The US Department of Labor is conducting an investigation into a significant downward revision of employment numbers. The Federal Reserve: Data independence is crucial.

The U.S. Department of Labor announced that it will launch an investigation into recent changes in data processing at the Bureau of Labor Statistics (BLS). This move comes at a time when there is increasing concern from the public about the reliability of government economic data, sparking wide attention from the market and political circles. The Office of the Inspector General of the Department of Labor stated in a letter released on Wednesday that the BLS recently made two highly notable decisions. One was to reduce the data collection work for two key inflation reports, and the other was to announce a significant downward revision of employment data on Tuesday. These changes directly affect the economic data foundation that the market and policymakers heavily rely on. The Inspector General's office said that the investigation will focus on the "challenges faced by the BLS in collecting and publishing key economic data." The BLS is responsible for collecting and publishing several core economic indicators covering employment, inflation, and more, with its data traditionally considered as the standard by the market, businesses, and the government. However, this significant revision has caused shock in the market and raised concerns about the existence of political interference behind the data. The background of the investigation cannot avoid a major personnel decision made by President Trump last month. Trump dismissed the former director of the BLS and nominated E.J. Antoni, an economist from the far-right think tank "Traditional Foundation," to take over. Many economists criticized this move as "politicizing the BLS" and undermining the agency's long-standing tradition of independence. For a long time, the BLS has been relatively immune to interference from past administrations; as a relatively independent statistical agency, it provides objective data for policies and markets. However, with recent signs of a slowdown in the U.S. economy, Trump has become increasingly dissatisfied with the Federal Reserve's policies and has shifted blame towards the BLS, accusing its data of being manipulated. These actions are seen by the public as a part of Trump's efforts to expand his influence over economic decision-making bodies. Shortly before Trump announced the dismissal of the BLS director, the Department of Labor had just released a weaker-than-expected employment report, which became the catalyst for the recent events. Trump's camp claimed that the report data had been manipulated, but critics argue that these accusations lack evidence. In response to public concerns, Federal Reserve Chairman Powell publicly stated that federal statistical agencies play a vital role in policy-making. He said, "Government data is the real standard. We need this data to be of high quality and trustworthy." Powell also emphasized the importance of protecting statistical independence. Trump and some critics have focused their accusations on the BLS's regular revisions of data. However, economists generally believe that this is a long-standing and necessary process, as short-term economic data collection itself is complex and uncertain. For example, the significant downward revision of employment data in this case falls under the BLS's routine benchmark adjustment process. At the same time, the challenges facing the BLS are increasing. Due to budget pressures and declining survey response rates, data collection work is becoming more difficult. The BLS has previously explained that the reduction in the inflation data survey was a necessary decision made due to limited existing budgets. Recent research studies have found that despite declining response rates, it has not significantly reduced the reliability of employment and inflation reports. Mainstream economists point out that although the recent downward revision of employment data is significant, it still falls within the normal range of fluctuations.