President Trump apparently thinks the July nonfarm payroll report is proof that the federal government’s Bureau of Labor Statistics (BLS) is out to get him.
In the runup to the report’s release, analysts were expecting to find that the economy added slightly more than 100,000 jobs last month. That’s not what happened, according to the numbers. Instead, a substantially fewer 73,000 jobs were picked up. Even more notable were the massive downward revisions to the initial growth estimates from May and June. Instead of adding 144,000 jobs in May and 147,000 jobs in June, the BLS jobs report said that, in fact, a meager 19,000 and 14,000 jobs were gained in those months.
The president had plenty to say in the wake of the report’s publication, including on his very favorite social media outlet, Truth Social:
“In my opinion, today’s Jobs Numbers were RIGGED in order to make the Republicans, and ME, look bad — Just like when they had three great days around the 2024 Presidential Election, and then, those numbers were ‘taken away’ on November 15, 2024, right after the Election, when the Jobs Numbers were massively revised DOWNWARD, making a correction of over 818,000 Jobs — A TOTAL SCAM. Jerome ‘Too Late’ Powell is no better! But, the good news is, our Country is doing GREAT!”
Trump was so unhappy with the report, in fact, that he moved quickly to fire BLS Commissioner Erika McEntarfer – a Biden appointee – and replace her with E.J. Antoni, chief economist at The Heritage Foundation, a conservative think tank.
Observers on both sides of the political dividing line say there’s a dearth of evidence to support the president’s bold contention that jobs numbers have been “rigged” to make him look bad.
Additionally, Trump’s Truth Social post is incorrect about the timing of the 818,000-job downward revision. The revision – which applied to the 12-month period ended March 2024 – was announced by the BLS in a report published last August…months before the general election.
But even if it’s the case that employment data isn’t being willfully manipulated in an effort to embarrass the president politically, the regular and substantial revisions to initially published numbers make clear that employment data is growing increasingly unreliable.
CNBC’s Jeff Cox: BLS “Using Very Antiquated Measures to Gather” Data
Last week, CNBC’s ace economics reporter Jeff Cox briefly appeared on his network’s Worldwide Exchange show to talk about the deficiencies in data collection methods that many say are the real reason for the ever-wonkier BLS numbers.
Referring to the survey process used to gather the information and numbers that ultimately become official BLS data, Cox said:
“Getting the information has been more and more difficult for the BLS because people just aren’t responding to these things anymore. And the BLS is using very antiquated analog measures to gather this. There’s a lot of pressure on them to modernize how they’re how they’re collecting data. They’re still calling people up on the phone and using paper surveys.”
Wall Street Journal: BLS Jobs Survey Response Rate Has Dropped to 43% from 60% Since Pandemic
In a recent article on the July jobs report, the Wall Street Journal noted that survey response rates – which weren’t exactly stellar before the global health crisis – have fallen significantly since.
“The survey’s overall response rate has declined to 43% from 60% before the pandemic,” the Journal explained, “and small businesses are less likely than bigger ones to respond.”
By the way…the matter of reporting rates among small businesses being particularly bad is no minor issue; small businesses in the U.S. employ nearly half of the nation’s private-sector workers.
And what happens when data is missing?
Rather than discard an incomplete response, the BLS instead imputes the missing data, which means completing the response using values generated by models designed to generate substitute numbers.
Heavy Use of Imputation to Complete Missing Data Raises Serious Questions About Report Accuracy
And as survey response rates decline, the use of imputation is growing. As it does, concerns about the bottom-line accuracy of these high-profile reports are growing, as well.
“Statistics (BLS) is having a lot of trouble with its data collection,” Cox said, referring to the BLS. “It’s having to impute more and more data into these surveys.”
“It’s really raising a lot of issues in terms of, you know, whether you can trust this data,” he added.
In a recent interview with Fox News Digital prior to his being nominated as the new BLS commissioner, E.J. Antoni succinctly summarized the problem with untrustworthy economic data, rhetorically asking:
“How on earth are businesses supposed to plan – or how is the Fed supposed to conduct monetary policy – when they don’t know how many jobs are being added or lost in our economy?”
And how on earth are investors supposed to proceed?
There’s likely nothing nefarious going on with the jobs reports. But just because the reasons for data inaccuracies may be innocent, that doesn’t change the macro risks to investor portfolios which arise from those inaccuracies.
Unreliable Economic Data Is Yet Another Example of Pervasive Uncertainty
We live in an era of unprecedented uncertainty. Part of what makes it unprecedented is the multitude of ways in which it now exists and threatens the global economic order…including the stability of financial markets.
War, national fiscal profligacy, unstable trade relationships and de-dollarization are among the most obvious drivers of uncertainty – but they are by no means its only drivers.
Inaccurate, difficult-to-trust economic data is unquestionably a source of that uncertainty, too’ and one more compelling reason why it’s so critical in this day and age for investors to ensure their portfolios are smartly hedged and effectively diversified.
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