kugler’s departure caught markets off guard. Bond yields fell sharply on speculation that a Trump-friendly successor might advocate for looser policy sooner, while stock-index futures rallied briefly as traders bet on eventual rate cuts. Powell’s current term runs until May 2026, but political pressure from the White House and Republican leaders has raised the specter of further turnover at the leadership level. Potential contenders for the new vacancy include Trump economic adviser Kevin Hassett, Treasury Secretary Scott Bessent, and Fed Governor Chris Waller—each viewed as more inclined toward rate reductions than the current majority.
The expedited vacancy also complicates the Fed’s internal balance. With three seats already open pending Senate action, the board is operating with a slim quorum. Adding another vacancy risks hampering meeting logistics and quorum requirements for key votes, unless interim replacements are swiftly confirmed. Lawmakers from both parties have signaled concern over rapid political appointments that could undermine the Fed’s long-cherished independence.
Broader Implications for Markets and Policy
Together, these twin moves underscore a broader campaign by the White House to assert control over economic levers. By targeting the BLS, Trump injects fresh uncertainty into data-driven decision-making at a time when markets rely heavily on clear signals to gauge the Fed’s next steps. The timing—just days before the Fed’s Jackson Hole symposium, where central bankers debate the outlook for inflation and growth—heightens the stakes.
Investors and corporate treasurers have already adjusted portfolios in anticipation of more dovish monetary policy. Major banks reported a surge in applications to lock in lower borrowing costs, and swap markets show elevated odds of a rate cut by late 2025. At the same time, companies are closely watching labor market metrics to calibrate hiring and wage plans. Reduced confidence in employment data could prompt firms to delay investment, hiring or expansion decisions until more definitive information reemerges.
On Capitol Hill, lawmakers have floated proposals to bolster the BLS’s budget and reinforce statutory protections for its leadership. A bipartisan group of senators urged quick hearings for prospective replacements to safeguard the agency’s credibility. Meanwhile, Fed watchers caution that any shift toward political appointees prioritizing rate cuts could spark inflationary pressures if enacted too soon, undermining the central bank’s effort to bring price growth back to its 2% target.
The double-pronged strategy also reverberates abroad. Foreign central banks and international investors monitor U.S. economic governance closely, given the dollar’s role as the world’s reserve currency. Perceived politicization of data or monetary policy could erode confidence in U.S. assets and spur volatility in foreign exchange markets. Some emerging-market economies, already grappling with slowed demand and capital outflows, may face additional headwinds if U.S. rates diverge unpredictably.
As the administration proceeds, the next weeks will be critical. The White House must nominate and secure Senate confirmation for both a new BLS leader and a Fed governor, tasks that often stretch over months. In the meantime, markets will navigate an environment marked by fresh uncertainty over the accuracy of economic benchmarks and the independence of the central bank. For President Trump, the moves represent a calculated bid to consolidate economic authority; for many observers, they raise the specter of policy tools being wielded less for technical objectives and more for political advantage.
(Source:www.reuters.com)
Data Integrity Under Scrutiny
In a Truth Social post shortly after the Labor Department’s July report revealed payroll gains of just 73,000 jobs—and downward revisions totaling 258,000 positions for May and June—Trump accused McEntarfer of manipulating employment figures and ordered her immediate removal. He claimed, without presenting evidence, that the monthly sample surveys underpinning the nonfarm payrolls and unemployment statistics produce “inaccurate” and “rigged” results.
McEntarfer, a career statistician appointed under the previous administration, had overseen a period of strained resources at the agency. The BLS has cited budgetary constraints for cutting back on survey collection, reducing its sample size for the Consumer Price Index and producer-price data. Response rates for the monthly establishment survey have dipped from over 80% in late 2020 to about two-thirds today, raising questions about data reliability. Internal officials have privately warned that sustained low participation and staff reductions could impair the agency’s ability to track the economy.
