Trump fires data chief on bad job news and gets chance to tilt Fed
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 U.S. 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 Gov. 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 U.S. 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 U.S. 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 U.S. 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 run-up 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 U.S. 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.
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Nobody should ever say that it was a good call, but it was the only one a U.S. President was likely to make in 1945. The decision to drop an atomic bomb on Hiroshima on Aug. 6, 80 years ago, was the almost-inevitable outcome of Japanese intransigence and of the technical success of the Manhattan Project, which brought into being nuclear weapons. The anniversary is generating a wave of commemorations and renewing the arguments for and against the mission of Col. Paul Tibbets to drop Little Boy from his B-29, named Enola Gay, over Japan on that summer morning. In the 21st century, many brand the bombing a war crime — maybe the worst of all those committed in World War II save the Holocaust. I disagree. Some 20 years ago, I wrote a book about the 1944-1945 battle for Japan for which I spent months poring over the Hiroshima controversy. 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There is a myth that commands support among a modest faction of modern historians that in August 1945 the Japanese were ready to quit. This is untrue. The Tokyo leadership, dominated by the military, certainly wanted an out. But they sought terms such as no U.S. government would entertain. They wished to maintain Japanese hegemony over Korea and Manchuria, to be spared from allied occupation and to be granted the right themselves to conduct any war crimes trials. Despite their catastrophic defeats in successive Pacific battles, the Tokyo war party believed Japan still held an important card — the capability to savage an invasion of the mainland, inflicting casualties that the squeamish Americans would find unacceptable. The Japanese looked forward to wreaking carnage among allied troops landing on Japanese beaches. There is another, uglier aspect of the story. This derives from technological determinism — the extent to which the bomb-dropping commitment was finally made because the weapons existed, that they had been bought and paid for. An especially repugnant conversation took place in July 1945, when the Hungarian-born scientist Leo Szilard trekked to the Spartanburg, South Carolina, home of Secretary of State James Byrnes, to argue passionately against using the weapon he had helped to create. Byrnes, disgusted by the impassioned outburst, responded with two remarks that reflect scant credit on him. First, he said that the U.S. Congress "would have plenty to say if $2 billion proved to have been expended on the Manhattan Project for no practical purpose.' He added that the bomb could even help to get Josef Stalin's legions out of Szilard's own country. The visitor walked back to Spartanburg station having accomplished nothing. Along with most of the scientists working on the Manhattan Project, he had for years been motivated by terror that Hitler might acquire a nuclear device ahead of the allies. They saw their own work as defensive. When Germany collapsed, and with it the threat of a Nazi bomb, it became abhorrent to consider its use. Their difficulty in making their case was that they were bound by intensive secrecy and could not speak out. Truman had assumed the presidency on April 12, 1945, ignorant of the program. When he was briefed that the U.S. would, within weeks, probably possess the most terrible weapon in history, nobody invited him to make any great decision. It was taken for granted that if the Japanese were still fighting when the bomb program achieved consummation, the U.S. would use its progeny to force Tokyo's surrender. Some people to this day assert that Americans would never have employed the bomb against Europeans. This is almost certainly untrue. The German generals who claimed that, if Hitler had followed their advice, they could have kept the European war going for months longer, ignored the near certainty that in such circumstances, the first nuclear weapon would have fallen on Berlin. As it was, even after Hiroshima most of the Japanese leadership persisted in resisting surrender. Their obduracy provided an excuse for the far less defensible detonation of the second bomb, Fat Man, on Nagasaki because there was a desire to test its technology. Nonetheless the decisive factor in the belated Japanese surrender, conveyed to the Americans on Aug. 14, was the Russian declaration of war on Japan and invasion of Manchuria. Stalin had known of the American nuclear program through his agents in the West but was devastated by news of Hiroshima because he worried Tokyo would quit immediately, denying him the excuse for belligerency and seizure of the territorial prizes he had been promised. As it was, on Aug. 9, the Red Army launched its assault and secured Stalin's booty. Many of the Western critics who today denounce the bombs are essentially arguing that the U.S. should have saved the Japanese people from the madness of their own leaders. Yet in the sixth year of a horrific global struggle that had desensitized all its participants in various degrees, this was asking too much. I believe Truman would have a stronger moral case in the eyes of posterity had the U.S. given an explicit public warning to Japan if they kept fighting. In July 1945, the allies did threaten dire consequences but failed to specify what these would be. Moreover, there seems a good argument that Hiroshima and Nagasaki have done much to preserve mankind ever since. The mushroom cloud, the ghastly images of the horrors of nuclear warfare, leave no room for doubt that if any nation resorts to such weapons, we are doomed. Even the world's vilest dictators recognize this. It is right that we continue to commemorate the anniversaries of Hiroshima and Nagasaki, pivotal and dreadful moments in the history of humankind. But responsibility for them should rest with the Japanese leaders who launched their country into a war of aggression that cost countless lives. We should be thankful that billions of today's people, though familiar with little history, at least know what happened on those August days 80 years ago, and thus recognize that a repetition would augur an end of everything. Max Hastings is a Bloomberg Opinion columnist. His histories include "Inferno: The World At War, 1939-1945," "Vietnam: An Epic Tragedy 1945-1975" and "Abyss: The Cuban Missile Crisis 1962."
