Would Trump Have Fired Bureau Of Labor Statistics Commissioner If Jobs Report Were Revised Upward?

Forbes Breaking News

On "What's Moving Your Money with Spencer Hakimian," Spencer responded to President Trump firing Dr. Erika McEntarfer, the Bureau of Labor Statistics Commissioner.

Transcript

00:00The big news on Friday was that after the labor report came out and it was a pretty soft jobs

00:05report, Trump decided to fire Dr. Erica McTarfer who was a civil servant that was serving on

00:13the BLS. Now this is a really insignificant job. I pretty much assume that almost none of you have

00:20heard of this woman's name up until yesterday. And while they do very noble and very important work,

00:27this is not someone that can easily put her or his hands on the scale and move things. This is a

00:34very nonpartisan, very bland statistical reporting job. It's not front cover news ever. You rarely

00:41hear about them. You don't know who's working under them. And their job is simply to report

00:46the revisions. Now Trump fired her seemingly on the premise that in recent months and years,

00:54there has been an increasing size of revisions to this data. And given the fact that there are all

01:00these revisions, this is somebody that is worthy of being relieved of her duties because she is

01:06simply not performing her job. And look, to an extent, I agree with Trump's logic here. I've been

01:12sounding the horn about how off government published job data was relative to just, let's say, the ADP,

01:21which is a private payroll report that comes out. Or if you look at CPI versus truflation,

01:27you've got a similar outlook. Again, CPI is also published by the DLS. But could you imagine if this

01:34report came out and it was positively revised upward, aka if they originally thought jobs were 150,000

01:42and jobs ended up actually being 300,000? You think Trump would be firing this woman? I don't think so.

01:48Let me know what you think. By the way, I don't think Biden didn't fire anyone. But again,

01:54so when you want to protect the integrity of the data, I appreciate that argument. But that argument

02:00has to work both ways. You can't just pretend you want to protect the integrity of the data

02:05when data is revised to the downside. So look, that's what I've been thinking about this lately.

02:12And just as a general thought, I think he's got the right idea here. But I think his motives are

02:18quite nefarious. And I think he's doing this only because he is negatively impacting himself.

02:25Now let's go to the second order effect, because this is frankly more important.

02:29It is strongly assumed that the next commissioner of the BLS is going to be someone that Trump handpicks.

02:36And we can reasonably assume with that handpick, there is going to become an expectation that

02:42more positive data has to be shown about the economy with this administration.

02:48They have to massage the data. They're going to have to tweak the data. They're going to have to,

02:52you know, squeeze the data. They're going to have to put their fingers on the scale in terms of

02:57the weights they put on this data, whatever they have to do. They're going to have to do something

03:01to make this data look a little bit better for the current administration, for the Trump

03:07administration. Now, there is essentially no precedence for this in the United States of

03:14nonpartisan data becoming just so clouded by partisanship and by clear motives to make something

03:22appear like what it's not. I'm sure you guys can all get where I'm trying to get at with this.

03:26But we do have some 21st century examples of when countries try to either make their employment

03:33numbers look better or their inflation numbers look better or their GDP look better or their

03:40national debt look less extended than it actually was. And in every single instance, it ended in

03:48disaster, utter, outright, unquestioned disaster. Let's get into some of these things.

03:54In the mid-2010s, Argentina was dealing with a massive inflation crisis and they began firing

04:01anyone that was reporting inflation on behalf of the government that was showing true numbers.

04:07And what ended up happening was not only did the private sector not believe the new government

04:14numbers that supposedly showed inflation improving, but because it was assumed that there was so much

04:20lying and so much monkey business and all these numbers, bond yields in Argentina actually rose in

04:26excess of what they should have risen given that inflation because frankly, no one could have trusted

04:32them. You can look also at a country like Egypt. They also had a currency problem stemming from

04:39inflation and they did a similar thing. They made their inflation data appear much better than it actually was.

04:50And what ended up happening is that so much of the contracts in Egypt have an inflation kicker given to them

04:58every single year to match inflation. So what ended up happening was that people on retirement plans, on pensions in

05:05Egypt, ended up collecting less than they really should have because inflation was being underreported and it led to a

05:12recession because people's purchasing power was falling in real terms because the government was underreporting

05:18inflation. Now, Argentina and Egypt are, you know, not stable economies relative to the United States, but we can even look at

05:26China for a very fascinating example here. In China for years, they overreported GDP growth and underreported debt

05:34growth. And what ended up becoming the final effect of all of that, all of that fluff, all of that exaggeration, they got the

05:43biggest property crisis in their history that came out of this. Developers were under the premise that population and

05:52growth was much higher than it was. At the same time, loans were extended that shouldn't have been extended because

05:58banks appeared to be less leveraged than they really were. And at the end, the market finally caught on in 2021 and

06:042022 and figured it out. And China is paying a significant price for that dishonesty. So look, this might not happen in the

06:13United States, but it's clearly the trend that we're going in, right? We can always change it, but it's clearly the trend that

06:19we're going in. And history shows you don't gain much from doing this because frankly, market participants, the

06:27private sector is too smart and they'll see through the lies and they'll punish the government for those

06:32lies in the form of higher borrowing costs, lower economic growth, less investment, less growth all

06:39around. Now, one other thing that's really alarming is since we got an initiative in the United States

06:46government to become more efficient and to lay off non-critical employees, some sectors, some places

06:54like the BLS have had to cut back on their data collection. So the inflation report that comes out

07:00monthly, the CPI that the BLS collects, it went from 95% pure data collection and 5% estimation at the end of

07:11last year to just at July 4th of this year, it is down to 66% actual data collection and 33% estimates.

07:20One third of inflation right now is being estimated. I'm not kidding. Go on my Twitter, go on my TikTok,

07:27go on my YouTube page, go on the Forbes videos that we posted before we talked about this.

07:32One third of CPI is now being estimated. That is not an accurate way of measuring CPI. I always talk

07:39myself about how I just don't see how inflation is 2.5%. I live a life. I have housing costs. I have

07:47food costs. I have health insurance costs. I have child care costs. All my costs are rising significantly

07:54higher than 2.5% year over year. I want you guys to comment in your personal lives. What is the inflation

08:00rate that you are actually experiencing? Almost no one that I talk to is experiencing 2-3% inflation.

08:05Personally, the people I'm talking to are experiencing between 5% and 10% annual inflation. 5%, 6%, 7%,

08:12sometimes up to 10%, some people more, some people a little bit less. But I want to know what you

08:17guys are seeing in terms of all of this.

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