Trump Orders Firing of Statistics Head After Weak July Jobs Report

Summary

Podcast Summary: WSJ What’s News – "Trump Orders Firing of Statistics Head After Weak July Jobs Report"

Release Date: August 1, 2025

Introduction

In this episode of WSJ What’s News, hosted by Alex Otsola from The Wall Street Journal, the discussion centers around significant economic indicators, political decisions, and their impacts on the markets. The episode delves into President Trump's decision to fire the Bureau of Labor Statistics (BLS) commissioner following a disappointing July jobs report, analyzes the implications for the Federal Reserve, examines market reactions, and explores noteworthy corporate developments, including Figma's IPO and Amazon's recent earnings performance.

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1. Trump Fires BLS Commissioner Following Weak Jobs Report

July Jobs Report Overview

At the outset, Alex Otsola highlights a new Labor Department report indicating that the U.S. added a seasonally adjusted 73,000 jobs in July, falling short of the 100,000 jobs economists had anticipated (00:22). This underperformance signals emerging weaknesses in the labor market, which had previously shown more robust job gains.

Analysis by Christina Rexrode

Joining the discussion, WSJ Finance Editor Christina Rexrode offers insights into the factors contributing to the slowdown in job growth:

• Economic Uncertainty: Rexrode notes, “There's a lot of talk about tariffs, making companies uncertain about hiring. A lot of places want to wait to hire until they have a little bit more clarity on where the economy is going.” (01:10)

• Revised Job Numbers: The revisions for May and June jobs were significantly lower than initially reported, with May adding 19,000 jobs and June 14,000 jobs (01:10). Rexrode emphasizes concern over the trend of negative revisions this year.

Trump's Decision to Dismiss BLS Commissioner

Following the release of the jobs report, President Trump announced the firing of the BLS commissioner. Christina Rexrode explains Trump's rationale:

• Trump claimed the commissioner would be “replaced with someone much more competent and qualified.” (02:04)

• He also alleged political manipulation of government job numbers, a claim Rexrode says lacks evidence: “We're not aware of any evidence of that.” (02:24)

Economic Implications and Federal Reserve's Stance

Otsola probes the broader economic picture, noting that while the July job additions were below expectations, unemployment slightly increased to 4.2% from 4.1%. Christina Rexrode provides a nuanced view:

• Potential for Federal Reserve Rate Cuts: The weaker jobs report “opens the door a little bit wider for the Fed to potentially cut in September.” However, she cautions that mid-September is still distant, with the Fed awaiting more data (03:32).

• Labor Supply Considerations: Rexrode mentions that a declining worker supply could allow for lower job growth without adversely affecting the unemployment rate, suggesting a more complex labor market dynamic (02:43).

2. Market Reactions to Economic Data and Political Moves

Factory Activity Decline

Alex Otsola reports that factory activity continued its downward trend in July, with the Institute for Supply Management's (ISM) Purchasing Managers' Index (PMI) dropping to 48 from 49 in June (04:27). A PMI below 50 indicates contraction in the manufacturing sector.

Stock Market Downturn

The combination of the weak jobs report and President Trump's updated tariff plan exerted downward pressure on major U.S. stock indexes:

• NASDAQ: Fell by nearly 2.25%
• S&P 500: Dropped 1.6%
• Dow Jones Industrial Average: Experienced its worst week since early April, sliding 1.2%

Additionally, the VIX—often referred to as Wall Street's fear gauge—rose, reflecting increased market volatility (04:27).

3. President Trump's Nuclear Submarine Remarks Amid Russia-Ukraine Tensions

President Trump made headlines by announcing the positioning of two nuclear submarines "in the appropriate regions" in response to escalated tensions with Russia over Ukraine. In a social media post, he criticized former Russian President Dmitry Medvedev, stating that Medvedev's comments were a “step towards war.” Critics and former officials noted the unusual nature of the President engaging in nuclear signaling, a tactic often associated with Russian President Vladimir Putin. The White House has not provided additional details on the implications of this move (04:27).

