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Author: Dong Jing, Wall Street News
Following the firing of the Bureau of Labor Statistics director, the Trump administration plans to carry out a larger restructuring of the agency and install more “own people” to ensure that employment data is “more transparent and more reliable”.Analysts said this unprecedented move has caused market concerns about the independence and credibility of official U.S. statistics.
On August 3, according to media reports, White House chief economic adviser Kevin Hassett said that the firing of Labor Statistics Director Erika McEntarfer is part of Trump’s plan to further reform the agency, and Trump hopes to install his own troops in the Labor Statistics Bureau.
Previous reports that the U.S. Bureau of Labor Statistics released an unexpectedly bleak job report last Friday, and Trump fired the Director of Statistics.
Critics such as former Treasury Secretary Larry Summers believe that the practice of firing heads of key government agencies for dissatisfaction with the data is “the practice of authoritarian countries, not democratic countries.”Former Director of Labor Statistics Bill Beach also warned the move to undermine the independence and integrity of the agency.
White House spokesman Taylor Rogers said Trump believes businesses, families and policy makers need accurate data when making major decisions, and he will restore U.S. trust in this key data.
Employment data collection methods are questioned
Although corrections to employment data are not uncommon, the scale of this correction has attracted special attention.
Last Friday (August 1), the U.S. Bureau of Labor Statistics significantly lowered its previous data, with employment data in May and June lowered by 258,000, resulting in only 19,000 new jobs in May and only 14,000 new jobs in June.
Hassett said the correction of the size of the data is a particularly noteworthy issue.He said that when the data is “corrected everywhere, there will be questions about whether there is a partisan tendency.”
Hassett blamed the massive correction on the failure to modernize the way data is collected.He said he called for a review of the process back in 2015, “worrying that the ever-changing economy… will develop faster than their (data) calculating capabilities.”
He believes the recent big correction proves his point, adding that “data can’t keep up with the economy.”
The data collected by the U.S. Bureau of Labor Statistics is based on a monthly voluntary survey of 121,000 businesses and government agencies.In a typical month, about 60% of the sample institutions respond promptly to the information required for the monthly employment report, and the majority of the rest usually responds within the next one to two months, which leads to routine corrections.
Bank of America CEO Brian Moynihan also said the methods “are no longer so effective”.
Politicalization risks raise widespread concerns
Trump’s decision to fire Erika McEntarfer, the Director of Labor Statistics, has raised concerns about the institution’s independence.The institution has historically been regarded as a non-political institution, and its data independence is crucial to market confidence.
Bill Beach, director of Labor Statistics during Trump’s first term, said:
“This unfounded and destructive statement undermines the valuable work and dedication of Bureau of Labor Statistics staff in producing monthly reports” and escalates the president’s unprecedented attack on the independence and integrity of the federal statistical system.”
Former Treasury Secretary Summers questioned how the data could be manipulated.He said:
“The data were summarized by a team of hundreds of people following detailed procedures in the manual, and it is impossible for the head of the Bureau of Labor Statistics to manipulate this number.”
White House spokesman Taylor Rogers defended Trump’s actions, saying:
“President Trump believes that businesses, families and policy makers should have accurate data when making major policy decisions, and he will restore U.S. trust in this critical data.”
