Odd Lots - Bill Beach on How Trump Just Politicized US Economic Data

Episode Date: August 4, 2025

Late last week, Donald Trump shocked Wall Street by firing Erika McEntarfer, the head of the Bureau of Labor Statistics, the agency responsible for publishing some of America's most important economic data. The firing came after the BLS released a weaker than expected jobs report for July, with just 73,000 new jobs added for the month (compared to forecasts for 103,000). The bureau also revised jobs numbers for the prior two months down by nearly 260,000 jobs. Trump called the data "rigged." But why does the BLS make these revisions, and what does the firing of the BLS chief mean for anyone trying to gauge the direction of the US economy? In this episode, we speak to Bill Beach, a former BLS chief, about the latest drama in US economic statistics. Read more:Trump to Name New Fed Governor, BLS Head in Coming DaysS&P 500 Bounces 1% After Weak Jobs Data Stokes Rate-Cut Optimism Only Bloomberg - Business News, Stock Markets, Finance, Breaking & World News subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at  bloomberg.com/subscriptions/oddlotsSee omnystudio.com/listener for privacy information.

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slash audio. That's vanguard.com slash audio. All investing is subject to risk vanguard marketing Corporation distributor. Thinking about buying the right home, but not sure when. What if you had the right design, the right lot and finishes at the right price? Not someday, but right now. Register at Democrat Homes.com and get everything you want right now. Bloomberg Audio Studios, Podcasts, Radio News. Hello and welcome to another episode of the Odd Thoughts podcast. I'm Tracy Allaway. And I'm Joe Wisenthal. Joe, I kind of missed this on Friday. because I was not feeling very well, so I was out sick. But what was Friday morning like when you were sat in front of your Bloomberg terminal?

Well, the jobs report was pretty shocking, obvious. Friday was just a crazy day. Yeah. So the jobs report obviously was bad. I mean, the last two months massively revised down, all of this evidence of labor market momentum perhaps seems to be stalling. The tariff effect, maybe we really are and it's sort of some sort of tariff-induced slowdown. The only job creation is in health care and social service. Not great. Right. Okay. So I saw the initial jobs report headlines. So we had non-farm payrolls coming in at plus $73,000, which I think was like 30% lower than the average expectation.

We had the unemployment rate taking up to like 4.3%. 4.2. 4. Almost 4.3%. Oh, let me, sorry. I'm rounding up here. Okay, okay, okay. Although maybe I shouldn't do that on a podcast all about labor markets. statistics. But the big thing that seemed to catch everyone's attention was we also had these

massive revisions to the report for May and June. So we had a combined 258,000 jobs basically lowered from the initial reports. And this was like the biggest revision since the depths of the pandemic. And then the headline that really caught my eye while I was, you know, laying in my sick bed on Friday afternoon, was Trump firing the head of the Bureau of Labor statistics, so the agency responsible for putting out the non-farm payroll report every month. Yeah, this is, I would say, the key thing is that, A, we've been used to these, you know, seeing significant revisions. We've been talking, you in particular, have been writing a lot in the newsletter about deteriorating quality of labor statistics. Response rates to a lot of surveys have gone down over time, kind of like we're seeing in political opinion surveys and so forth.

So there's already been this sort of anxiety. you have a lot of people online, including President Trump himself, who have been like stoking sort of these conspiracy theories about these revisions, these attempts to actually be transparent. And then you get the first sort of like genuinely negative report under this administration. It's the first one that was like, okay, this was bad. And boom, Trump fires the person responsible for it. Now again, this is one of those things where sort of like Doge itself where it's like, I like the idea of government efficiency, right? Yeah, sure, Doge. I like the idea of the BLS sort of doing a better job in some way or addressing these responses. But like Doge, which, you know, we all have seen how that's turned out, I think there are a lot of more than a lot of questions, more than a lot of questions about whether firing the BLS and replacing the head with someone who's, you know, a Trump appointee will, you know, add a more credible, transparent data quality. Right. One thing that we have learned from all our episodes on data collection.

