Cogito Ergo Non Serviam
US Jobs Report Disappoints
Yesterday, the Bureau of Labor Statistics made news in two ways. First, it released the US Non-Farm Payrolls Report, known colloquially as the jobs report or the unemployment report. It showed a huge slowing of the labor market with just 73,000 jobs created in July. The figures for May and June were revised lower from 144,000 to 19,000 in May and from 147,000 to just 14,000 in June. Unemployment ticked up to 4.2% from 4.1% in June. Second, the president fired the head of the BLS claiming without proof or any human decency that the figures were rigged. This second point strikes at the heart of government statistics.
Tariffs are the problem driving the labor market downwards. While tariffs of any sort are a bad idea (except for the infant industry case), the whipsaw raising and lowering of tariff levels in which the president has engaged has created uncertainty that forces business leaders into a cautious stance. Unless a job needs to be filled to keep the company afloat, there is strong incentive to delay hiring. This is reflected in the jobs data of the last three months.
"In many ways, this is about slowing down. And now the test we have is really to figure out, to what extent is this slowdown likely to persist and get us into a more troublesome position," Atlanta Fed President Raphael Bostic said on CNBC. "But we don't know that now, and that's something that I'll be working on over the next two months" before the Fed's September meeting.
"This is a gamechanger jobs report," said Heather Long, chief economist at Navy Federal Credit Union. "The labor market is deteriorating quickly."
So the Fed should cut rates – except that inflation is ticking up as well. The Consumer Price Index, for instance, rose to an annualized rate of 2.7% June 2024 to June 2025. If the Fed cuts rates, it will boost inflation past 3% easily. If it does not, the labor market will continue to stagnate. Mr. Trump, who built his reputation on cheap debt, wants lower interest rates. But inflation affects everyone while unemployment hurts only those out of work. Politically, the Fed has more incentive to fight inflation rather than unemployment. That is what Paul Volcker did back in the 1970s and 1980s. This journal expects the same this time. The next move for US interest rates is probably up rather than down.
The firing of Ericka McEntarfer as Commissioner of the Bureau of Labor Statistics means the world may have to rely less on government data in future. Mr. Trump will replace her, and his modus operandi is to hire people who will follow orders. If Mr. Trump does not like a number, he will ensure that the person who puts out that number does things his way. He will try to cook the books. What a grifter like the Oval Office Occupant hates is objective data that proves the puffery is just that.
The National Review (William F. Buckley, Jr.'s publication) agrees. In an article posted today, the magazine explains why it is so hard for the BLS to produce a jobs report and why the revisions happen. In that piece, it states, "So, no, the BLS is not incompetent, and it does not have an easy job at all. The reasons for revisions are incredibly boring and technical and have nothing to do with politics or ideology. Or at least they didn't, until the president fired the BLS commissioner because he didn't like the jobs numbers. Now, the incentives have changed, and there is a reason to cook the books out of self-preservation."
Cooking the books will mean the data are no longer reliable. That means investment will become more difficult to make wisely. It will result in more uncertainty and more bankruptcies. But the self-preservation is about protecting the president, not the economy.
© Copyright 2025 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Ubuntu Linux.
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