news – The Gold Strategist

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.

This post is created and published for general information purposes only. The Gold Strategist blog disclaims responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

Analysts at the Congressional Budget Office recently took a closer look at President Trump’s landmark budget reconciliation known as the Big, Beautiful Bill…and concluded it’s even uglier than it appeared after their initial passing glance.

Upon completion last week of its second – and more comprehensive – review, the CBO revealed the bill actually could add about $2.8 trillion to deficits over the next 10 years…roughly $400 billion more than the agency’s previous estimate of $2.4 trillion.

Notably, the first number did not account for the manner in which the bill would impact the economy nor the consequential effects on the budget from those impacts. The scope of the initial estimate was limited to the bill’s prospective direct impact on the budget. The updated “dynamic” estimate seeks to account, as well, for the potential macroeconomic effects of the bill, including its anticipated impacts on inflation, interest rates and overall economic growth.

And the CBO’s conclusion? Life under the Big, Beautiful Bill is poised to become even more fiscally precarious.

CBO Sees Legislation Boosting Real GDP by Just 0.5% Over the Next Decade

The analysis is replete with details, but there are a couple of “punchlines” readers would do well not to miss. One is that, in the estimation of the agency, the combination of tax cuts and spending cuts – particularly those to Medicaid and food stamps – would boost real GDP over the next decade by just half a percentage point…far less than the 3%-or-so gain projected by the White House’s Council of Economic Advisers.

Another zinger in the CBO’s fresh review is that the overall cost of the bill could cue a projected 14-basis-point bump in 10-year Treasury rates. This jump would be a direct result of not only the static increase in the nation’s debt load but also the demand for higher rates by investors in America’s debt…investors who expect to be better compensated for assuming greater perceived risk. The pricier debt service that comes with these higher rates is the principal driver of the $441 billion increase to deficits the CBO now sees as likely.

Public’s Share of Federal Debt Poised to Reach 124% by 2034

As for the consequential impact to the public’s share of the federal debt, that now is projected to rise by $3.3 trillion over the next 10 years, up from the CBO’s previous estimate of $3 trillion. An associated implication, says the CBO, is that the ratio of public debt to GDP is poised to rise from 117% in 2034 (based on a January CBO analysis of the nation’s long-term fiscal outlook) to 124%…a figure that many economists say would redline the nation’s already overworked debt engine.

As you might imagine, members of the administration have been critical of the CBO’s dour prognostications. White House spokesman Kush Desai recently suggested the agency seems prone to overlooking key features of the president’s economic priorities that could go a long way to ensuring the nation’s debt does not worsen in the years to come:

“The Trump administration remains committed to an America First agenda of tariffs, rapid deregulation and domestic energy prediction that ushered in historic job, wage and economic growth during President Trump’s first term — prosperity that CBO had also failed to predict back in 2017.”

Except there are few comprehensive analyses of the Big, Beautiful Bill that reach the same optimistic conclusions at which Desai and others appear to have arrived. As the National Review said shortly after the CBO released its most recent assessment of the legislation:

“Not a single independent analysis comes anywhere close to matching Republicans’ rosy growth assumption. Accordingly, the consensus among budget experts is that the megabill will be anything but deficit-neutral, adding trillions of dollars to the national debt by 2034.”

Budget Watchdog: Bill “Not Paying for Any of Itself”

Among those independent analyses at odds with the administration’s outlook (in addition to the CBO’s detailed scrutiny, of course) is that of the Committee for a Responsible Federal Budget, whose senior vice president and policy director, Marc Goldwein, lodged this pointed criticism:

“It’s not only not paying for all of itself, it’s not paying for any of itself.”

The ongoing process of examining – and reexamining – the Big, Beautiful Bill to understand the degree to which it may exacerbate the nation’s already fraught fiscal outlook is hardly without value. But there’s a “bigger picture” element to this discussion of which prudent investors should not lose sight: namely, that even if, by some miracle, the bill does prove to be “deficit-neutral,” that wouldn’t change the nation’s longstanding unsustainable fiscal trajectory.

It’s a fiscal trajectory that’s likely to become an even more profound and impactful stressor of capital markets as politicians continue to put off dealing with it in any meaningful way; but also, a trajectory that could significantly catalyze select safe-haven assets which live entirely outside the U.S. financial system…including – or perhaps especially – gold.

Bank of America Says Debt – Not Geopolitical Risk – Will Be the Catalyst of $4,000 Gold

As a structural portfolio component, some of investing’s most dynamic minds, including Ray Dalio and “Big Short” prophet Porter Collins, are “all in” on gold largely because of its capacity to thrive amid fiscal chaos. So are analysts at a number of investment banking giants, including those at Bank of America, who believe America’s fiscal fragility…rather than ubiquitous geopolitical tension…will be the primary reason gold reaches $4,000 per ounce within the next 12 months.

That Uncle Sam’s fiscal profligacy trump’s kinetic war as a reliable gold driver speaks volumes about not only how unfortunate our macro debt outlook has become…but also how important it may be to be sure the yellow metal is among one’s holdings in the years ahead.

This post is created and published for general information purposes only. The Gold Strategist blog and Bob Yetman disclaim responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

Tag: news

Goofy Jobs Numbers Suggest One MORE Reason Why Hedging Is So Important

CBO: Big, Beautiful Bill Looks Even Uglier After Second Glance