in the U.S. is that it is actually a really, really insanely labor-intensive thing to do. You have to actually call up a bunch of people, homeowners, for instance, or you have to call up a bunch of businesses and ask questions. You have to go out into the field and gather individual prices. And we can have a debate over whether or not you could maybe use new technology, price scanning data, to make all of that more efficient. But for the time being, that's how it's done. And so you need people to do it. And if Doge comes in and eliminates, you know, a big chunk of the budget, then it becomes harder to do. Or if it just gets more costly and the budget's gone up.

And then the one thing I would say is that in our conversations, and again, you have talked to the BLS many times, they're really good. They're professionals. And they take it very serious. They're very responsive. However, we could talk about this a little bit, perhaps less responsive than they used to be in recent weeks. So anyway, we should talk about all of this.

I think it's really important. And as you said, there are big questions, like what happens if a President Ouse, a BLS chief, and then introduces a new one. We have the perfect guest, someone we've spoken to before about the decline of America's data infrastructure. We're going to be speaking with Bill Beach. He is, of course, the former commissioner of labor statistics, former head of the BLS. So, Bill, thank you so much for coming back on all thoughts. Yeah, it's just really a pleasure to be back with you. I wish we were talking about some other subject besides this termination. I mean, it's just really shocked. Well, on that note,

Friday Trump tweets or posts that he wants to fire Erica McEnterfer, the Commissioner of Labor Statistics. What was going through your mind when you saw that news? I was dumbcast. I just finished a luncheon meeting at a very nice restaurant and I was sitting in my pickup truck and I just couldn't believe. And then I sat there for probably 30, 40 minutes car running and answering emails, people just sorting it out. It isn't that he didn't have the authority to do so. he does have the authority. We all, you know, everyone in the executive branch serves the pleasure of the president, except those that have been specifically exempted by statute and where that statute has been signed

by the president. I think what was shocking about this is not that she was dismissed. That's shocking enough. It was the possibility that we could have now a sustained attack on official economic statistics, and that would undermine confidence in those statistics and put us in a path that other countries have followed. I mean, instantly people went to worst case. After a while, that sort of settled down and we began to look at the reasons for the dismissal, which I then subsequently said on Twitter or X that were they were unfounded.

And I haven't dropped that position since. So I'm happy to talk about it. Well, why don't we just back up for a second. We talked to you before because you've been sounding the alarm about the capacity constraints to collect good data. But just for people who haven't listened to or haven't followed you, You were a Trump appointee. I mean, you served at the head of the BLS in 2017. And so I do, you know, and so I was like, okay, your credibility. Why do you just give us a little bit of background about who you are, your position, and the concerns that you've been raising for some time about the

constraints at the BLS? So I was really honored to be the commissioner of labor statistics from 2019 until 2023. So I served a little less than two years under President Trump. He nominated me. It is a presidential nomination, Senate-confirmed positions. It has a statutory four-year term. And then I served the rest of my term under President Biden, so I was in both terms. I think that's kind of important because the BLS commissioner has been exempt from the normal turning over of the presidency by party. And that's because the view is, well, these data are so important. They should not even be a part of the political appointment process.

except when they come due. Sort of like, you know, the Federal Reserve Chair or something of that nature. It's just seen as we want to keep it out of politics. So I served over that period of time, you know, that was the COVID period. So there were all kinds of real challenges from that. But I think the main thing that I drew from that period is how important it is crucial, almost we're at a crisis level to modernize the way we collect data. The response rates on the surveys are falling dramatically.

I've made that point on this program. And our costs are rising dramatically, which makes it really difficult to conduct those surveys in the future and the way we have in the past. And then the future is kind of going in the direction of the employment survey. And I just said surveys are falling, but the employment survey is a little different. It's not an in-person survey. It is an electronic survey. And we need to invest more in the electronic side of statistical creation or production, blended data, et cetera. I could do a whole program on this, but your point was well made.

