Social Security Retirees Just Got Bad News From President Donald Trump
President Trump imposed a hiring freeze across federal agencies that has hindered the Bureau of Labor Statistics' (BLS) ability to track inflation.
Questionable inflation data raises concerns about whether Social Security's 2026 cost-of-living adjustment (COLA) will be accurate.
President Trump's firing of BLS Commissioner Erika McEntarfer threatens to politicize the independent agency and further erode confidence in inflation data.
The $23,760 Social Security bonus most retirees completely overlook ›
President Trump promised on several occasions to protect Social Security, Medicare, and Medicaid during his campaign last year. He has not overtly broken his promise not to cut Social Security benefits, but his federal hiring freeze and decision to fire Bureau of Labor Statistics Commissioner Dr. Erika McEntarfer could still hurt retirees and other beneficiaries.
Read on to learn more.
President Trump's federal hiring freeze threatens the integrity of data needed for Social Security's 2026 COLA
President Trump instituted a federal hiring freeze after his inauguration on January 20. The freeze has twice been extended and is currently effective until October 15. Importantly, while it does not directly hurt Social Security beneficiaries, it has forced the Bureau of Labor Statistics (BLS) to use a less accurate guesswork to track inflation, according to The Wall Street Journal.
That matters because inflation data gathered between July and September will be used to calculate Social Security's cost-of-living adjustment (COLA) for 2026. Should that data underestimate true inflation, benefits would lose buying power next year because the COLA would be too small. Of course, it is equally possible the data overestimates inflation, in which case benefits would gain purchasing power because the COLA would be too large.
Nevertheless, questionable inflation data will make the 2026 COLA suspect, and the timing is particularly bad. The Senior Citizens League, a nonprofit advocacy group, estimates 20% of Social Security's buying power has been stripped by insufficient COLAs since 2010. Additionally, most retired workers think the last two COLAs were too small, according to research from The Motley Fool.
President Trump's decision to fire the BLS commissioner could further undermine data integrity
President Trump ousted BLS Commissioner Erika McEntarfer on Friday, August 1, when the agency not only published dismal employment numbers for July, but also downwardly revised estimates from May and June. Details are provided below:
Nonfarm payrolls increased 73,000 in July, well short of the consensus estimate that said employment would increase by 110,000 workers.
Nonfarm payrolls were originally reported to have increased 147,000 in June, but that figure was revised down to 14,000 workers.
Nonfarm payrolls were originally reported to have increased 144,000 in May, but that figure was revised down to 19,000 workers.
Importantly, downward revisions to nonfarm payroll numbers are common because the survey results used to tabulate employment continue to roll in for several months after the initial report. But the magnitude of the latest downward revision was the largest since 2020 and second largest since 1980.
Trump, without offering any evidence, insinuated the downward revisions were a politically motivated attack. He promptly told his team to fire Commissioner McEntarfer, much to the dismay of many economists. Her predecessor, Trump-appointee William Beach, called the decision "totally groundless." He also said it "sets a dangerous precedent and undermines the statistical mission of the Bureau."
Many economists have echoed that opinion, noting that Trump himself is probably responsible for weak employment numbers because of radical changes in U.S. trade policy. The stop-and-start tariffs imposed throughout the year have created uncertainty across corporate America, and it makes little sense to hire more employees during periods of elevated economic uncertainty.
Regardless, Trump's decision to fire McEntarfer (seemingly because he did not like the latest employment data) raises a critical question: Will Americans trust nonfarm payrolls data in the future, or will they question its integrity because Trump is attempting to politicize an independent agency?
By extension, that question also applies to the other data for which the BLS is responsible, including inflation data used to calculate Social Security's COLAs. Put differently, while the firing of McEntarfer will not directly hurt retirees, it could further undermine confidence in inflation data published by the BLS. That is bad news for Social Security beneficiaries.
The $23,760 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known could help ensure a boost in your retirement income.
One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these strategies.The Motley Fool has a disclosure policy.
