Fire Lutnick!
By Dr. Harold A. Black
blackh@knoxfocus.com
haroldblackphd.com
The president fired the commissioner of the Bureau of Labor Statistics, Dr. Erika McEntarfer, turning her into a cause celebre. Pardon me, but that was not a very smart move. The initial job numbers released by the bureau are always overstated and have to be revised downward. This is due to the first numbers resulting from employer surveys. Those surveys have lousy response rates and are unreliable. That is why the numbers keep getting revised downward when the real figures come in. This year, the average revision downward has been 55,000 per month. In my opinion, Dr. McEntarfer should have been fired long before Trump did it for overseeing the production of such awful statistics during her tenure. Now, Trump got upset because the July jobs number was only 70,000. He had a hissy fit. But that number was only the job estimate. What was the real number? Most of the previous month’s job growth that Trump was so proud of was actually a bad number. Most were state and local government jobs, while the private sector job growth was negative.
So, Trump did a really dumb thing. Instead of firing her because of having to adjust downward each month the previous month’s numbers, he fired her because the initial estimate of July’s numbers was low. This is beyond stupid. Trump said on Truth Social: “I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY. She will be replaced with someone much more competent and qualified.” Mind you, she was confirmed by the Senate 86-9. Does that sound like a Biden lackey to you? Trump then said, “In my opinion, today’s Jobs Numbers were RIGGED in order to make the Republicans, and ME, look bad.” A group called the Friends of BLS (I am not kidding) then responded, “This rationale for firing Dr. McEntarfer is without merit and undermines the credibility of federal economic statistics that are a cornerstone of intelligent economic decision-making by businesses, families, and policymakers.” You think?
Actually, Trump should have fired Howard Lutnick, the commerce secretary, instead of Dr. McEntarfer, who was just the messenger. Lutnick played a bigger role. Back in February, he terminated two unpaid expert advisory committees on economic data. The committees were advising the administration on how to improve the reporting of statistical data. One was the Federal Economic Statistics Advisory Committee, which made recommendations on improving inflation and employment numbers and reporting on GDP (gross domestic product). The second group was the Bureau of Economic Analysis Advisory Committee, which consulted on labor statistics.
The committees were comprised of academics, private-sector economists, and data scientists focused on continually improving economic data produced by the BLS as well as the Commerce Department’s statistical agencies, the Census Bureau and the Bureau of Economic Analysis. Even if one may even argue that most were probably Democrats and hated Trump, it doesn’t explain the wildly inaccurate numbers under Biden. One expert said, “This will impact the quality of the data.” No kidding.
Now, with the firing of the advisory committees and McEntarfer, Trump’s critics have more ammunition to question any data reporting coming out of this administration. Several Democrat senators are asking if cutting back on cities surveyed for the CPI is an attempt to skew inflation numbers. The market realized that the initial numbers were estimates and knew that they would be revised. However, the media usually ran with the initial numbers and wrote the headlines. Seldom were the revisions reported with the same gusto. I doubt very seriously if any business decisions were made on these numbers. Now going forward, they will likely be ignored. Trump will now put into these positions his own people (re: political hacks) who, knowing that their jobs are on the line, will be motivated to report only data designed to keep their jobs. No one will believe any of these data.
Again, Dr. McEntarfer just reported the numbers and was fired. But Lutnick is mainly responsible in that he fired the advisory committees months before. What was that about chickens coming home to roost? Advice to Trump: Fire Lutnick!
