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CNN
4 days ago
- Business
- CNN
The jobs report that enraged Trump was flashing a recession warning sign
The bad news in last Friday's jobs report may have been overshadowed when President Donald Trump fired the commissioner in charge of producing it. But economists haven't forgotten about America's job market – and they're growing concerned. Some of the jobs report data has economists using a word they haven't uttered in several months: recession. Hiring over the past three months slowed dramatically, creating problems for the economists and statisticians at the Bureau of Labor Statistics whose job is to make sense of the payroll data they get from thousands of businesses across the country. As new data came in about May and June's employment, the BLS was forced to sharply lower those months' job totals from their preliminary estimates. The BLS revised May and June's jobs totals lower by a combined 258,000 jobs. That massive revision gave economists some serious agita. Larger revisions have happened before, but every time changes that large have taken place over the course of at least two months, the US economy has been in a recession – at least since records began in 1968. 'The job market is terrible,' said Douglas Holtz-Eakin, former director of the Congressional Budget Office during the George W. Bush administration. 'Outside of education and health, the economy has lost private sector jobs in the past three months. That's terrible.' The US economy has added an average of just 85,000 jobs per month this year, which is well below the 177,000 jobs that the economy added on average each month before the pandemic. Poor jobs data doesn't mean the US economy is in or going into a recession. Several recent economic indicators are pointing in the wrong direction – weakness in second-quarter gross domestic product and slower-than-expected growth in both the manufacturing and services sectors, for example. But, importantly, the National Bureau of Economic Research, which is responsible for declaring recessions, tracks four big indicators of economic activity – consumer spending, personal income, factory production and employment. None have been pointing to a recession or even that the US economy is on the precipice of a recession. That is, until Friday's jobs report. Yet even the recession alarms it sounded come with some caveats. Recent moribund job growth was likely distorted by business uncertainty surrounding Trump's tariffs, and it's too early to tell whether it will rebound or continue to remain at this low level, noted Keith Lerner, co-chief investment officer at Truist. 'The US economy is in a muddle-through environment,' said Lerner, who said the Federal Reserve probably needs to take action to lower interest rates soon because the jobs report suggests it might be behind the curve. The Fed has known about the slowing hiring for quite some time. But the sharp pullback over the past few months – data the Fed didn't have when it made its decision last week to hold interest rates steady – probably means the economy is considerably weaker than economists had expected. 'Friday's jobs report was terrible with recessionary level numbers, but slowing hiring is not new,' said Robert Ruggirello, chief investment officer, Brave Eagle Wealth Management. 'While Friday's report does not mean we are entering a recession, it shows that companies are freezing hiring and firing until there is more policy certainty and business confidence.' Ironically, the leading culprit for slowing jobs growth may be the thing that has been holding the Fed back from cutting rates: Trump's tariffs. The Fed had been in wait-in-see mode in case tariffs pushed prices higher. The flip side is that the US economy appeared strong enough to handle higher interest rates. But it seems businesses are no longer waiting. They're freezing hiring and changing their investments as they grow fearful that tariffs could raise costs and hurt the economy. 'The president's unorthodox economic agenda and policies may be starting to make a dent in the labor market,' said Chris Rupkey, chief economist at FwdBonds. 'Businesses are not waiting as they are cutting back on the numbers of new workers they bring on board, which means we can no longer count on the employment markets to be a positive factor supporting economic growth in the weeks and months ahead.' Trump's immigration policy appears to be taking a toll, too. Since April, 1.4 million people dropped out of the US labor force – 802,000 of whom were foreign born. That may have helped make the jobs report look slightly better than it actually is. Because of the way the survey was taken, if the 503,000 who dropped out of the labor force but still wanted to work had told the BLS that they were actively searching for a job, the unemployment rate would have risen to 4.5% last month, Rupkey said. Instead, it rose to 4.2%. The revisions, though surprising for their sheer size, were not fully unexpected. They align with the other inputs that analysts have been tracking, Goldman Sachs economists said in a note to clients Saturday, and they help paint a clearer picture of the economy. Other key jobs indicators 'have slowed significantly in recent months,' wrote Goldman Sachs economist Jan Hatzius. 'Taken together, the economic data confirm our view that the US economy is growing at a below-potential pace.' In other words, Goldman Sachs isn't shocked by the revisions. If anything, they fit with the broader puzzle pieces. The revisions were 'undeniably concerning,' Bank of America economists said in a note to investors Monday. But the 'silver lining' is that a considerable amount of the revisions had to do with seasonal adjustments – basically algorithms that needed adjusting as new data came in. The BLS considers its initial jobs numbers to be preliminary when they're first published, because some respondents fail to report their payroll data by the BLS' deadline. Low survey responses can make the report more challenging to estimate. But the BLS continues to collect the payroll data as it's reported, and it revises the data accordingly. To extrapolate the data for the entire country, BLS economists add in some educated guesswork, based on seasonal hiring trends. The BLS also smooths out the data with calculations known as seasonal adjustments to avoid huge spikes and dips in data each month. The data are also revised because of those seasonal adjustments. If the more complete data comes in well above or below the preliminary data, revisions can be exacerbated by the BLS' seasonal adjustments, which sometimes need to be recalculated. Now that the BLS has a better sense of the job market – one with a much slower pace of hiring – revisions in future months may be far less dramatic than over the past several. CNN's Matt Egan contributed to this report.
