Trump fires data chief after disappointing jobs report shakes markets

By Molly Smith

 

President Donald Trump got some bad economic news Friday, and responded by shooting the messenger. 

Trump fired the head of the Bureau of Labor Statistics, hours after it sent markets tumbling with a report that showed a dramatic slowdown in US hiring. It’s an escalation of his campaign against economic institutions long held to be above partisan politics —  one that until now has principally targeted the Federal Reserve.

 

And Trump got an unexpected opportunity that same afternoon to exert more influence at the central bank too, when Governor Adriana Kugler announced her imminent resignation, just as investors were still digesting the jobs numbers and the BLS news. He’ll now get to name a replacement, likely one who’s inclined to support his drive for lower interest rates. 

 

For a president who touts a hot US economy, and claims his tariff hikes and tax cuts will make it stronger still, Friday’s job numbers were a setback. They revealed the weakest employment growth since the pandemic. But his reaction – ousting BLS chief Erika McEntarfer, whom he accused without evidence of political bias – drew condemnation even from economists linked to his own party, and it’s anxiety-inducing for investors, too. 

 

There’s already widespread concern about Trump’s relentless pressure on the Fed and its chief Jerome Powell to cut rates, since the consensus is that central banks do a better job of taming inflation when politicians leave them alone. His move against US data agencies now risks damaging the integrity of the world’s most important statistics – numbers that can move global markets by trillions of dollars at a time.

 

Trump’s targeting of the BLS will “spark general anxiety in the market that politics may bleed over into future economic considerations,” said Yung-Yu Ma, chief investment strategist at PNC Asset Management Group. “The bigger concern now for investors is what is the next step? Will Trump threaten to fire Fed Chair Powell again after this?” 

 

And these questions arise with the US already facing a “nasty cycle,” Ma said, where growth slows and inflation starts to rise. 

 

Trump used Friday’s hiring numbers to renew his attack on Powell, who’d cited a solid jobs market as one reason for holding interest rates steady earlier this week. There was a silver lining for the president: Markets immediately started pricing in a September cut when the data came in.

 

Two-year Treasury bonds – which are tightly linked to short-term Fed rates – soared the most since 2023, sending yields down almost 30 basis points. The announcement of Kugler’s departure, and the prospect of a Trump pick joining the Fed in her place, amplified rate-cut bets for later in the year.

 

Meanwhile the S&P 500 index was slumping, the president was directing barbs at McEntarfer, and economists linked to both political parties were jumping to her defense.

 

The BLS on Friday slashed its payroll estimates for the previous couple of months, as well as posting a below-forecast number for July. It’s the latest in a series of unusually large revisions, which have drawn Trump’s ire before – including in the runup to last year’s election.

 

“Important numbers like this must be fair and accurate, they can’t be manipulated for political purposes,” Trump posted Friday on social media. He later added that the figures “were RIGGED in order to make the Republicans, and ME, look bad.”

 

But US data agencies enjoy a global reputation for “gold standard” statistics – one Trump may now be putting in danger — and economists of all stripes dismissed the idea of politically motivated manipulation.

 

“There’s just absolutely no evidence” that McEntarfer had any desire to fake the numbers, said Michael Strain of the conservative-leaning American Enterprise Institute. 

 

William Beach, who was appointed to head the BLS during Trump’s first term, called her firing “totally groundless” and said it sets a “dangerous precedent.” 

 

McEntarfer will be replaced at the BLS on an acting basis by William Wiatrowski, currently the deputy chief, the administration said.

 

As for Kugler, whose term was due to end in January, it’s not clear who’ll be appointed to fill her seat – and it could be a decision with major consequences. Even before her early departure, Treasury Secretary Scott Bessent had suggested the administration might nominate a replacement for Kugler who’d then be elevated into the post of Fed chair. 

 

At the start of Friday, before all the drama that followed – the shock job numbers, BLS firing and Fed departure – Trump had issued a call to arms on social media, urging members of the central bank’s board to defy their chair and vote for lower interest rates. “ASSUME CONTROL, AND DO WHAT EVERYONE KNOWS HAS TO BE DONE!” he wrote.

 

Later on, departing the White House, the president told reporters he was “very happy” that he now has an open spot on the board  — and posted that Powell should follow Kugler’s example and resign.