Trump dismisses American official following release of employment report
The US labor market is facing challenges as companies take a cautious approach to hiring and investment, with job creation levels significantly lower than recent years. July's job growth missed expectations and revisions to hiring figures in recent months have brought them to the weakest levels since the Covid-19 pandemic.
Heather Long, chief economist at the Navy Federal Credit Union, has dubbed the latest jobs report a "gamechanger." Notably, 75% of the jobs added in July were in the healthcare sector, indicating a potential shift in the job market. However, the economy needs certainty soon on tariffs to avoid a prolonged weak hiring environment, according to Long.
The slowdown in job growth is attributed to President Donald Trump's trade and immigration policies. Economists fear that the longer the tariff whiplash lasts, the more likely the weak hiring environment turns into layoffs. Trump ordered the reimposition of steeper tariffs on scores of economies, set to take effect in a week, adding to the uncertainty.
The employment data also reflects the impact of mass layoffs of federal government workers under the Trump administration. In 2025, over 120,000 federal employees were laid off or targeted for layoffs, significantly impacting agencies such as USAID and disrupting global humanitarian programs.
Claims of labor data manipulation under the Trump administration are less detailed in the provided sources. However, employment data showed a rising unemployment rate to 4.2% in July 2025 with a sharp drop in employment by nearly 700,000, reflecting economic difficulties potentially impacted by these federal workforce reductions and policy shifts.
The firing of Erika McEntarfer, the Commissioner of the Labor Department's Bureau of Labor Statistics, has sparked criticism. McEntarfer was nominated by former president Joe Biden and confirmed by the US Senate in 2023. Trump accused McEntarfer of faking the jobs numbers, but there is no evidence to back his claims. Critics argue that the firing sets a dangerous precedent and undermines the statistical mission of the bureau.
The National Association for Business Economics has condemned the dismissal of McEntarfer, attributing large revisions in jobs numbers to dwindling resources rather than manipulation. Commerce Secretary Howard Lutnick disbanded two expert committees that worked with the US government to produce economic statistics earlier this year.
Amidst these challenges, the Federal Reserve is monitoring the situation closely. A sharp weakening in the labor market could push the Fed toward cutting interest rates sooner to shore up the economy. However, both Fed Vice Chair for Supervision Michelle Bowman and Governor Christopher Waller have warned that standing pat risks further damaging the economy, adding that the inflationary effects of tariffs are temporary.
In historical context, while previous administrations have occasionally reorganized federal agencies or adjusted workforce sizes, the scale and aggressive nature of mass layoffs and program freezes under Trump mark a notable downturn in federal workforce stability and effectiveness. These actions have sparked protests from affected communities, including federal workers and allied groups.
References: 1. Economic Policy Journal 2. CNN 3. USA Today 4. The Washington Post 5. Bureau of Labor Statistics
Politicians and economists are voicing concerns about the potential impact of President Trump's policy-and-legislation on the US labor market, with the slowdown in job growth attributed to his trade and immigration policies. The employment data reflects the impact of mass layoffs of federal government workers, and claims of labor data manipulation under the Trump administration have sparked criticism.
The dismissal of Erika McEntarfer, the Commissioner of the Labor Department's Bureau of Labor Statistics, has raised questions about the independence of the statistical mission of the bureau and set a potentially dangerous precedent. Economists fear that the prolonged uncertainty from the tariff whiplash and weak hiring environment may worsen, leading to higher chances of layoffs.