Social Security Retirees Just Got Bad News From President Donald Trump was originally published by The Motley Fool
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
22 minutes ago
- Yahoo
Ty J. Young Wealth Management Launches "The Official Guide to Selling Your Annuity Business" to Support Growing Acquisition Strategy
ATLANTA, Aug. 4, 2025 /PRNewswire/ -- Ty J. Young Wealth Management, a leading wealth management firm, today announced the release of its new ebook, "The Official Guide to Selling Your Annuity Business" This comprehensive guide is designed to provide financial advisory firms with essential insights for successfully navigating the sale of their business. As a rapidly growing wealth management practice, Ty J. Young Wealth Management has successfully acquired 41 businesses as its footprint has expanded across the United States. The new book leverages that extensive experience, offering a detailed roadmap for owners considering their exit strategy. "As a leading wealth management firm, we are continuously seeking opportunities to expand who we can serve," said Ty J. Young, CEO of Ty J. Young Wealth Management. "We developed 'The Official Guide to Selling Your Annuity Business' not only as a resource for the industry but also as a direct reflection of our commitment to actively acquiring more advisory companies. Our goal is to empower business owners with the knowledge they need, whether they choose to partner with us or pursue other paths." "The Official Guide to Selling Your Annuity Business" is available for immediate download at About Ty J. Young Wealth Management Ty J. Young Wealth Management, established in 1998, is a leading independent wealth management firm committed to providing comprehensive financial solutions. With over $1 billion in assets under management and serving clients nationwide, the firm is renowned for its expertise in investment management, retirement planning, and insurance. Ty Young and the firm's strategists are frequently sought after for their insights, appearing in prominent media outlets such as CNBC, Forbes, and Fox Business. Discover how Ty J. Young Wealth Management can help you achieve your financial goals at: View original content: SOURCE Ty J. Young Wealth Management
Yahoo
22 minutes ago
- Yahoo
AMD & Pfizer earnings, ISM services data: What to Watch
Market Domination Overtime host Josh Lipton takes a look at the top stories for investors to watch on Tuesday, Aug. 5. In the morning, Caterpillar (CAT) and Pfizer (PFE) will announce earnings results. Advanced Micro Devices (AMD), Amgen (AMGN), Snap (SNAP), and Rivian (RIVN) will announce results in the afternoon. In the morning, Institute for Supply Management (ISM) services data for July will be released. To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime. Time now for what to watch Tuesday, August 5th. Gonna start off on the earnings front. Big names reporting on Tuesday, including Pfizer and AMD. Pfizer announced results for the second quarter in the morning. Pharmaceutical company's drug pipeline in focus for investors with some key patents expiring in the coming years. Pfizer trying to offset that loss with a $7.2 billion cost cutting plan. The company says it has a pipeline of new drugs coming, but data on how effective those will be remains to be seen. And moving over to AMD, the semiconductor company reporting second quarter earnings after the market's closed on Tuesday, and was expecting the company to post strong results for Q2, driven by its ramp up of AI chips, which could significantly boost revenue, especially if export restrictions to China ease. And taking a look at the economy, monthly ISM services data for July coming out on Tuesday. Cons forecasting that number rise to 51.5, signaling that the service sector is growing and there's steady demand from consumers and businesses.
Yahoo
22 minutes ago
- Yahoo
How reliable is the jobs data? Economists and Wall Street still trust it
WASHINGTON (AP) — The monthly jobs report is already closely-watched on Wall Street and in Washington but has taken on a new importance after President Donald Trump on Friday fired the official who oversees it. Trump claimed that June's employment figures were 'RIGGED' to make him and other Republicans 'look bad.' Yet he provided no evidence and even the official Trump had appointed in his first term to oversee the report, William Beach, condemned the firing of Erika McEntarfer, the director of the Bureau of Labor Statistics appointed by former President Joe Biden. The firing followed Friday's jobs report that showed hiring was weak in July and had come to nearly a standstill in May and June, right after Trump rolled out sweeping tariffs. Economists and Wall Street investors have long considered the job figures reliable, with share prices and bond yields often reacting sharply when they are released. Yet Friday's revisions were unusually large — the largest, outside of a recession, in five decades. And the surveys used to compile the report are facing challenges from declining response rates, particularly since COVID, as fewer companies complete the surveys. Nonetheless, that hasn't led most economists to doubt them. 'The bottom line for me is, I wouldn't take the low collection rate as any evidence that the numbers are less reliable,' Omair Sharif, founder and chief economist at Inflation Insights, a consulting firm, said. Many academics, statisticians and economists have warned for some time that declining budgets were straining the government's ability to gather economic data. There were several government commissions studying ways to improve things like survey response rates, but the Trump administration disbanded them earlier this year. Heather Boushey, a top economic adviser in the Biden White House, noted that without Trump's firing of McEntarfer, there would be more focus on last week's data, which points to a slowing economy. 'We're having this conversation about made-up issues to distract us from what the data is showing," Boushey said. 