The US economy is huge and like anything huge, it has a lot of inertia which makes it slow to respond to external forces. Since Trump has come into office, he has made sweeping and reckless economic moves that are not based on reality-based analyses but more on his pet theories, revenge against perceived wrongs, and sheer capriciousness, all designed to satisfy his need to be a bully. The tariffs have been his primary vehicle for the last feature and it has thrown global markets and trade relationships into turmoil. It was inevitable that this would lead to negative impacts on the economy but until this month, those consequences had not manifested themselves.
The July jobs report may be the first indicator. What was alarming was not the numbers for July itself but the steep downward revisions for May and June, which reduced the job growth to almost zero, usually a sign of an impending recession. Trump has responded angrily, as usual denying any fact that shows him in a bad light, claiming that the numbers were rigged against him, and firing Erika McEntarfer, the commissioner of the Bureau of Labor Statistics (BLS).
Needless to say, this has alarmed pretty much everyone outside the Trump cult because whatever crackpot economic theory you may be using, you still need accurate data to make decisions. If you appoint someone who will only give you numbers you want to hear, you enter a very vicious spiral indeed. Trump’s team has fanned out with a media blitz to try and minimize the damage of the jobs report but pretty much everyone in the reality-based world is alarmed by these moves, including some Republicans.
Senior Republican lawmakers are condemning the decision of their party leader, Donald Trump, to fire the leading US labor market statistician after a report that showed the national economy added just 73,000 jobs – far fewer than expected – in July.
The disappointing figures – coupled with a downward revision of the two previous months amounting to 258,000 fewer jobs and data showing that economic output and consumer spending slowed in the first half of the year – point to an overall economic deterioration in the US.
…But the firing of McEntarfer, who had been confirmed to her role in January 2024 during Joe Biden’s presidency, has alarmed members of Trump’s own party.
“If the president is firing the statistician because he doesn’t like the numbers but they are accurate, then that’s a problem,” said Wyoming Republican senator Cynthia Lummis. “It’s not the statistician’s fault if the numbers are accurate and that they’re not what the president had hoped for.”
…William Beach, a former BLS commissioner appointed by Trump in his first presidency, posted on X that McEntarfer’s firing was “totally groundless”. He added that the dismissal set a dangerous precedent and undermined the BLS’s statistical mission.
Beach also co-signed a letter by “the Friends of the Bureau of Labor Statistics” that went further, accusing Trump of seeking to blame someone for bad news and calling the rationale for McEntarfer’s firing “without merit”.
The letter asserted that the dismissal “undermines the credibility of federal economic statistics that are a cornerstone of intelligent economic decision-making by businesses, families and policymakers”.
The letter pointed out that the jobs tabulation process “is decentralized by design to avoid opportunities for interference”, adding that US official statistics “are the gold standard globally”.
“When leaders of other nations have politicized economic data, it has destroyed public trust in all official statistics and in government science,” the letter said.
The Trump cult point to the downward revision of the May and June numbers as signs that these numbers are unreliable. But that is sheer willful ignorance of how the system works. The reality is that at 8:30 am on the first Friday of every month, the BLS releases the jobs numbers for the previous month. How does it get that number so quickly? By surveying 629,000 businesses nationwide. This is a huge number and not all businesses will respond in time. The BLS will continue to accept late survey results as they come in and this results in modified numbers the following months. But that commonplace working out of using updated data to update conclusions is being portrayed as some kind of devious manipulation. That is so stupid. If the BLS people wanted to release manipulated results, they could just as easily have done it the first time. Why wait until later?
John Cassidy was not surprised by the dismal jobs report.
Given all the uncertainty created by the chaotic rollout of Trump’s new tariff regime, it’s hardly surprising that employers have been thinking twice about hiring workers. The official employment report for June, which was released a month ago, showed weakness in many private-sector industries, but the over-all scale of the slowdown wasn’t clear until the July report came out, on Friday. Leaving aside seasonal farm labor, employers created seventy-three thousand new positions last month, a smaller number than Wall Street was expecting. But the real shocker came in the revised estimates for May and June, which showed that job growth fell to below twenty thousand in each month. That amounts to a virtual standstill. Taking the last three months as a whole, employment growth has been weaker than in any comparable period since the covid-19 pandemic.
Trump’s initial response to the jobs report was to renew his attacks on the Federal Reserve, and its chair, Jerome Powell, for not acceding to his demands for a cut in interest rates. “Powell is a disaster,” he wrote on Truth Social immediately after the job figures were released. Later in the day, again on Truth Social, Trump announced that he was firing the commissioner of the Bureau of Labor Statistics, which produces the monthly employment report. In another post, he sought to justify this unprecedented step by claiming that the July job figures had been rigged to make him and other Republicans look bad.