BLS has had some challenges in front of it, as has the entire statistical system. Unfortunately, for this particular episode, those challenges were really not, I don't say, relevant. They're relevant, of course, but they're really not the reason why we should have had a change at the top. Well, speaking of the employment report, talk to us about what exactly happens when the BLS is publishing the initial non-farm payrolls, And then what happens, you know, in the couple months or so before it publishes the revision? And why does it seem we are getting these large gaps, at least in recent months and years? Right. So the employment survey, the jobs numbers, come from a survey of businesses.

The unemployment rate comes from a survey of households. So there's two surveys involved in every first Friday report. What we're talking about now is the survey that goes out to businesses. and it goes out to hundreds of thousands of businesses. Well, of course, there's still a probability sample since there's well in excess of 12 million businesses in our census of business, our business register. Well, those businesses are supposed to turn their surveys in at the end of the month, basically, but only about 68%.

Usually that's the average. Do so, and so BLS keeps the window open for two more months. So 68% or so at the end of the first month, they make the first estimate. Then at the end of the second month, we'd get about 83% completion, and they revise that number of the first month. And then by the third month, we're into the 90s. Usually end up around 93, 94% of all the sent out returns come back to us with information. So it's a wonderful survey. The revisions are done because we get more information from businesses.

oftentimes big businesses answer first. They have the capacity to do so, and then we get smaller entities, state and local governments, smaller businesses answer in those next two months. We always have revisions. There's, I can't admit, even when we say the number did not change. It doesn't mean we didn't have revisions. They just canceled each other out. There's just all these revisions are coming in. The revisions have been high recently, but this is not a typical of a period where, when the economy is either going back to growth or going down to subsidence. So oftentimes turning points in the economy are accompanied by changes, larger changes in the revisions, particularly in this case where we suspect smaller businesses are feeling the effects of the supply shock coming from the tariff policy and from immigration, and that these supply shocks are affecting smaller businesses more than they are larger businesses, and state and local governments are being affected by yet another factor, and that is the expiration of the COVID-era money, I think that was actually the root of a lot of the changes that you saw on Friday, state and local governments are not

able to hire at the levels they were going to hire at in previous years, or did hire at in previous years because they did not have the subsidies that they had in previous years. So these are important revisions. Actually, the research shows, and this may shock you, that BLS is getting much better at its first estimate than it was 30 years ago. In fact, it's really kind of almost a steady progress towards greater accuracy. So the big revisions are indicative of not error. They're indicative of more information. And the bigger the revisions, the more likely we are in a turning point. There's so much that was in that answer that I found to be very helpful and clarifying. So thank you. I mean, just this idea, you know,

A, that actually over time, contrary to what people on Twitter might think, that the quality of that first pass has actually gone up is very striking. You know, let's stipulate that, okay, the BLS could use some upgrading. As you mentioned, that there are these capacity constraints, non-response, the cost of going out. Maybe it needs to adopt more technology in some way to solve for this. Does the BLS currently have that capacity either budgetary-wise or statutory authority such that a commissioner could just do that? Whatever it is, that ideal state, or would it need either some sort of budgetary allocation or an act of Congress to get to the point where it's, you know, getting to the level that we're happy with again? It has the authority to make the changes. It doesn't have the budget to do so.

And it isn't that BLS just needs more money, right? Matter of fact, I think Congress, if it paid more attention, would say, well, what are you spending your money on now? And let's make sure that the low priority is canceled so that we can support the high priority. I think BLS would be very happy with that. But we do need more money. And why? Well, if you're going to change an official statistic, the unemployment rate, let's just take that. You want to be really careful, right?