By publicly blaming a single bureaucrat for broader structural issues, the president has deepened longstanding concerns that politics may taint statistical independence. Economists caution that undermining trust in the nation’s primary gauges of inflation and employment risks confusing market signals and potentially destabilizing investment decisions. Some former BLS directors have decried the move as a “dangerous precedent,” arguing that objective data are essential for informed policy and public confidence.
A Sudden Fed Vacancy
Just hours after the firing, Fed Governor Adriana Kugler—also a Biden appointee—announced her plan to leave the central bank next week, more than a year before her term was to expire. With President Trump publicly lambasting Fed Chair Jerome Powell for not cutting interest rates, the open seat accelerates the administration’s ability to place an additional ally on the Federal Reserve Board. Under the Federal Reserve Act, the president can fill unexpired terms and later renominate governors for full 14-year tenures, affording Trump a pathway to influence monetary policy beyond his term.
Kugler’s departure caught markets off guard. Bond yields fell sharply on speculation that a Trump-friendly successor might advocate for looser policy sooner, while stock-index futures rallied briefly as traders bet on eventual rate cuts. Powell’s current term runs until May 2026, but political pressure from the White House and Republican leaders has raised the specter of further turnover at the leadership level. Potential contenders for the new vacancy include Trump economic adviser Kevin Hassett, Treasury Secretary Scott Bessent, and Fed Governor Chris Waller—each viewed as more inclined toward rate reductions than the current majority.
The expedited vacancy also complicates the Fed’s internal balance. With three seats already open pending Senate action, the board is operating with a slim quorum. Adding another vacancy risks hampering meeting logistics and quorum requirements for key votes, unless interim replacements are swiftly confirmed. Lawmakers from both parties have signaled concern over rapid political appointments that could undermine the Fed’s long-cherished independence.
Broader Implications for Markets and Policy
Together, these twin moves underscore a broader campaign by the White House to assert control over economic levers. By targeting the BLS, Trump injects fresh uncertainty into data-driven decision-making at a time when markets rely heavily on clear signals to gauge the Fed’s next steps. The timing—just days before the Fed’s Jackson Hole symposium, where central bankers debate the outlook for inflation and growth—heightens the stakes.
Investors and corporate treasurers have already adjusted portfolios in anticipation of more dovish monetary policy. Major banks reported a surge in applications to lock in lower borrowing costs, and swap markets show elevated odds of a rate cut by late 2025. At the same time, companies are closely watching labor market metrics to calibrate hiring and wage plans. Reduced confidence in employment data could prompt firms to delay investment, hiring or expansion decisions until more definitive information reemerges.
On Capitol Hill, lawmakers have floated proposals to bolster the BLS’s budget and reinforce statutory protections for its leadership. A bipartisan group of senators urged quick hearings for prospective replacements to safeguard the agency’s credibility. Meanwhile, Fed watchers caution that any shift toward political appointees prioritizing rate cuts could spark inflationary pressures if enacted too soon, undermining the central bank’s effort to bring price growth back to its 2% target.
The double-pronged strategy also reverberates abroad. Foreign central banks and international investors monitor U.S. economic governance closely, given the dollar’s role as the world’s reserve currency. Perceived politicization of data or monetary policy could erode confidence in U.S. assets and spur volatility in foreign exchange markets. Some emerging-market economies, already grappling with slowed demand and capital outflows, may face additional headwinds if U.S. rates diverge unpredictably.
As the administration proceeds, the next weeks will be critical. The White House must nominate and secure Senate confirmation for both a new BLS leader and a Fed governor, tasks that often stretch over months. In the meantime, markets will navigate an environment marked by fresh uncertainty over the accuracy of economic benchmarks and the independence of the central bank. For President Trump, the moves represent a calculated bid to consolidate economic authority; for many observers, they raise the specter of policy tools being wielded less for technical objectives and more for political advantage.
(Source:www.reuters.com)