4. Figma's IPO Underpricing Leaves $3 Billion on the Table

IPO Overview

Alex Otsola shifts focus to the tech sector, discussing software maker Figma's recent Initial Public Offering (IPO). Despite a stock debut that saw shares surge by 250%, Figma and its selling shareholders only raised $1.2 billion out of a possible $4.2 billion, indicating an underpricing of shares at $33 each (07:08).

Insights from Dan Gallagher

Dan Gallagher, capital markets expert, explains the factors behind the underpricing:

• Limited Share Supply: Figma issued a relatively small number of shares, creating scarcity (07:41).

• Selective Investor Base: Executives handpicked investors, some of whom were price-sensitive, which constrained the IPO pricing (07:41).

• Retail Investor Demand: High demand from retail investors led to a dramatic first-day price surge, exceeding expectations (07:41).

Implications of Underpricing

Gallagher discusses who bears the brunt of this scenario:

• Sellers Affected: The company and selling shareholders lost potential revenue, as they could have raised more capital if shares were priced higher (09:01).

• Long-term Stakes: Despite immediate losses, sellers retain significant ownership, potentially benefiting from future gains if the stock maintains its higher valuation (09:01).

5. Amazon's Q2 Earnings: AWS Performance Raises Concerns

Earnings Highlights

Amazon reported its second-quarter earnings, showcasing strong overall performance. However, its Amazon Web Services (AWS) division, a critical component for investors, only matched Wall Street’s projections with a 17% year-over-year revenue growth to approximately $31 billion (09:42).

Comparison with Rivals

In contrast, competitors like Microsoft and Google reported accelerated growth in their cloud divisions during the same period, setting higher expectations for AWS.

Analysis by Dan Gallagher

Dan Gallagher provides context for AWS's performance:

• Relative Performance: Despite AWS being a smaller revenue segment compared to Amazon's retail operations, the stagnation in its growth rate is concerning given the sector's competitive momentum (10:17).

• Investor Expectations: The heightened focus on artificial intelligence (AI) places additional pressure on AWS to demonstrate robust growth, especially as investors seek advancements aligned with AI integration (10:54).

• Retail Strength: Amazon's retail division remained strong, offsetting some concerns from AWS's performance. Factors such as tariffs and weakened consumer spending impacted online commerce, making the solid retail quarter noteworthy (10:54).

Future Outlook

Gallagher suggests that until AWS shows improved growth, particularly in AI-related services like GenAI, investor confidence in Amazon's cloud segment may remain cautious, potentially affecting the company's stock performance (10:54).

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Conclusion

This episode of WSJ What’s News provides a comprehensive analysis of recent economic indicators and corporate developments. President Trump's dismissal of the BLS commissioner amidst a weak jobs report underscores the interplay between politics and economic data. Market reactions reflect growing concerns over labor market trends and geopolitical tensions. Additionally, corporate maneuvers, such as Figma's underpriced IPO and Amazon's AWS performance, highlight the dynamic challenges and opportunities within the business landscape. As the Federal Reserve evaluates its next moves and companies navigate investor expectations, these discussions offer valuable insights into the forces shaping the current economic and financial environment.

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Transcript

[Alex Otsola]

Trump fires the labor statistics chief after a new report showed that U.S. hiring slowed in July, paving the way for a possible rate cut.

[Christina Rexrode]

This opens the door a little bit wider for the Fed to potentially cut in September, but it's August 1st. Right now, mid September feels really far away.

[Alex Otsola]

Plus, how does a company leave $3 billion on the table as it goes public? And is Amazon falling behind in the artificial intelligence race? It's August 1st. I'm Alex Otsola for the Wall Street Journal. This is the PM edition of what's the top headlines and business stories that move the world today. A new report from the Labor Department out today showed that the US added a seasonally adjusted 73,000 jobs in July, below the gain of 100,000 jobs economists polled by the Wall Street Journal had expected to see. It's a signal that pockets of weakness that had been marring the labor market are starting to take hold. I'm joined now by finance editor Christina Rexrode. Christina, what is driving jobs growth down?