You want to run tests. You want to test out your new idea. You don't want to have a, you know, count the number. of geese in the air and that's the unemployment rate, you want to make sure that that is a particularly good indicator of the employment market. And you want to test it in real time, as well as experimental time, you in real time. So run it parallel. Well, these tests expand the costs of your unemployment statistics program because you're running essentially two systems simultaneously. We think that to modify the current population survey, which is the survey of

households would cost around 15 million to 20 million in experimental costs over a two-year period. It's not great. The program itself costs about $45 million a year, but it does add to the cost for those two years or so. Congress could easily do that. I mean, oh my gosh, Congress is spending a lot more money than that on things that we might disagree with, but they need to allocate a little bit of money to CPS for that. Does it have the authority? Here's a really interesting story. During COVID, we canceled all travel, all conferences, and I was surprised at how many millions of dollars went into travel and conferences and meetings. So this became, for me, couch money during the COVID years, and I was able to spend that money on important things, I thought. So I did a lot of things

like I built a new data center to get us out of the basement of a 104-year-old building and out to a wonderful above-ground local location. But I also started a number of of research programs. I made 31 big modifications to the CPI. We started a whole new approach on looking at consumer expenditures, and I subsidized some experimentation on the jobs report. Well, as soon as COVID was over, we started to get congressionally mandated programs that then sucked up all that couch money. If we had a little bit of extra, we, I mean, BLS, a little bit of a little bit of extra to do these things. Let's just think of the innovation that way that would happen. I think we would quickly be out of the problems that we are facing from a methodological standpoint,

and that might then reduce the political pressure that we saw that was so evident on Friday. So we are recording this August 4th, 925 a.m. in the morning and 33 seconds. I feel like I need to be that specific nowadays with the news flow. So who knows what happens between now and when this episode actually comes out, but we are expecting the administration to announce a new BLS head in the coming days. What happens now? You know, there's a Trump appointee for a new statistics commissioner after the president has specifically stated that he thinks the previous commissioner was politically motivated in some way. Are people still going to believe the numbers that are coming out? And how do think that's actually going to play internally at the BLS, at an organization whose whole, you know,

raison dutch is to find, you know, factual numbers and statistics to portray the American economy? Well, I think there has been damage, and it will take time to recover from that damage. The last time there was a serious political effort on BLS was during the Nixon administration. And it took some time for BLS to recover from that. the action taken by the president at that time vis-a-vis BLS was not, I think, as significant as this one. So you just imagine that the president decides to, oh, no, no, appoint St. Peter, you know, as the new BLS commissioner. And of course, St. Peter has a reputation for honesty and for clarity of thought. Still, it'll be the case because St. Peter won't have any control over the way that the data are collected or the data are assembled or the estimates that are done.

and that's all done outside of the knowledge of the commissioner. Commissioner has no control over that. In fact, you're locked out of that whole process. So it will be the case that St. Peter will have a month come when the unemployment rate will be disappointingly low, could even be negative. But I think given what has just happened, people will say, well, St. Peter probably influenced that number, and it's not as bad as it really is. So for a while, that suspicion that the estimate that's announced is really not the real estimate

will be in the minds of some people, not in my mind, because I know that these people who work there, the professionals, the full-time staff, the patriots that work there, the loyal Americans who are just extremely diligent in doing an absolutely objective job, those people are still in place. But if you don't have my level of knowledge or a reasonable level of knowledge of how, internally BLS works, you're going to be subject to these falsehoods and accusations, and that will be damaging, that will reduce investment, that will reduce economic activity, that will make, at least that will create greater uncertainty about what's happening inside the U.S. economy.

Policymakers will be less clear in the direction that they take. So there will be a time when we need to recover, no matter who's appointed. I hope that it will be a short-lived time. My guess is, given the reputation of BLS, if someone really reputable is appointed, then, yeah, I don't think the period of transition will be that long. All right. Well, Bill Beach, really appreciate you coming back on the show. Thank you so much for being on all thoughts. Thanks, Bill.

