| Dear Reader,
President Trump’s recent firing of BLS head Erika McEntarfer has drawn significant controversy from media pundits — with some even arguing that his actions might jeopardize the integrity of jobs data.
Unfortunately for said pundits … they’re actually a bit late to the party.
Because as the White House pointed out in a press release from August 1, the BLS has a “lengthy history of inaccuracies [and] incompetence.”
Today, I’m going to show you why that’s a fair characterization.
I’m going to show you precisely where they “fudged” the math to make their numbers work, and we’re going to talk about how 800,000 new jobs can simple “disappear” at the stroke of a pen.
Click below to start the video:  | Elon Musk has already taken public shots at Trump…
But what he’s planning next could hit a lot harder.
Not just for Trump…
But for every American…
So much so that Elon's biggest supporters could soon call him a "traitor."
Click here to see what's coming. | Video Transcript All right, let's get started!
I'm Andrew Zatlin. This is Moneyball Economics, and today we're going to talk payrolls.
And yes, I am going to dive into the Donald Trump tantrum where he fired the director of the Bureau of Labor Statistics.
But first, let's talk about what happened last week. Payrolls came out. I feel hugely vindicated. First of all, I nailed the July number. I said 82,000 would be the number it came out at 73,000 right there, but more critically, they revised down June.
I've been a lonely voice out there. I have been in the wilderness like Jeremiah preaching the truth and not everybody listening, I have said that the labor market came crashing down. Companies hit the brakes. My forecast for June was incredibly below everybody else's. The preliminary number that was strong in June, 147,000.
Fast forward, they revised that sucker away. In fact, they revised most of May away as well.
So my sitting here saying, I've got a good finger on the pulse of the economy and especially payrolls that I have earned that number one ranking on Bloomberg because I get things more right than wrong. Well, it's back. I'm back in action. I'm back in the saddle. I've been vindicated. I have been the prophet predicting the future.
So let's not talk about the labor market. Let's talk about the fallout from Donald Trump because I think that's much more interesting.
Donald Trump says that the director of the BLS has to go because there's either incompetency at work or worse, a deliberate act of sabotage against his administration.
I can't speak to the intent, but I can speak to the fact that these numbers coming out of the BLS are bogus, that there have been specific examples that I'm going to share with you today of someone coming in and deliberately fudging the number to force it up.
I want to talk about that today because obviously there are political implications, but let's just talk about this data and whether it's truth or not.
The way they compile the data is they send out a survey and one of the challenges is participation. The response rate from businesses to those surveys, it's been going down. That was a big problem, and Joe Biden appointed somebody to address that problem in 2024, she took over from the BLS with the mandate to make sure this data is reliable.
Now, off on the side, this data is huge. This is a plumb position because payroll data moves trillions of dollars in the stock and bond market. Whoever's in charge of that, trust me, is going on some pretty plush speaking engagements.
Payroll data matters. It matters because it directly hits whether or not the fed's going to cut rates. So when you get a huge inflection like we just had, that's material.
All of a sudden the bets are rock solid.
September's going to see a rate cut. A lot of people thought that was even not on the table. A lot of money was lost, a lot of money was made. The BLS payroll data is hugely significant and the person at the top, well, it's kind of like getting an ambassadorship. You're being rewarded.
Unfortunately, the person coming in had no background. She's got a great background in economics, but she hasn't really run organizations that actually deliver stuff. She's coming off being appointed to the Council of Economic Advisors, for example. She certainly had no direct management experience to the BLS.
So this is just a political appointee. It's a reward, was told she was given a mandate, fix this data integrity problem because it's there and you know what she accomplished in her year and a half in that position, nothing. The problem still persists.
An example of that problem, and partly why Trump is upset was last year we had jobs data coming out pretty solid, but it was the rest of the economy wasn't sending the signal That justified a strong jobs number. In fact, I was out there last year, Goldman, a whole bunch of us who follow this stuff were out there saying something's off. The data doesn't feel right.
And it got even worse because as we got closer and closer to the election, that data got really strong and that's where Trump is coming in. He's like, look, man, you beefed up that data so that it would appear that the sitting administration, the Democrats were doing a great job, that Bidenomics was working, that wasn't the only place where he was upset. Also, remember that at the time the Fed was cutting rates. So he's out there being paranoid saying the Fed cut rates to juice the economy. The BLS juiced up payrolls to make it look like the economy is doing strong. Boom, you guys are trying to help out my opposition. I don't appreciate that.
But fast forward, you get to February and that's when the BLS trues up their numbers.
They look back and they say, we got to revise all this stuff. They had an unprecedented revision. It was crazy big. They took the job to number for the entire year of 2024, and they almost effectively cut it in half. They eliminated over 800,000 jobs.
That's not small, that's huge.
That's a sign that they don't have a model that works. They don't know what they're doing.
And then they repeated it. Last week they took two months of data, may and June, and they eliminated 280,000 jobs. Yet again, we don't know what we're doing. Jobs were strong in 2024. Nope, they were weak.