…The reality is that the B.L.S. is staffed by statisticians and other data experts, many of them career public servants, who go to great lengths to produce accurate figures. Even by his standards, Trump’s effort to find a scapegoat was pretty pathetic. As for the Fed, which held its benchmark interest rate steady at a policy meeting earlier this week, it isn’t responsible for the fact that many firms are responding to Trump’s tariffs by holding off on hiring and starting to raise their prices. Another economic report released this week showed the rate of inflation, as captured by the Fed’s preferred metric, edged up to 2.6 per cent in June, from 2.4 per cent in May. That means inflation is still above the Fed’s two-per-cent target, and it points to a possible return of stagflation, in which price rises accelerate at the same time that the economy stagnates.
…As Americans wait nervously to see whether this is the future awaiting them, many people in other countries are coming to terms with a world in which the U.S. government has transitioned from acting as the principal guarantor of an open trading system to operating what is essentially a global protection racket.
Actually, if Trump had any sense. he would not have been so quick to slam the BLS. Because Trump is also mad at the head of the Federal Reserve Jerome Powell because Powell has not acquiesced to his demand to lower interest rates in order to boost the economy and make him look good. But the Fed has two mandates. One it to keep inflation in check (their informal goal is 2%) and the other is is try and obtain full employment. The current inflation rate of 2.6% and edging upwards means that lowering interest rates is unlikely. But poor job growth numbers may result in the unemployment rate rising sharply in the near future, putting pressure on the Fed to reduce interest rates to stimulate growth. But what we currently have is stagflation: economic stagnation with inflation, which puts the Fed in a bind as to which to treat as a priority.
What Trump would like is to have everyone in important data-dependent positions be people who disregard data and objective analyses and will simply do what he tells them to. What he does not seem to realize is that the reality-based numbers people are the lug nuts that keep the wheels of government on. They are unobtrusive and hence they are often ignored and overlooked when they are doing their job. Getting rid of them would be the quickest way of having the wheels come off and having things go completely out of control.
As they say, reality bites.
Thom Hartmann has an interesting take on how 2025 might turn out like 1929 (or 1857, or 1772).
The latest Canadian export numbers were released the other day. Due to US tariffs, Canadian exports to the US are down by 16%. However total exports to the world are up by 1% so I guess we are having success in finding other tariff-free markets to sell our goods to.
Meanwhile Canadian shoppers are still boycotting US products whenever possible. My local supermarket tags the shelves showing which products are Canadian made, but they also put a black dot on the shelf tag for American made products to help you avoid buying them by accident.
a black spot, you say?
The Trump regime is attacking the US economy from multiple directions.
The major one right now are the tariffs.
.1. They ended up very high, roughly 15% overall.
They haven’t been this high since the Smoot-Hawley tariffs of the early 1930s.
Those tariffs didn’t cause the Great Depression but they did make it worse.
They were quickly repealed by Roosevelt.
.2.
The tariffs are a sales tax on the US people.
They will hit the poor the hardest, the middle class as well, while the rich will barely notice them.
The GOP is also destroying the social safety net including Food Stamps (SNAP) and Medicaid.
The net result is a war on the poor who are already struggling.
.3.
We already had trade agreements with the rest of the world, trade agreement treaties ratified by the US congress.
Trump just ran over those agreements like they didn’t exist.
I’m sure he had no idea that they even existed and wouldn’t have cared anyway.
It turns out they are unenforceable.
So, who in the rest of the world is ever going to trust a US treaty again?
I’m sure the US economy will take a hit.
The US economy is already showing signs of this and it is early in the game.
It remains to be seen just how far we are going to fall.
re raven @4:
Why should anyone have EVER trusted a US treaty? Ask the Native Americans.
Because in the past the US was governed by adults who lived in the real world. Don’t get me wrong, I’m not claiming they had honour, or integrity, or even particularly high intelligence or competence. But from a low start, there really has been a very noticeable step downwards in all of those metrics in the last seven months. It’s almost as if there’s a career conman with dementia in charge, surrounded entirely, no exceptions, by unprincipled grifters who are using him to line their pockets.
Yes, pre-Trump, and especially post-WWI to pre-Trump, the U.S. generally tried to at least have the appearance of keeping up with treaties… though that was already starting to break down again by Reagan’s time as the religious right was starting to make serious inroads and a lot of treaties didn’t get signed because they were obviously the work of the incipient ‘one world government’ which would result in Satan taking over. (Such as the U.N. treaty on the treatment of the disabled, which was heavily based on the existing Americans with Disabilities Act, so signing it would have changed pretty much nothing in U.S. law, but because it was now an international treaty it was regarded with suspicion.)
A lot of these economic agreements go back to Nixon’s time, and the active plan to prevent China from going completely isolationist by entangling them in the international trade networks. And that’s now just getting all thrown away.