US Economy

Trump will get to pick the head of agency that delivers 'phony' jobs report

Jobs report leads market to price out rate hike
Jobs report leads market to price out rate hike

Yes, the latest Labor Department report on jobs was strong, but should you believe the numbers?

President Donald Trump has repeatedly railed against the reliability of the government's monthly tally of job growth and unemployment, at one point dismissing it as "90 percent fiction." Now, he will have the authority to name the head of the agency that calculates the data.

The Bureau of Labor Statistics functions as an independent agency within the broader Department of Labor. It is staffed with 2,500 career civil servants who are responsible for compiling and publishing data on everything from prices to wages to workplace injuries. That's critical for the bureau to maintain the thoroughness and objectivity that have made it the gold standard of data for economists since its creation in 1884.

Only the director of the agency is a presidential appointee. Directors serve four-year terms that typically span administrations, a move intended to blunt any accusations of political interference.

Erica Groshen, commissioner at the U.S. Bureau of Labor Statistics
David Paul Morris | Bloomberg | Getty Images

But this time is different. The most recent BLS director, Erica Groshen, was nominated in 2012 but not confirmed until the next year. As a result, her term ended Jan. 27. And that means Trump will be able to nominate a replacement whose tenure will coincide with his time in the White House.

Some liberal economists are already ringing alarm bells at the prospect.

"There is certainly reason to worry that Trump, like [President] Nixon, might bring about the demotion of officials whom he feels are not on his team and replace them with political loyalists, which itself would cast doubt on the objectivity of published statistics," former senior Obama advisor Gene Sperling wrote in The Atlantic. "Even more likely is the possibility that he would undermine the credibility of these agencies by publicly attacking their officials or telling the public to ignore their statistical findings."

A White House spokeswoman said Friday that the administration respects the independence of BLS, but emphasized that it wants the numbers "to be as accurate and reflective of economic conditions as possible." White House Press Secretary Sean Spicer recently said that Trump looks at a broad array of numbers beyond the commonly cited figures for the unemployment rate and job growth.

"He's not focused on statistics as much as he is on whether or not the American people are doing better as a whole," Spicer said.

No administration since former President Richard Nixon has attempted to meddle with the data. In addition, several safeguards have been put in place since then: The BLS is required to report any interference to the Office of Management and Budget. The White House has signed onto directives asserting the independence of statistical agencies. There are also international standards for the collection and publication of economic data.

White House officials "have not done anything to interfere with the independence of the BLS so far," Groshen said. "I want to recognize that and appreciate that."

Still, Groshen emphasized that the biggest danger facing BLS is a lack of funding. The agency was hard hit by federal spending cuts in recent years, forcing it to stop collecting certain data and constraining its ability to upgrade its current systems, she said.

"That I think is a clear and present danger," Groshen said.

Some conservatives believe it is unlikely that Trump would massage the numbers, despite the skeptical rhetoric he deployed on the campaign trail. Michael Strain, director of economic policy studies at the American Enterprise Institute, said that more important will be how the White House uses the data to push its policy goals.

"I'm not concerned that the president will have any impact on the data," he said. "I am concerned about how the president might react to the data release."

There is little to dislike in the latest batch of numbers: The economy added 227,000 jobs in January, while the unemployment rate nudged up to 4.8 percent amid a growing workforce. The data is typically collected in the middle of the month, making it the final reading of the Obama administration.

Trump has pledged to surpass the previous president's record and create 25 million new jobs over the next four years. There has been no word from the White House on whom they will pick to helm the statistical agency. But whether Trump succeeds or not, it will be up to BLS to provide the country with his scorecard.

Hatzius: Momentum in the economy pre-dates the election
Hatzius: Momentum in the economy pre-dates the election