Jobs were strong. May and June, nope, they were weak. What's going on here? So Trump is right to call out. This is not good. This is in competency. You got to go. It's happening on your watch. And he's installing the acting commissioner who was his acting commissioner under Trump as well. He's been around the block, but he's different from the academic who was assigned and rewarded. He's actually worked the job. He worked his way up through the ranks. He's the person who should be in charge. He's the one who's got to basically validate the numbers and the methodology and fix it. But because it's a political position, he probably won't have it.
What is going on here? Why are these numbers pumped up and then reversed? Well, there's a lot of impact. It's interesting that right, when Trump is trying to get interest rate cuts, the jobs data is coming out saying, Nope, jobs are strong, and that gives ammunition to the Fed to not cut rates.
Now we've got to wait until September for that to happen.
And so if you're Trump and you're paranoid, you're not liking all this stuff that's happening that well, it's incompetency at best, but could it be more?
Unfortunately, Trump is not wrong from the assessment that people are responsible for pumping this up, but this is not a model mechanics thing that in fact, someone's coming in and fudging the data directly. And I have the proof, I've talked about this previously. I'm going to share with you two examples where someone clearly has come in and fudged the data to make it look like things are stronger.
The question is what's going on? And then why did they just reverse it? So let's start with what's going on. Lemme give you the first example. There's a sector in healthcare that focuses on senior citizen support and people with some dependencies. So think of it as nursing care homes, kind of sort of about a million people work in that industry and it grows year in, year out, but it doesn't grow that much. In any given month, you'll get maybe 10,000 jobs.
So over the course of the year, about a hundred thousand jobs, you can go back in time. Here's a chart. Going back about 11 years, 10,000 month in month out until we got to April. Suddenly in April, out of nowhere, a hundred thousand jobs were created.
And if you've been listening to me on Moneyball economics or reading my stuff, you'll know that I was quick to jump on that and say, wait, this didn't happen, and it didn't happen for a couple of reasons. One, when you see a sector taking off, it's like a wave. It doesn't just go one time. It moves like a wave.
It grows, it grows, it grows, and then it does whatever it's going to do. In this case, it went up one month, 10 times what it does in a given month and then went right back down to normal. And obviously 10 times the normal is also unusual. Continued below This is a case of an individual or individuals coming in and saying, I've got to create a hundred thousand jobs. I'll do it here. Nobody's paying attention. Yeah, well, detective Zatlin’s on the beat!
Another example comes from last month in June, and again, I was on my soapbox saying this didn't happen. Didn't happen. You look at, for example, the state and local public education system. June is one of the prime months when summer vacation's in full force and you see a lot of seasonal layoffs, except apparently this year, June, we didn't. You can go back 20, 30 years.
You will not see a more positive bullish month of June.
Suddenly a couple hundred thousand people, fewer were fired in June. How'd that happen? Well, the reality is it didn't because even though they claimed that it happened in June, well, these revisions took it away. In other words, here are two examples that aren't just a tweaking of something like on the seasonal adjustments or weather.
Someone literally had to come in and say, I'm going to bake this cake. I'm going to force this number to happen. So what is the impact of having a stronger number?
I mean, if you're Trump, don't you want to have a strong jobs market? Doesn't it say that your economy's looking good? Well, yes and no. I mean, you kind of want weakness so that you can get your rate cut. This is working 100% against that activity. Well, then why would you reverse it?
I'm of the opinion that there may or may not have been to direction from the top to get these numbers up and then direction from the top to get the numbers down. I don't know. That's intent. That's stuff I don't know about.
But I will say someone pushed these numbers up.
It is not too far removed from my humble estimation that perhaps there was senior narratives being pushed, or it could be a lone wolf out there forcing the numbers up. Someone at the top doesn't know the model mechanics well enough to make this happen. They could give direction, but they don't know where and how to make it happen. So there's definitely something going on here.
In fact, I wouldn't be surprised if Trump kicks off some kind of investigation who did what and who knew about it and when. Suffice it to say though, the credibility of this number has taken a lot of hits lately.
Trump getting rid of the person in charge. That's another hit to the credibility of the institution. A lot of people don't like to see that. It's like the fight against Chairman Powell saying, I'm going to get rid of you. Markets don't like that.
We want reliability and predictability in what should be a very simple, credible data point. That's why I think he's going to take the acting commission and possibly a point him to be the commission, turn this no more into a political role, but into a functional role. Someone who knows how to get the numbers out there.
Bottom line, someone's been mucking around with the data. Someone decided to stop mucking around with the data, and all we know is there's basically going to be somewhere where Trump is on the war path with this group.
What does it mean for us? Well, it doesn't mean anything except payroll. Data is going to continue to come out, and it's probably going to now be a lot more negative and pessimistic because quite frankly, the labor market has frozen. Talk to you soon. We're in it to win it, folks. Zatlin out. 
Andrew Zatlin
Editor, Moneyball Economics |
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