[Christina Rexrode]

There's a couple of things in the air. There's a lot of talk about tariffs, making companies uncertain about hiring. A lot of places want to wait to hire until they have a little bit more clarity on where the economy is going. But the thing that really concerned people is that the numbers for May and June were revised so much lower. The Labor Department said Friday that May added just 19,000 jobs and June added just 14,000. And it's normal to have revisions. What's a little concerning right now is that all the revisions lately so far this year have all been negative.

[Alex Otsola]

After today's jobs report came out, President Trump announced that he is firing the top official at the Bureau of Labor Statistics. What's going on there?

[Christina Rexrode]

What Trump said is that the BLS commissioner would be, and these are his words, replaced with someone much more competent and qualified. And then the president said that the government's job numbers have been manipulated for political purposes. We're not aware of any evidence of that, Christina.

[Alex Otsola]

I'm wondering about the picture that all this data paints together, because 73,000 jobs in July, it's a little lower than expected, but it's not like job contraction. And the unemployment number was 4.2, a little higher than 4.1 last month. What kind of picture does this paint about how the economy looks right now?

[Christina Rexrode]

That's a great question. There are certainly going to be people who say this looks really bad. This is the month where things really started to fall off a cliff. And reasonable people can say that there's also an argument to make that you shouldn't pay too much attention to the headline jobs numbers. And the reason that some people are saying, well, the sky isn't falling is that they note that the US Is in a position where the supply of workers is probably going to decline. The point of that is that when the supply of workers declines, you can have job growth be lower without it really hurting the unemployment rate.

[Alex Otsola]

Let's talk now about one organization that is definitely looking at this number, which is the Fed. What does this mean for them?

[Christina Rexrode]

So as we all know, the Fed is concerned about cutting rates too soon in case we are still in an era where inflation is about to shoot up. But they also do not want to keep rates high where they are now if the job market is about to deteriorate. So I would say this opens the door a little bit wider for the Fed to potentially cut in September. But it's August 1st. Right now, mid September feels really far away. And the Fed is going to get a lot more information before that September meeting. They're going to get one more jobs report and two more consumer inflation or CPI reports. And who knows what those will say.

[Alex Otsola]

That was WSJ finance news editor Christina Rexrode. Thanks so much, Christina.

[Christina Rexrode]

Thank you.

[Alex Otsola]

Meanwhile, factory activity continued to slide backward in July, adding to signs of weakness in the sector. The Institute for Supply Management said today that its purchasing manager's index of manufacturing activity contracted to 48 in July from 49 in June. The reading below 50 points to contraction inactivity in the sector. The week July jobs report and President Trump's revamped tariff plan weighed on markets today. Major US Indexes ended lower. The tech heavy NASDAQ led the losses, falling almost two and a quarter percent. The S&P 500 dropped 1.6%. And the Dow faced its worst week since early April, sliding 1.2%. The Vix, a market volatility index often dubbed Wall Street's fear gauge, shot higher. President Trump said he would position two nuclear submarines, quote, in the appropriate regions in response to recent comments from former Russian President Dmitry Medvedev and escalating tensions with Moscow as the US Pressures Russia to end the war in Ukraine. In a social media post today, Trump criticized Medvedev, who earlier this week said Trump's threat of new sanctions on Russia is a, quote, step towards war. The White House didn't immediately respond to a request for more information. The US Routinely keeps strategic submarines at sea that carry nuclear tipped ballistic missiles as part of its nuclear deterrent. It isn't clear whether Trump was suggesting the US Would put more of these submarines to sea, or why moving them to other areas of the ocean would add to US Nuclear firepower. But former US Officials and experts outside the government said it was striking that the US President appeared to be engaging in the sort of nuclear signaling that American officials have long criticized Russian President Vladimir Putin for doing. Coming up why for a company it's not always great news that its Stock price jumps 250% its first day of trading. More on that after the break.

[Corey Driebush]

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[Alex Otsola]

As we noted on yesterday's show, shares in software maker Figma posted eye popping gains in their stock market debut Thursday. Also eye popping was the $3 billion the company left on the table by underpricing its shares. Figma and selling shareholders raised $1.2 billion in the IPO. They could have pocketed much more had the initial shares, priced at $33 apiece, been priced higher. Corey Driebush covers capital markets for the Journal and is here now with more. Corey, what is going on with this apparent underpricing? Why did this happen?

