Trump Ousts BLS Chief. What It Means for Investors.

President Donald Trump, unhappy with the latest payrolls figures, fired BLS Commissioner Erika McEntarfer. (Photo by Andrew Harnik/Getty Images)

President Donald Trump’s firing of a top official at the Bureau of Labor Statistics following Friday’s dismal jobs report poses new questions for investors about how federal economic data will be viewed going forward, Capital Alpha Partners said in a note Friday.

“It would be unprecedented in recent history for investors in U.S. markets to doubt the integrity of the data they use to make investment decisions,” managing partner Ian Katz wrote Friday evening. “So there are serious implications here.”

Trump’s decision to fire BLS Commissioner Erika McEntarfer unfolded after the agency released July jobs numbers and issued large revisions for May and June, lowering payroll gains by a combined 258,000 in those two months—the biggest such revision since the early days of the Covid-19 pandemic during spring 2020.

The stock market wasn’t happy. The S&P 500 dropped 1.2% following the release as investors started to question the strength of the economy.

Neither was the president. On his Truth Social platform, Trump called for McEntarfer’s dismissal, referring to her appointment by President Joe Biden and saying jobs numbers “can’t be manipulated for political purposes.”

“In my opinion, today’s Jobs Numbers were RIGGED in order to make the Republicans, and ME, look bad,” Trump said in another social media post Friday.

McEntarfer was confirmed to her role by a bipartisan Senate vote last year.

Katz, at Capital Alpha Partners, noted the revisions to May and June numbers “were unusually negative and surprising.” Still, he said, “investors both in the U.S. and abroad, and the business community, have always treated the numbers as honest.”

While Trump has questioned federal employment data in the past, Katz wrote, the decision to fire McEntarfer “is by far the most dramatic move Trump has made to act on those views.”

How investors will respond remains to be seen, Katz said. Under one scenario, “the notion that economic data may be manipulated for political reasons would undermine confidence in that data,” he wrote.

But if BLS continues to operate in “business-as-usual mode” under McEntarfer’s successor, “her firing might not have major implications for investors,” Katz said.

For now, agency Deputy Commissioner William Wiatrowski is serving as acting commissioner. “Trump’s decision on whom to nominate for the job will be very consequential,” wrote Katz.

As the Trump administration looks for a replacement at BLS, the White House now also has a chance to fill a seat on the Federal Reserve Board of Governors, months ahead of schedule.

Fed governor Adriana Kugler, whose term was set to expire in January, is resigning effective Aug. 8, the board announced Friday.

Kugler’s departure comes as Trump puts public pressure on Fed Chair Jerome Powell to lower interest rates. Powell’s term as chair expires in May.

“We have long expected that Chair Powell’s replacement as Chair would first be appointed to fill Governor Kugler’s seat, once her term was over,” UBS economist Amanda Wilcox said in a note Saturday.

The early exit by Kugler “will move the search for the next Chair into overdrive,” Wilcox said, and could “lead to additional tension” on the Federal Open Market Committee.

Write to Catherine Dunn at catherine.dunn@dowjones.com