Senior Trump calls for dismissal of top Labor official following July's sluggish job market improvement
In a significant development, Adriana Kugler, a renowned labor economist, is set to return to Georgetown University as a professor this fall, having resigned from her role as a Federal Reserve governor.
The U.S. labor market experienced a significant weakening in the late spring and early summer, according to a report from the Labor Department. This period saw a decrease in factory employment by 11,000 jobs in July, an increase in the unemployment rate to 4.2%, and job gains for May and June being largely erased in the revised report.
Concerns about the integrity of U.S. government statistics under the Trump administration have been mounting. The administration's tendency to discredit or interfere with unfavorable data, particularly labor market statistics, has undermined public trust and the reliability of economic information. President Trump repeatedly rejected jobs reports that showed poor economic performance, firing the official in charge of the data after a downward revision of new jobs figures and labeling such reports as "phony" or inaccurate.
This pattern of dismissing or altering unfavorable data extended beyond labor statistics to other areas, such as limiting COVID-19 testing to understate the pandemic’s severity, indicating a broader strategy to manage information to political ends. Experts warn that this approach threatens the democratic system and economic health by suppressing honest analysis, eroding public trust, and potentially causing flawed policy decisions based on distorted or mistrusted data.
The undermining of the Bureau of Labor Statistics (BLS), a key agency that compiles and revises employment data through a rigorous, well-established process balancing timeliness and accuracy, risks reducing confidence in the employment data crucial for decisions by consumers, businesses, and policymakers. The firing of the BLS head was widely seen by experts, including a former Trump-appointed commissioner, as unjustified and harmful to the agency’s mission of providing unbiased, high-quality labor statistics.
President Trump also expressed baseless claims about the jobs numbers on social media, suggesting they were rigged to make him look bad. The federal government shed 12,000 jobs in July, and tens of thousands of additional federal workers have taken buyouts but are still counted as employed through the end of September.
In a positive note, health care was one of the few sectors with solid job growth last month. Wages continue to climb, with an average increase of 3.9% from the previous year in July. However, the weakness in the job market is likely to amplify calls for the Federal Reserve to lower interest rates at its next policy meeting in September.
The share of adults who are working or looking for work has decreased by half a percent in the last year, and the unemployment rate rose in July, even as nearly 40,000 people dropped out of the workforce. The share of immigrants in the workforce has fallen sharply.
Domestic manufacturers have been affected by uncertainty over import taxes. The federal government has been charging a 10% tax on nearly everything imported since April, with higher tariffs set to take effect on many goods next week. President Trump announced a new round of tariffs on a wide range of countries.
In the midst of these challenges, the Fed's seven-person governing board will have a new member, as Adriana Kugler, who has served as Fed governor for just under two years, is stepping down next week. Her departure comes as the U.S. labor market grapples with the fallout from the Trump administration's policies and the ongoing pandemic.
- The resignation of Adriana Kugler, a Federal Reserve governor, sets her up to return to Georgetown University as a professor this fall, following concerns about the integrity of U.S. government statistics under the Trump administration.
- In the late spring and early summer, the U.S. labor market experienced a significant weakening, with a decrease in factory employment, an increase in the unemployment rate, and job gains for May and June being largely erased.
- President Trump repeatedly rejected jobs reports that showed poor economic performance, firing the official in charge of the data after a downward revision of new jobs figures and labeling such reports as "phony" or inaccurate.
- Experts warn that the administration's tendency to discredit or interfere with unfavorable data extends beyond labor statistics and threatens the democratic system and economic health by suppressing honest analysis and eroding public trust.
- The Federal Reserve may lower interest rates at its next policy meeting in September due to the weakness in the job market, which could potentially stimulate growth in the economy and the stock market.
- Domestic manufacturers have been affected by uncertainty over import taxes, with the federal government charging a 10% tax on nearly everything imported since April, and a new round of tariffs on a wide range of countries announced by President Trump.
- The ongoing challenges in the labor market and the economy, including the fallout from the Trump administration's policies and the ongoing pandemic, will continue to be a focus of economic analysis and general-news reporting as a new member joins the Federal Reserve's seven-person governing board.