CNN
5 days ago
- Business
- CNN
The jobs report that enraged Trump was flashing a recession warning sign
Job market Donald TrumpFacebookTweetLink Follow The bad news in last Friday's jobs report may have been overshadowed when President Donald Trump fired the commissioner in charge of producing it. But economists haven't forgotten about America's job market – and they're growing concerned. Some of the jobs report data has economists using a word they haven't uttered in several months: recession. Hiring over the past three months slowed dramatically, creating problems for the economists and statisticians at the Bureau of Labor Statistics whose job is to make sense of the payroll data they get from thousands of businesses across the country. As new data came in about May and June's employment, the BLS was forced to sharply lower those months' job totals from their preliminary estimates. The BLS revised May and June's jobs totals lower by a combined 258,000 jobs. That massive revision gave economists some serious agita. Larger revisions have happened before, but every time changes that large have taken place over the course of at least two months, the US economy has been in a recession – at least since records began in 1968. 'The job market is terrible,' said Douglas Holtz-Eakin, former director of the Congressional Budget Office during the George W. Bush administration. 'Outside of education and health, the economy has lost private sector jobs in the past three months. That's terrible.' The US economy has added an average of just 85,000 jobs per month this year, which is well below the 177,000 jobs that the economy added on average each month before the pandemic. Poor jobs data doesn't mean the US economy is in or going into a recession. Several recent economic indicators are pointing in the wrong direction – weakness in second-quarter gross domestic product and slower-than-expected growth in both the manufacturing and services sectors, for example. But, importantly, the National Bureau of Economic Research, which is responsible for declaring recessions, tracks four big indicators of economic activity – consumer spending, personal income, factory production and employment. None have been pointing to a recession or even that the US economy is on the precipice of a recession. That is, until Friday's jobs report. Yet even the recession alarms it sounded come with some caveats. Recent moribund job growth was likely distorted by business uncertainty surrounding Trump's tariffs, and it's too early to tell whether it will rebound or continue to remain at this low level, noted Keith Lerner, co-chief investment officer at Truist. 'The US economy is in a muddle-through environment,' said Lerner, who said the Federal Reserve probably needs to take action to lower interest rates soon because the jobs report suggests it might be behind the curve. The Fed has known about the slowing hiring for quite some time. But the sharp pullback over the past few months – data the Fed didn't have when it made its decision last week to hold interest rates steady – probably means the economy is considerably weaker than economists had expected. 'Friday's jobs report was terrible with recessionary level numbers, but slowing hiring is not new,' said Robert Ruggirello, chief investment officer, Brave Eagle Wealth Management. 'While Friday's report does not mean we are entering a recession, it shows that companies are freezing hiring and firing until there is more policy certainty and business confidence.' Ironically, the leading culprit for slowing jobs growth may be the thing that has been holding the Fed back from cutting rates: Trump's tariffs. The Fed had been in wait-in-see mode in case tariffs pushed prices higher. The flip side is that the US economy appeared strong enough to handle higher interest rates. But it seems businesses are no longer waiting. They're freezing hiring and changing their investments as they grow fearful that tariffs could raise costs and hurt the economy. 'The president's unorthodox economic agenda and policies may be starting to make a dent in the labor market,' said Chris Rupkey, chief economist at FwdBonds. 'Businesses are not waiting as they are cutting back on the numbers of new workers they bring on board, which means we can no longer count on the employment markets to be a positive factor supporting economic growth in the weeks and months ahead.' Trump's immigration policy appears to be taking a toll, too. Since April, 1.4 million people dropped out of the US labor force – 802,000 of whom were foreign born. That may have helped make the jobs report look slightly better than it actually is. Because of the way the survey was taken, if the 503,000 who dropped out of the labor force but still wanted to work had told the BLS that they were actively searching for a job, the unemployment rate would have risen to 4.5% last month, Rupkey said. Instead, it rose to 4.2%. The revisions, though surprising for their sheer size, were not fully unexpected. They align with the other inputs that analysts have been tracking, Goldman Sachs economists said in a note to clients Saturday, and they help paint a clearer picture of the economy. Other key jobs indicators 'have slowed significantly in recent months,' wrote Goldman Sachs economist Jan Hatzius. 'Taken together, the economic data confirm our view that the US economy is growing at a below-potential pace.' In other words, Goldman Sachs isn't shocked by the revisions. If anything, they fit with the broader puzzle pieces. The revisions were 'undeniably concerning,' Bank of America economists said in a note to investors Monday. But the 'silver lining' is that a considerable amount of the revisions had to do with seasonal adjustments – basically algorithms that needed adjusting as new data came in. The BLS considers its initial jobs numbers to be preliminary when they're first published, because some respondents fail to report their payroll data by the BLS' deadline. Low survey responses can make the report more challenging to estimate. But the BLS continues to collect the payroll data as it's reported, and it revises the data accordingly. To extrapolate the data for the entire country, BLS economists add in some educated guesswork, based on seasonal hiring trends. The BLS also smooths out the data with calculations known as seasonal adjustments to avoid huge spikes and dips in data each month. The data are also revised because of those seasonal adjustments. If the more complete data comes in well above or below the preliminary data, revisions can be exacerbated by the BLS' seasonal adjustments, which sometimes need to be recalculated. Now that the BLS has a better sense of the job market – one with a much slower pace of hiring – revisions in future months may be far less dramatic than over the past several. CNN's Matt Egan contributed to this report.
