SPOKANE, Wash. — In measuring the U.S. economy, the Bureau of Labor Statistics ultimately helps shape the nation’s economy.
American government economic data is consistently among the best in the world, policy makers including those of the Federal Reserve rely on it heavily to make often highly impactful decisions, like setting interest rates influencing everything from mortgage rates to business investment.
That’s part of the reason Gonzaga associate professor of economics Ryan Herzog thinks President Donald Trump made a mistake in getting rid of over a jobs report he accused of being rigged.
“There’s a lot of concern in the economics community that this is going to create increased uncertainty around the data that’s being provided,” Herzog told The Pulse on Friday.
The July jobs report showed a dip in job growth and included a significant downward revision for May and June. The president accused McEntarfer, a Biden appointee, of deliberately skewing the numbers to make his administration look bad.
Herzog said the accusations serve neither policy makers nor the public.
“What we need to conduct good public policy and what the public needs is good, credible data,” Herzog said. “When the administration is undermining the data gathering process and the data that is being reported largely from non-partisan individuals, then that’s problematic.”
To fill McEntarfer’s old role, President Trump of the conservative think tank Heritage Foundation. Antoni is an outspoken critic of the BLS.
But it isn’t Antoni’s conservative lean nor concerns that he may manipulate data in favor of President Trump that give Herzog pause, but his failure to tick one of the two boxes Trump promised McEntarfer’s replacement would surpass her on: experience.
“(President Trump) could have appointed someone from American Enterprise Institute, AEI, or Cato, which are more conservative think tanks, libertarian think tanks. And we would have been, I think, OK with that,” Herzog said. “(Antoni) five years out of his graduate program; he’s never worked in survey collection or data analytics roles as far as we know… this individual has no experience at all in this role.”
Antoni downplayed the president’s claims that jobs data was intentionally manipulated in an interview with Fox Business on Aug. 12.
Instead, Antoni claimed the downward revisions for jobs in May and June are indicative of flawed practices at BLS.
Herzog argued the downward revision was unsurprising given the active push to downsize local government.
“If you look at where these data revisions came from, they were largely revised down from government,” Herzog said. “It’s not a shock that these numbers are being revised down as we get better and better
Economists generally expect BLS data to be less accurate during periods of major economic shifts, like recessions, given the role of imputations – or estimates based on historic data – in the monthly numbers. The more things change, the less helpful those historical estimates are, and the more important revisions are.
In essence, revisions are an important part of ensuring usable data, especially now when things are changing.
“We need to have credible data so we can interpret and understand how these changes are playing out at the end of the day,” Herzog said.
Job growth is one of two key factors alongside inflation that economists will use to measure the consequences of President Trump’s tariff regime. For Herzog and many other economists, the trends in these two macroeconomic indicators will help them determine not whether tariffs are accomplishing their stated goal, but how badly they’re distorting the American economy.
“There there’s no winning,” Herzog said. “You’re not coming out better in a trade battle, you might lose less than the other country.
The two factors are also fundamental to the Federal Reserve’s moves on interest rates. Generally, the Fed increases its benchmark rate to temper inflation and drops its benchmark rate to stimulate the economy and drive job growth.
Tariffs threaten to drive inflation up and job growth down, putting the Fed in a delicate position even with the best available data.
“The fed has relied on a relatively strong labor market as reasoning for them not needing to lower rates,” Herzog said. “Yet this new data that came out actually provided the Fed with a lot more evidence. The market is now pricing in an interest rate reduction in September. We need this accurate data to make sure the Federal Reserve is able to follow through.”
That fact highlights an irony in Trump’s qualms with the July jobs report. Namely, the weaker job numbers increased the likelihood that the Fed does what the president has strongly pushed for: a rate cut. Although the cut will certainly not be quite as steep as the president has asked for.
“President Trump would like to see (the federal funds rate) down to 1%, giving us sub 4% mortgage rates,” Herzog said.
The president’s own treasure secretary, Scott Bessent, would instead like to see rates around 3%, but not right away.
“Even from the White House, there is mixed messaging coming out,” Herzog said.
Herzog thinks the Fed will cut rates in September and potentially cut rates once more before the end of the year. In any case, the best decisions will be made only if the best data is available.
“My hope is that we can have credible data that we can rely on, because there’s so much economic uncertainty right now,” Herzog said. “We need this information.”
