Stocks closed with losses Monday as Wall Street braces for the first federal inflation report released after President Trump ousted the head of the agency responsible for producing it.
The Dow Jones Industrial Average closed with a loss of 201 points, falling 0.5 percent Monday.
The S&P 500 index and Nasdaq composite each fell 0.3 percent.
The dip comes one day before the Bureau of Labor Statistics (BLS) is set to release the latest reading of the consumer price index (CPI), which is expected to show inflation rising in July.
Economists expect prices to have risen by 0.2 percent in July — 0.3 percent without food and energy included — to hit a core annual inflation rate of 3 percent, according to consensus estimates.
“The data, due tomorrow, probably will show that goods prices rose at an above-trend pace, albeit no faster than in June. Meanwhile, services prices likely increased moderately overall, boosted by a rebound in airline fares, partly offset by a fall in hospital services prices,” wrote Samuel Tombs and Oliver Allen of Pantheon Economics in a research note.
After winning the 2024 election with the promise to bring prices down, Trump is facing increasing backlash from voters and concerns from fellow Republicans as his tariffs keep up pressure on inflation.
Wall Street will pay close attention to the report and Trump’s reaction to it after the president’s explosive response to the July jobs report.
The federal jobs report for July showed the U.S. gaining just 73,000 jobs last month and included stunning revisions to the initially reported employment gains for May and June.
The net result showed the U.S. gaining barely more than 100,000 jobs over the past three months, roughly a third of what economists say is necessary to prevent unemployment from rising.
Trump responded by accusing the BLS — a nonpartisan agency of statisticians — of manipulating the jobs data to benefit Democrats, but he provided no evidence to support his claim.
The president also fired former BLS Commissioner Erika McEntarfer, sparking an outcry from her Democratic and Republican predecessors, along with scores of economists.
Despite Trump’s claims to the contrary, revisions to employment and inflation data are normal aspects of how the BLS maintains the most accurate data on the economy. The White House has also failed to show any evidence of political manipulation of data at the BLS, and economists say it would be nearly impossible to skew the jobs report in that manner.
“These numbers are put together by teams of literally hundreds of people following detailed procedures that are in manuals. There’s no conceivable way that the head of the BLS could have manipulated this number,” said former Treasury Secretary Larry Summers.
Any doubts about the credibility of U.S. jobs or inflation data could pose serious consequences for the country’s reputation and financial dominance.
“This is much more dangerous than the pressure on the Fed,” Cato Institute research fellow Jai Kedia told The Hill. “The labor and inflation statistics are the bedrock of every other federal institution that’s trying to work on the economy.”
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