Wall Street is concerned with the firing of the Bureau of Labor Statistics chief and questions the accuracy of government data

The firing of Erika McEntarfer, who was the commissioner of the Bureau of Labor Statistics (BLS), is generating strong concern in the financial world, especially on Wall Street, which is now beginning to question the reliability of official economic data.

The financial sector's doubt is clear: Does McEntarfer's firing — by order of President Donald Trump following the release of a weaker-than-expected jobs report — imply that the White House will seek to release made-up data on the economy's performance?

If yes, the U.S. economy and stock market will likely face trouble and instability. If no, economic performance will continue as normal.

For decades, investors have blindly relied on government reports on employment and inflation to make important decisions in the markets for stocks, bonds and their derivatives. That trust, translated into institutional stability and legal certainty, is considered one of the key pillars explaining why U.S. assets have outperformed their international peers. However, this confidence is now being challenged.

Following McEntarfer's surprise ouster, several investment banks reported receiving inquiries from clients concerned that political interests are manipulating the official figures, The Wall Street Journal reported.

"Your initial thought is, ‘Are we heading toward what you see in Latin America or Turkey, where if the data doesn’t look good, you fire someone, and then eventually stop reporting it?’" Alejandra Grindal, chief economist at Ned Davis Research, asked.

JPMorgan chief economist Michael Feroli warned that McEntarfer's removal is indeed a threat to the integrity of U.S. financial markets and joins President Trump's attempts to put direct pressure on the Fed chief to lower interest rates.

"Politicization of the Fed has been much discussed over the past several months, but the risk of politicizing the data collection process should not be overlooked,” Feroli wrote.

According to the WSJ, the distrust is not just limited to the financial community. Days before McEntarfer's firing, a group of economists sent a bipartisan letter to Congress warning of the need to "safeguard the integrity of the U.S. statistical system" and invest in its modernization, as it is the "lifeblood of the U.S. economy."

Meanwhile, the White House has tried to calm the waters. Economic adviser Kevin Hassett said President Trump wants people close to him at the BLS "so that when we see the jobs numbers, they are more transparent and more reliable."

For now, while the stock market did not react negatively, the S&P 500 was up 1.5% on Monday, according to the WSJ the real impact of the move could be seen in the long run: when assessing confidence in the dollar, the cost of government debt and the U.S.'s position as the issuer of the world's reserve currency.

"Any perception of political bias in economic data would accelerate the shift away from the dollar as a reserve currency," Paul Donovan, chief economist at UBS Global Wealth Management, said. 

As the facts unfold, some private firms and universities are already evaluating alternative methods of collecting and disseminating independent economic data. However, most experts agree that, at least for now, it is nearly impossible that a private effort can match the scope, historical depth and national representativeness of the U.S. government's decades-old statistical system, which has been functioning, improving and inspiring complete investor confidence.