That was great. Thank you very much for asking. Joe, so good to get Bill back on to talk about this. Really the perfect guest. There are so many, I guess, ironies involved in this whole conversation. The big one, of course, is this idea that, like, well, if Trump wants to convince everyone that the U.S. economy is doing fantastic and job growth is great, then firing the head of statistics and having everyone distrust, you know, the subsequent numbers, because the subsequent head might be a political appointee who's, you know, a loyalist to Trump, it seems like you're sort of shooting yourself in the foot. The other huge contradiction is that he says Powell is too late. Yeah.

Right. This is the other huge contradiction, which is every day he slams Powell. He's like, oh, you're too late. You need to cut rates. Well, if the job numbers were weak, then I could understand this argument to some extent. Oh, the job. But he's also casting aspersions on the negative jobs numbers. So how is Powell too late? I mean, this is, it's an irretrievable contradiction in the two criticisms, both of the Fed and the BLS. It's definitely a contradiction. I don't think, however, that Trump necessarily draws a direct connection between the unemployment. rate and interest rates. Well, that's also, you know, he seems to just like low interest rates. And he seems to be perceived that low interest rates are basically a reward for an improving economy. But, yes. But, I mean, lots of other contradictions. You're absolutely right.

So another one is this idea that, okay, a lot of the weakness came through on the revision side. The revisions are mostly coming from small businesses who reply late. And if you think about the Trump administration, you know, they always sort of portrayed themselves as a, a good business environment for smaller businesses. And it might be that that's an area that's seeing some weakness. I thought your question about sort of internal morale. And as Bill said, you know, an agency staffed with patriots. I mean, I just, you know, is BLS going to continue to be a destination for people who are patriots, right?

Or take their job seriously in the future is a really interesting question. Also, the idea that like maybe we could like get high data quality for like 20 million. million dollars, given how much that's worth, it's just like drives you crazy if that's really all it took. But also, I really like this idea that would have to always be done in parallel with the current thing, such that the new data is sort of provably backwards compatible with the old data, right? So if you're going to adopt a new methodology, you need some allocation to run two surveys at once, et cetera. Anyway, even in a very short conversation, learned a lot from Bill. Absolutely. I do think it's worth pointing out that there are other statistical

agencies in the world that are experimenting with new technology for data sources. The UK's Statistics Agency in particular, they're going to start using, you know, price scanning data for CPI. Wait, have you heard about the whole thing, though, with how they moved the O&S to Wales and no one wanted to go out there? Have you heard about this? I have. Wales is not that bad. Let's distribute the largesse of the government across. Everyone loves that idea. Let's not have it all be concentrated in London. They're like, okay, we're going to make everyone move to Wales and now it's a lot harder for the O&S to hire anyone. Anyway, it's just a little interesting story out. Maybe we'll cover it at some point. Why people don't want to move to Wales? No, I just think it's interesting, right?

Like, there's a, I intuitively, I love this idea of like, or why should all of the government spending on public sector stuff at the federal level be in the richest city in the UK, or why should it all be in D.C., etc. So this idea of, anyway, it's a separate thing. It's actually some interesting challenges arise from it. Okay. Shall we leave it there? Yeah, let's leave it there. This has been another episode of the Odd Lots Podcast. I'm Tracy Allaway. You can follow me at Tracy Allaway.

And I'm Joe Wisenthall. You can follow me at the stalwart. Follow our guest, William Beach. He's at Beach, WW453. Follow our producers, Carmen Rodriguez, at Carmen Armin, Dashel Bennett, at Dashbot, and Kale Brooks. For more Odd Lots content, go to Bloomberg.com. slash odd lots where we have a daily newsletter and all of our episodes. And you can chat about all of these topics 24-7 in our Discord. Discord.g. slash oddlots. And if you enjoy Oddlots, if you like it when we talk about the future of economic statistic collection in the U.S., then please leave us a positive review on your favorite. Or the UK. And please leave us a positive review on your favorite podcast

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