President Donald Trump’s recent firing of Bureau of Labor Statistics Commissioner Erika McEntarfer had many wondering aloud whether future jobs data would still be objective and accurate. Less reliable data, whether real or perceived, would make it harder for business leaders to predict where their organizations are headed and make strategic decisions, experts told CFO Brew.
Trump’s nomination of EJ Antoni, chief economist of the conservative Heritage Foundation, as his next BLS chief didn’t seem to do much to quiet those concerns.
Antoni is a “longtime critic” of how the agency has handled employment data, the Wall Street Journal reported. He can expect some stiff questioning over how he’ll handle any results that may anger Trump, according to Axios, which also noted that economists “worry that Trump aims to politicize the agency.” Antoni also recently suggested the BLS should stop posting its monthly jobs report “until it is corrected.”
Economists were already concerned with Trump’s claims that the BLS rigged jobs numbers to make him look bad. With Antoni potentially leading the bureau, “I think things have the potential to get even hairier,” Abigail Hall, an economics professor at the University of Tampa, told CFO Brew.
Antoni’s criticisms of the BLS “ring some alarm bells with economists who work with this data,” Hall said. Economists may start to question the accuracy of future jobs reports and worry what changes the bureau will make to its research methods, she added.
But what does the BLS chaos mean for CFOs? Experts told CFO Brew that all the commotion going on at BLS is just one more contributor to the overall uncertainty organizations are contending with this year.
Alexander Bant, chief of CFO research at Gartner, likened the uncertainty CFOs must face to trying to land a plane during some less-than-desirable flight conditions. As an indicator, the jobs numbers are like the plane’s altitude, because of how important they are in business decision-making.
“If that indicator is wrong, [CFOs] will slam into the runway,” Bant told us. “If they are not forecasting demand correctly, if they’re not forecasting cash correctly, if they’re not working through their supply chains and their inventories and understanding the inputs to demand, their altitude will be off.”
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Businesses will have a harder time making decisions when they’re not certain the data they’re using is accurate, according to Hall. Combined with other factors (see: tariffs) contributing to an uncertain global economy, “it makes it really difficult for people to make medium-term and long-term plans, and that is fundamentally detrimental to economic growth,” she said. “Because what do you do when you don’t know what’s coming, or you don’t have good…information? You adopt a wait-and-see approach.”
An economy doesn’t grow if organizations adopt a holding pattern, Hall continued. “At best, you wind up with a kind of stagnation, and then certainly at worst, you wind up with bad decision-making.”
The problem runs deeper than the headlines. There’s an inherent challenge around real-time surveys that goes beyond the immediate BLS upheaval.
Gartner isn’t advising clients about the merits of replacing the bureau’s chief, Bant said. Rather, it’s discussing with them the difficulty of relying on real-time data to make forecasts and set organizational strategy—especially when there have been significant revisions to employment numbers recently.
“When there’s as large of revisions as there have been in the last couple of months, I think CFOs welcome an opportunity to present data that is more in line with the actual indicator that they need,” he said.
Indeed, the response rate to BLS’s monthly jobs survey has dropped to under 45% since the Covid-19 pandemic, relative to approximately 60% in the previous 10 years, according to a letter from the Federal Reserve Bank of San Francisco. A lower response rate means initial analyses are less accurate “and subject to larger revisions, which would compound the challenges policymakers face in assessing the current state of the economy,” San Francisco Fed researchers wrote.
The problem isn’t unique to BLS surveys, according to Bant. It’s becoming harder to collect survey info in real time and on a recurring basis “across all data and research services in the market,” he said.