On Friday, the Bureau of Labor Statistics released a jobs report that upended the narrative pundits, journalists, government officials, and the White House had been repeating for months: The economy is doing just fine.
The numbers showed that the US economy added a modest 73,000 jobs in July, several thousand under what economists had forecasted. But the real surprise came in the revisions to data from May and June, which found the country added 258,000 fewer jobs than initially reported.
President Donald Trump was outraged by the revisions, calling the data “a scam.” And he directed his anger towards BLS commissioner Erika McEntarfer.
“We need accurate Jobs Numbers,” Trump posted on Truth Social. “I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY. She will be replaced with someone much more competent and qualified. Important numbers like this must be fair and accurate, they can’t be manipulated for political purposes.”
But Trump wasn’t the only one who appeared to be stunned by the latest jobs report.
Kimberly Adams, senior Washington correspondent for Marketplace and the host of the Marketplace podcast Make Me Smart, told Vox that everyone in her business is getting whiplash.
“We were doing all of these stories about why is the economy so resilient? Why isn’t anybody reacting to tariffs?” Adams said. “And then this week we’re all talking about, my gosh, are we heading into stagflation and recession?”
Adams explained that the reason it seems like experts got it wrong is because a lot of the economic data in the United States relies on lagging indicators like the unemployment rate.
Below is an excerpt of Adams’s conversation with Today, Explained host Sean Rameswaram, edited for length and clarity. There’s much more in the full podcast, so listen to Today, Explained wherever you get podcasts, including Apple Podcasts, Pandora, and Spotify.
Why did the head of the Bureau of Labor Statistics make up the statistics?
The head of the Bureau of Labor Statistics did not make up the labor statistics. It’s literally shooting the messenger. The president of the United States was complaining on Truth Social and elsewhere that the reason for firing the head of the Bureau of Labor Statistics has to do with the number and the scale of revisions.
The jobs numbers came in lower than expected last week, and they indicate that there’s not the same kind of robust labor market that we thought we’d had over the last couple of months. But what drew even more attention were the revisions to the numbers from previous months. And they were pretty drastic revisions that shocked a lot of people.
These revisions tell us that the labor market we thought we had the last few months — that seemed to be pretty resilient against the tariffs and other changes President Trump and his administration were making in the economy — it wasn’t actually as resilient as we thought.
I should say: Labor market numbers get revised all the time. GDP numbers get revised all the time to pick whatever economic indicator you want. But these revisions in particular were, a) really large, and b) just fundamentally changed the story of what the labor market looked like over the last couple of months.
So not only did the numbers tell us that there was less hiring than we thought there was, it also told us that the labor market itself shrank, that there was a lower labor force participation rate. A lot of people are blaming that on the crackdown on immigration. The report also told us that if it weren’t for job growth in the tariff-resilient health care sector, we would have had almost no job growth at all.
But now that Donald Trump has fired the commissioner in charge of these job report numbers, the head of the Bureau of Labor Statistics, it’ll all be okay again by the next jobs report in September? We all win?
I imagine that may be what the president wants to believe, that the numbers will be a bit more appealing. Almost all of the economists I talk to say that there’s no reason whatsoever to believe that the Bureau of Labor Statistics is manipulating the numbers or that the numbers are rigged, as the president said.
There’s been a huge backlash to this firing from the community of people that follow this stuff very closely. And putting in someone who might be a little bit more amenable to the president’s narrative around economic data has the potential to undermine economic data in the United States and make it less trustworthy — both for businesses here in the US, as well as in the global economy.
And why does that matter? I mean, for people who don’t pay attention to these numbers, why does trustworthy data from the Bureau of Labor Statistics matter to this country and to the world?
Because lots of different businesses and countries and even individuals use this data to make decisions about how they’re going to manage their money, how they’re going to manage their businesses, and how they’re going to plan for the future.
So, for example, if you know that the unemployment rate is 4.2 percent, which is what the numbers came in at last week, you can say that’s a pretty low unemployment rate. And that means that most of the people out there who want jobs have jobs. And if we’re going to hire, we’re going to need to position ourselves well in the market to compete with the relatively few workers who are out there looking for a job.
This gets into one of the main reasons that this is on the agenda for a lot of folks, which is the Federal Reserve. The Federal Reserve has two mandates: full employment and stable prices. Full employment basically means as near as you can get to it, low unemployment rates. Stable prices equates to a more or less 2 percent inflation rate. We are still trending a little bit above 2 percent inflation, but when the Fed met last week, which was before these jobs numbers came out, the unemployment situation looked pretty good. So they didn’t have much of an incentive to do anything about interest rates, because inflation was still running a bit high. Unemployment looked fine, so no big deal. So let’s leave interest rates until inflation cools down a bit more.
If the Fed had the information on Wednesday that they ended up getting on Friday, would that have changed their decision? Maybe.
The last time you were on this show, you were here to talk about the Fed. It has sounded for weeks now like Trump has been itching to fire Jerome Powell, the head of the Fed.
Who he hired!
Who he hired, thank you. He didn’t end up firing Powell, but then he fired the head of the Bureau of Labor Statistics. Are the economists you’re talking to afraid that this might not be the end of Trump getting rid of people who seem to disagree with his imaginary vision of what the numbers should be?
You’re absolutely right. This is definitely creating an environment where folks are worried that even if people at the Bureau of Labor Statistics (or any other federal statistical agencies) are still putting their heads down, doing the work, and churning out the data without fear or favor — if they release a report that the president doesn’t like, they might lose their job.
Even if they still do the work, other people and other entities might look at it and say, well, can it really be true?
Look at a country like China, which releases economic data about the performance of its economy all the time. And you’ll always hear folks say, take it with a grain of salt because the Chinese Communist Party likes to mess with the numbers. That means lots of folks have to jump through all of these additional hoops to try to figure out what’s actually going on in the Chinese economy.
China is one of the biggest economies in the world. What happens if we end up in the same boat?