CNN
5 days ago
- Business
- CNN
The jobs report that enraged Trump was flashing a recession warning sign
The bad news in last Friday's jobs report may have been overshadowed when President Donald Trump fired the commissioner in charge of producing it. But economists haven't forgotten about America's job market – and they're growing concerned. Some of the jobs report data has economists using a word they haven't uttered in several months: recession. Hiring over the past three months slowed dramatically, creating problems for the economists and statisticians at the Bureau of Labor Statistics whose job is to make sense of the payroll data they get from thousands of businesses across the country. As new data came in about May and June's employment, the BLS was forced to sharply lower those months' job totals from their preliminary estimates. The BLS revised May and June's jobs totals lower by a combined 258,000 jobs. That massive revision gave economists some serious agita. Larger revisions have happened before, but every time changes that large have taken place over the course of at least two months, the US economy has been in a recession – at least since records began in 1968. 'The job market is terrible,' said Douglas Holtz-Eakin, former director of the Congressional Budget Office during the George W. Bush administration. 'Outside of education and health, the economy has lost private sector jobs in the past three months. That's terrible.' The US economy has added an average of just 85,000 jobs per month this year, which is well below the 177,000 jobs that the economy added on average each month before the pandemic. Poor jobs data doesn't mean the US economy is in or going into a recession. Several recent economic indicators are pointing in the wrong direction – weakness in second-quarter gross domestic product and slower-than-expected growth in both the manufacturing and services sectors, for example. But, importantly, the National Bureau of Economic Research, which is responsible for declaring recessions, tracks four big indicators of economic activity – consumer spending, personal income, factory production and employment. None have been pointing to a recession or even that the US economy is on the precipice of a recession. That is, until Friday's jobs report. Yet even the recession alarms it sounded come with some caveats. Recent moribund job growth was likely distorted by business uncertainty surrounding Trump's tariffs, and it's too early to tell whether it will rebound or continue to remain at this low level, noted Keith Lerner, co-chief investment officer at Truist. 'The US economy is in a muddle-through environment,' said Lerner, who said the Federal Reserve probably needs to take action to lower interest rates soon because the jobs report suggests it might be behind the curve. The Fed has known about the slowing hiring for quite some time. But the sharp pullback over the past few months – data the Fed didn't have when it made its decision last week to hold interest rates steady – probably means the economy is considerably weaker than economists had expected. 'Friday's jobs report was terrible with recessionary level numbers, but slowing hiring is not new,' said Robert Ruggirello, chief investment officer, Brave Eagle Wealth Management. 'While Friday's report does not mean we are entering a recession, it shows that companies are freezing hiring and firing until there is more policy certainty and business confidence.' Ironically, the leading culprit for slowing jobs growth may be the thing that has been holding the Fed back from cutting rates: Trump's tariffs. The Fed had been in wait-in-see mode in case tariffs pushed prices higher. The flip side is that the US economy appeared strong enough to handle higher interest rates. But it seems businesses are no longer waiting. They're freezing hiring and changing their investments as they grow fearful that tariffs could raise costs and hurt the economy. 'The president's unorthodox economic agenda and policies may be starting to make a dent in the labor market,' said Chris Rupkey, chief economist at FwdBonds. 'Businesses are not waiting as they are cutting back on the numbers of new workers they bring on board, which means we can no longer count on the employment markets to be a positive factor supporting economic growth in the weeks and months ahead.' Trump's immigration policy appears to be taking a toll, too. Since April, 1.4 million people dropped out of the US labor force – 802,000 of whom were foreign born. That may have helped make the jobs report look slightly better than it actually is. Because of the way the survey was taken, if the 503,000 who dropped out of the labor force but still wanted to work had told the BLS that they were actively searching for a job, the unemployment rate would have risen to 4.5% last month, Rupkey said. Instead, it rose to 4.2%. The revisions, though surprising for their sheer size, were not fully unexpected. They align with the other inputs that analysts have been tracking, Goldman Sachs economists said in a note to clients Saturday, and they help paint a clearer picture of the economy. Other key jobs indicators 'have slowed significantly in recent months,' wrote Goldman Sachs economist Jan Hatzius. 