Trump fires the head of the BLS – The Daily Tearsheet

Vital Statistics:

Stocks are higher this morning on no real news. Bonds and MBS are up.

The week ahead is relatively data-light, with only the ISM report containing important data. We have some Fed-speak as well.

In response to the jobs report on Friday, President Trump fired the head of the Bureau of Labor Statistics, accusing her of “rigging” the data. He claims that the BLS overstated job growth in 2024 to help Joe Biden, and then revised everything downward once Trump won. “Head of the Bureau of of[sic] Labor Statistics did the same thing just before the Presidential Election, when she lifted the numbers for jobs to an all time high,” Trump said in a post to his Truth Social account Sunday afternoon. “I then won the Election, anyway, and she readjusted the numbers downward, calling it a mistake, of almost one million jobs.”

Erika McEntarfer, the head of the BLS isn’t known for being political, so there isn’t much evidence that she was playing politics with the data. That said, ever since the pandemic there have been major problems with BLS data. The response rate has fallen from 80% to the mid 60s, and the revisions have been pretty massive.

Would the Fed have cut rates last week knowing that job growth had stalled for the past 3 months? Maybe not. But, would Jerome Powell have said “The economy is not performing as though restrictive policy were holding it back inappropriately?” Probably not either. If anything, Trump’s actions should light a fire under the bureaucrats at BLS to fix the revision problems and the response rate.

Separately, Fed Governor Adriana Kugler announced her resignation on Friday. She was a Biden appointee to replace Lael Brainard who took a position in the Biden Administration. Trump said that he will only consider nominees who want to lower interest rates.

Consumer sentiment improved in July, according to the University of Michigan Consumer Sentiment Index. “Consumer sentiment improved for the second straight month, inching up a scant single index point from June. Current conditions rose about 5% to its highest reading since February 2025, while the expectations index fell slightly. A rise in sentiment among stock holders was partially offset by a decline among consumers who do not own stocks. Perceptions of this month’s economic developments were similar across the political spectrum; Republicans, Independents, and Democrats all saw some minor increases in sentiment this month. Although recent trends show sentiment moving in a favorable direction, sentiment remains broadly negative. Consumers are hardly optimistic about the trajectory of the economy, even as their worries have softened since April 2025.”

Inflation expectations eased from 5% to 4.5%, which is the lowest reading since February. Long-run inflationary expectations fell markedly from 4% to 3.4%.

The ISM Manufacturing Index fell again in July, decreasing 1 point to 48, which indicates the manufacturing industry is in contraction. Demand inputs improved modestly, however employment continues to contract. Here is how a machinery executive characterized the situation: “Currently, higher interest rates still depress the construction industry for new construction projects. Tariff policies are uncertain, which slows down (1) our investment in new projects, (2) component sourcing for new products, (3) blanket orders and (4) replenishment of large inventory quantities. Instead, we’re working to shift suppliers to lower political risk countries or develop domestic sources. We are impacted by the higher tariffs on costs of raw materials and components both sourced domestically and from overseas, and we expect expenses will be higher in the third and fourth quarters as we consume the inventory received with new and higher tariffs or update costs from domestic sources in the second quarter.”