President Donald Trump dismissed the head of the Bureau of Labor Statistics (BLS) after rejecting July’s employment figures as “rigged,” but Federal Reserve officials are treating the same data as a warning sign of a slowing economy and a reason to cut interest rates.
“The latest employment report confirmed some of the signs of fragility and reduced dynamism in the labor market,” said Fed Governor Michelle Bowman, a Trump appointee, in a Saturday speech. She warned that delaying action could worsen job conditions and slow growth further.
The jobs data, along with downward revisions to previous months, has shifted the conversation at the Fed. While policymakers were recently focused on inflation risks, signs of weaker job growth in May, June and July are now pushing them toward a more cautious outlook. Bowman and fellow Trump appointee Christopher Waller have called for immediate rate cuts, dissenting from last month’s decision to keep rates steady. Investors now see more than an 85% chance of a cut at the September 16–17 meeting.
New BLS figures on Tuesday showed consumer prices rose 2.7% in July from a year earlier, unchanged from June, as lower gasoline and grocery costs kept overall inflation in check. Core inflation, which excludes food and energy, climbed to 3.1% from 2.9%, driven by higher service costs such as medical care and airline tickets, along with goods like furniture and used cars that may be affected by tariffs. Markets maintained bets on cuts in both September and December following the report.
On Monday night, Trump appointed E.J. Antoni, chief economist at the Heritage Foundation, as the new BLS commissioner. The move will be closely watched given the agency’s role in producing data that can sway interest rates, stock markets and political momentum.
Fed officials stressed they rely on a range of information, not just BLS statistics. St. Louis Fed President Alberto Musalem said the central bank cross-checks government data with private sources and direct feedback from businesses and households. “We try to validate what the different data sets are saying, make sure they are telling the same story,” he said.
Private-sector data on hiring, consumer activity and prices, along with surveys from groups like the Institute for Supply Management and the University of Michigan, offer additional insight. State-level unemployment claims and the BLS’s quarterly wage census serve as further checks on monthly reports.
Minneapolis Fed President Neel Kashkari said any attempt to skew economic figures would fail. “You cannot fake economic reality,” he told CNBC. “Companies are either going to be hiring or they’re not, and so Americans are going to see the economy.”
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