After the Fed, Is the BLS Becoming Politicized? Wall Street's Concerns Deepen

"Questions Raised Over Data Reliability"

U.S. President Donald Trump has dismissed the head of the Bureau of Labor Statistics (BLS) and repeatedly claimed that employment statistics have been manipulated, fueling growing concerns on Wall Street. There are worries that attempts to politicize independent institutions such as the Federal Reserve (Fed) and the BLS could cast doubt on the accuracy of statistics and, furthermore, undermine trust in the U.S. economy and the dollar.

On August 4 (local time), President Trump stated on the social networking service Truth Social, "Last week's employment report was manipulated ahead of last year's presidential election."

Donald Trump, President of the United States. Photo by Reuters and Yonhap News

On August 1, after the BLS released statistics showing a deterioration in employment conditions over the past three months, President Trump dismissed Director Erica McEntarfer. On the same day, he reiterated his claim that both the pre-election employment statistics and last week's employment report had been revised to favor the Democratic Party, adding, "I will choose an extraordinary successor."

Wall Street is concerned that, at a time when it is already difficult to assess the impact of tariff policies on prices and employment, the dismissal of the BLS director only increases uncertainty. The BLS's statistics are key economic data that influence the Fed's monetary policy decisions, and now the U.S. government itself is casting doubt on them.

Michael Feroli, Chief U.S. Economist at JPMorgan, sent a memo to clients titled "Concerning News from the BLS," warning that this situation poses risks to the conduct of monetary policy, financial stability, and economic outlook. He stated, "While there has been much discussion in recent months about the potential politicization of the Fed, we must not overlook the risk of politicizing the data collection process. To use a soft landing analogy, flying with a broken instrument panel can be just as dangerous as having a partisan pilot."

He further expressed concern that this dismissal could erode market confidence in statistics as a whole. Neil Dutta, Head of Economics at Renaissance Macro, warned, "To question the data simply because you do not like what it says is something that undermines market confidence."

Ajay Rajadhyaksha, Head of Research at Barclays, pointed out in a memo to clients that no U.S. president has attempted to dismiss a sitting BLS director since the administration of former President Richard Nixon. He added, "This action could cause the market to question the reliability of data, especially when indicators surprise investors."

Tom Orlik, Chief Economist at Bloomberg Economics, said that while the dismissal of the BLS director may not have an immediate impact on how data is collected and reported, "it nonetheless means that whoever takes on the role will be operating under a cloud of suspicion."