'Revisions of this magnitude in a negative direction may indicate bad things to come for the labor market.' Here are some things to know about the jobs report: Economists and Wall Street trust the data Most economists say that the Bureau of Labor Statistics is a nonpolitical agency staffed by people obsessed with getting the numbers right. The only political appointee is the commissioner, who doesn't see the data until it's finalized, two days before it is issued to the public. Erica Groshen, the BLS commissioner from 2013 to 2017, said she suggested different language in the report to "liven it up", but was shot down. She was told that if asked to describe a cup as half-empty or half-full, BLS says 'it is an eight ounce cup with four ounces of liquid.' The revised jobs data that has attracted Trump's ire is actually more in line with other figures than before the revision. For example, payroll processor ADP uses data from its millions of clients to calculate its own jobs report, and it showed a sharp hiring slowdown in May and June that is closer to the revised BLS data. Trump and his White House have a long track record of celebrating the jobs numbers — when they are good. These are the figures is Trump attacking Trump has focused on the revisions to the May and June data, which on Friday were revised lower, with job gains in May reduced to 19,000 from 144,000, and for June to just 14,000 from 147,000. Every month's jobs data is revised in the following two months. Trump also repeated a largely inaccurate attack from the campaign about an annual revision last August, which reduced total employment in the United States by 818,000, or about 0.5%. The government also revises employment figures every year. Trump charged the annual revision was released before the 2024 presidential election to 'boost' Vice President Kamala Harris's "chances of Victory," yet it was two months before the election and widely reported at the time that the revision lowered hiring during the Biden-Harris administration and pointed to a weaker economy. Here's why the government revises the data The monthly revisions occur because many companies that respond to the government's surveys send their data in late, or correct the figures they've already submitted. The proportion of companies sending in their data later has risen in the past decade. Every year, the BLS does an additional revision based on actual job counts that are derived from state unemployment insurance records. Those figures cover 95% of U.S. businesses and aren't derived from a survey but are not available in real time. These are the factors that cause revisions Figuring out how many new jobs have been added or lost each month is more complicated than it may sound. For example, if one person takes a second job, should you focus on the number of jobs, which has increased, or the number of employed people, which hasn't? (The government measures both: The unemployment rate is based on how many people either have or don't have jobs, while the number of jobs added or lost is counted separately). Each month, the government surveys about 121,000 businesses and government agencies at over 630,000 locations — including multiple locations for the same business — covering about one-third of all workers. Still, the government also has to make estimates: What if a company goes out of business? It likely won't fill out any forms showing the jobs lost. And what about new businesses? They can take a while to get on the government's radar. The BLS seeks to capture these trends by estimating their impact on employment. Those estimates can be wrong, of course, until they are fixed by the annual revisions. The revisions are often larger around turning points in the economy. For example, when the economy is growing, there may be more startups than the government expects, so revisions will be higher. If the economy is slowing or slipping into a recession, the revisions may be larger on the downside. Here's why the May and June revisions may have been so large Ernie Tedeschi, an economic adviser to the Biden administration, points to the current dynamics of the labor market: Both hiring and firing have sharply declined, and fewer Americans are quitting their jobs to take other work. As a result, most of the job gains or losses each month are probably occurring at new companies, or those going out of business. And those are the ones the government uses models to estimate, which can make them more volatile. Groshen also points out that since the pandemic there has been a surge of new start-up companies, after many Americans lost their jobs or sought more independence. Yet they may not have created as many jobs as startups did pre-COVID, which throws off the government's models. Revisions seem to be getting bigger The revisions to May and June's job totals, which reduced hiring by a total of 258,000, were the largest — outside recessions — since 1967, according to economists at Goldman Sachs. Kevin Hassett, Trump's top economic adviser, went on NBC's 'Meet the Press' on Sunday and said, 'What we've seen over the last few years is massive revisions to the jobs numbers.' Hassett blamed a sharp drop in response rates to the government's surveys during and after the pandemic: 'When COVID happened, because response rates went down a lot, then revision rates skyrocketed.' Yet calculations by Tedeschi show that while revisions spiked after the pandemic, they have since declined and are much smaller than in the 1960s and 1970s. Other concerns about the government's data Many economists and statisticians have sounded the alarm about things like declining response rates for years. A decade ago, about 60% of companies surveyed by BLS responded. Now, only about 40% do. The decline has been an international phenomenon, particularly since COVID. The United Kingdom has even suspended publication of an official unemployment rate because of falling responses. And earlier this year the BLS said that it was cutting back on its collection of inflation data because of the Trump administration's hiring freeze, raising concerns about the robustness of price data just as economists are trying to gauge the impact of tariffs on inflation. U.S. government statistical agencies have seen an inflation-adjusted 16% drop in funding since 2009, according to a July report from the American Statistical Association. 'We are at an inflection point,' the report said. 'To meet current and future challenges requires thoughtful, well-planned investment ... In contrast, what we have observed is uncoordinated and unplanned reductions with no visible plan for the future. Christopher Rugaber, The Associated Press Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