[Dan Gallagher]

It seems for Figma and after a lot of conversations with people close to the deal, that there were a few factors at play that kind of almost created a perfect storm for this crazy first day of trading. For starters, the company and its investors decided to sell a really small number of shares. So that's already creating a scarcity or a small supply. At the same time, Figma executives decided they wanted to hand pick investors who would be able to be the buyers of the company in the ipo. A lot of executives do this. That's not completely unusual, however, when a stock is in such high demand. Some of the investors they wanted had more price sensitivity, so that put a cap on the IPO price. And finally, perhaps the largest factor was this fervent desire to own shares by retail investors. I've talked to bankers around this deal who said they did expect things to go a little crazy, but nowhere near this crazy of a 250% gain the first day day.

[Alex Otsola]

It's generally not considered a great thing to have the difference between the first day closing price and the initial IPO price be so dramatically different. Who suffers when that happens?

[Dan Gallagher]

So this is debatable, but you could say anyone who sold in the IPO did suffer. That would be the company and the selling shareholders, which were some of its early investors because they could have gotten more for their stake. The argument that says they didn't really suffer is that most of the sellers still own quite a bit of the company and so they still have the potential for all these gains if these gains do indeed hold for a while longer.

[Alex Otsola]

That was WSJ reporter Cori Drew Busch. Thanks so much, Corey.

[Dan Gallagher]

Thank you.

[Alex Otsola]

Amazon reported its second quarter earnings yesterday and though it was generally strong, it was marred by what was considered a disappointing showing by its Amazon Web Services cloud computing business. Aws revenue grew 17% from a year earlier to about $31 billion, merely in line with Wall Street's projections. That came after rivals Microsoft and Google reported accelerating growth in their own cloud units for the same period. For for more on what this means for the company, I'm joined by WSJ Heard on the street columnist Dan Gallagher. Dan, why was Amazon's cloud computing business disappointing last quarter?

[Dan Gallagher]

Well, it was because when you contrast it to the results that Microsoft and Google have already reported, they both showed that the growth rates of their cloud businesses actually picked up compared to the first quarter. And I think especially after Microsoft, Amazon having a much bigger cloud and also playing really hard in AI, there was expectations on Wall street that we would see that kind of pick up with aw and they didn't show that its.

[Alex Otsola]

Business is so diversified. Its retail side and these last earnings were pretty good. The retail side is humming. So how important really is this cloud computing business for Amazon's overall well being?

[Dan Gallagher]

Well, it's still a smaller part of their revenue relative to retail. It was actually a really good retail quarter. And when you consider the fact that the online commerce business is being impacted by things like tariffs, weaker consumer spending, the fact that they went out with one of their stronger periods in retail and strong retail profit margins was quite remarkable. But that's a well known business and like I said, because of the money and the interest of investors in AI, there's really a bullseye essentially on aws, like a hyper focus. And so until they start showing growth, they're picking up in ways that might be able to credit to things like Genai. I think investors are going to be a little bit hesitant with Amazon for a while.

[Alex Otsola]

That was WSJ Heard on the street columnist Dan Gallagher. Thanks so much, Dan.

[Dan Gallagher]

Thank you for having me.

[Alex Otsola]

And that's what's news for this week. In case you missed it, we've got a bonus episode out today in what's News and Earnings. We'll be looking at how the companies that deliver the goods you use every day are dealing with President Trump's trade war. We'll be digging into what companies in the logistics industry are saying in their earnings release reports and analyst calls. You'll find it in your what's News feed just before this podcast. Tomorrow, you can look out for our weekly markets wrap up, what's News in Markets. Then on Sunday, we'll be taking a look at how travel is different these days and what this means for travel in the future. That's in what's New Sunday. And we'll be back with our regular show on Monday morning. Today's show was produced by Pierre Bienname with supervising producer Michael Kosmides. Michael Lavall wrote our theme music. Aisha El Muslein is our development producer. Scott Salloway and Chris Zinsley are our deputy editors. And Falana Patterson is the Wall Street Journal's head of news audio. I'm Alex Osola.

Thanks for listening.