'Concerning news': Wall Street worries Trump's BLS firing could shake market confidence
In a note to clients titled "Concerning news from the BLS," JPMorgan chief US economist Michael Feroli wrote that the removal of the agency's commissioner creates "risks to the conduct of monetary policy, to financial stability, and to the economic outlook."
"The risk of politicizing the data collection process should not be overlooked," Feroli wrote. "To borrow from the soft-landing analogy, having a flawed instrument panel can be just as dangerous as having an obediently partisan pilot."
The firing came just hours after the BLS released the July jobs report, which showed more than a quarter million fewer jobs were added to the economy in May and June than initially thought. In a Truth Social post on Friday, Trump wrote that "we need accurate numbers" and the numbers "must be fair and accurate."
On Monday morning, Trump continued posting on social media about the matter, writing, "last weeks Job's Report was RIGGED." Trump has maintained a stance that the revisions done prior to the 2024 presidential election were made to make the US economy look better under then-President Biden.
While last Friday's jobs revisions were "larger than normal," per the BLS, the act of revising data once more information collected is a standard operating procedure for the agency.
For Wall Street, the chief concern with Trump's rhetoric is his calling into question the accuracy of key economic data that typically drives the Federal Reserve's monetary policy decision making and is closely tracked by investors for a read on the health of the US economy.
"The US public statistics represent the gold standard," Renaissance Macro head of economics Neil Dutta wrote in a note to clients after the firing on Aug. 1. "Calling them into question just because they tell you something you don't like undercuts market confidence."
Barclays chairman of research Ajay Rajadhyaksha pointed out in a note to clients on Monday that a US president hasn't attempted to fire an active head of the BLS since President Nixon was in office 50 years ago. Recent examples of statisticians being fired because the heads of government disliked the data include cases in Greece and Argentina.
"This move could lead to markets questioning data integrity, especially for releases that surprise investors," Rajadhyaksha wrote.
Trump's firing of McEntarfer at the BLS came the same day Federal Reserve governor Adriana Kugler said she will resign from the central bank's Board of Governors, effective Aug. 8. Trump is expected to appoint a new Fed official and a BLS commissioner in the coming days.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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