August 13, 2025

President Donald Trump shook the economic world by firing the head of the Bureau of Labor Statistics (BLS) because he didn't like the July jobs report—calling it “rigged.” But guess what? Federal Reserve officials see that very July data as real proof the economy is slowing down! Fed Governor Michelle Bowman, who was appointed by Trump, said in a recent speech, "The latest employment report confirmed some of the signs of fragility and reduced dynamism in the labor market." She worried that waiting too long to act could make things worse, saying, "I see the risk that a delay in taking action could result in a deterioration in labor market conditions and a further slowing in economic growth." This slowdown suits Trump's wish for the Fed to lower interest rates, which he hopes would ease the costs of the country's growing debt. However, this also baffles Trump’s claims that his tax cuts, immigration policies, and trade plans are pushing the economy ahead. Policymakers, who recently worried about inflation going up, now see less lively job growth from May to July and are shifting their game plans. Only two Trump appointees—Bowman and Christopher Waller—want immediate rate cuts, but traders are betting over 85% that the Fed will cut rates at the next meeting on September 16-17. New BLS data showed consumer prices grew 2.7% in July compared to last year, the same as June, helped by cheaper gas and food at home. But core inflation, which ignores unpredictable food and energy prices, jumped from 2.9% to 3.1%, driven by costs in medical care, airline travel, furniture, and used cars, possibly due to tariffs. This kept investors hopeful about Fed rate cuts in September and December. Despite its recent issues, BLS has strong internal checks to keep data honest, and the Fed uses many other sources to cross-check and confirm economic conditions. St. Louis Fed President Alberto Musalem explained, “We try to validate what the different data sets are saying, make sure they are telling the same story.” He added the Fed also connects directly with companies and families nationwide, giving them a “very strong impressionistic view of the economy.” The Fed doesn't rely only on BLS figures. Private data sources have grown fast, tracking real-time shopping, prices, jobs, and hiring through online sites and smartphones. Groups like the Institute for Supply Management and the University of Michigan provide insights on inflation and hiring trends, while the Fed’s Beige Book offers stories straight from business leaders. Minneapolis Fed President Neel Kashkari told CNBC last week he doubts anyone could fake numbers at BLS. He said, "You cannot fake economic reality... Imagine that numbers are being faked for anybody's political benefit. People are going to see what they feel. Companies are either going to be hiring or they're not, and so Americans are going to see the economy. Convincing them that inflation is not real is not a very effective strategy. Convincing somebody that the jobs numbers are better than they really are, I don't think it's actually going to work." Meanwhile, Trump’s choice for new BLS commissioner, E.J. Antoni from the Heritage Foundation, is being watched closely. His role will be key as BLS data influences interest rates, stock prices, and political futures. The stakes couldn’t be higher!

Read More at Economictimes →

Tags: Bureau of labor statistics, Federal reserve, Employment report, Interest rate cuts, Donald trump, Inflation,