'Taken together, the economic data confirm our view that the US economy is growing at a below-potential pace.' In other words, Goldman Sachs isn't shocked by the revisions. If anything, they fit with the broader puzzle pieces. The revisions were 'undeniably concerning,' Bank of America economists said in a note to investors Monday. But the 'silver lining' is that a considerable amount of the revisions had to do with seasonal adjustments – basically algorithms that needed adjusting as new data came in. The BLS considers its initial jobs numbers to be preliminary when they're first published, because some respondents fail to report their payroll data by the BLS' deadline. Low survey responses can make the report more challenging to estimate. But the BLS continues to collect the payroll data as it's reported, and it revises the data accordingly. To extrapolate the data for the entire country, BLS economists add in some educated guesswork, based on seasonal hiring trends. The BLS also smooths out the data with calculations known as seasonal adjustments to avoid huge spikes and dips in data each month. The data are also revised because of those seasonal adjustments. If the more complete data comes in well above or below the preliminary data, revisions can be exacerbated by the BLS' seasonal adjustments, which sometimes need to be recalculated. Now that the BLS has a better sense of the job market – one with a much slower pace of hiring – revisions in future months may be far less dramatic than over the past several. CNN's Matt Egan contributed to this report.
Bloomberg
7 days ago
- Business
- Bloomberg
Trump's Former Jobs Data Chief Decries Firing of His Successor
By and Catherine Lucey Save President Donald Trump's firing of the chief labor statistician was criticized by her predecessor, who called it an unfounded move that will undermine confidence in a key data set on the US economy. 'This is damaging,' William Beach, whom Trump picked in his first term to head the Bureau of Labor Statistics, said on CNN's State of the Union on Sunday.
Yahoo
02-08-2025
- Business
- Yahoo
Trump fires labor statistics chief hours after data showed jobs growth slowed
Donald Trump fired the federal government official in charge of labor statistics, hours after data revealed jobs growth stalled this summer, prompting accusations that he is 'firing the messenger'. The US president claimed that Erika McEntarfer, commissioner of labor statistics, had 'faked' employment figures in the run-up to last year's election, in an effort to boost Kamala Harris's chances of victory. Trump later claimed: 'Today's Jobs Numbers were RIGGED in order to make the Republicans, and ME, look bad'. He produced no evidence for these allegations, and insisted that the US economy was, in fact, 'BOOMING' on his watch. But Friday's employment figures told a very different story, and raised questions about the state of the labor market since Trump's return to office. 'We need accurate Jobs Numbers,' he wrote on Truth Social. 'I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY. She will be replaced with someone much more competent and qualified.' McEntarfer was contacted for comment. The Bureau of Labor Statistics (BLS) confirmed in a brief statement that she had been dismissed. William Wiatrowski, the agency's deputy commissioner, will serve as acting commissioner. Trump's abrupt announcement came as administration officials scrambled to explain a lackluster employment report. Not only did jobs growth fail to meet expectations in July, but previous estimates for May and June were revised significantly lower. The president was promptly accused of trying to hide accurate statistics. 'Trump is firing the messenger because he doesn't seem to like jobs numbers that reflect how badly he's damaged the economy,' said Lily Roberts, managing director for inclusive growth at the Center for American Progress, a thinktank. 'Politicizing our country's collection of data on what's going on in the economy … will make it harder to create an economy that makes sure everyone has a good job,' added Roberts. 'Borrowing from the authoritarian playbook fuels more uncertainty that will cost Americans for years to come.' Paul Schroeder, executive director of the Council of Professional Associations on Federal Statistics, described the president's allegation as 'very damaging and outrageous', adding: 'Not only does it undermine the integrity of federal economic statistics but it also politicizes data which need to remain independent and trustworthy. This action is a grave error by the administration and one that will have ramifications for years to come.' McEntarfer is a widely respected economist and veteran employee of the federal government. She previously worked at the US Census Bureau under George W Bush and at the US census bureau under Barack Obama, Trump and Joe Biden. In January 2024, before McEntarfer's confirmation for her current post by the US Senate, her nomination was backed by four former BLS commissioners. In a letter also signed by organizations including the American Statistics Association and a string of senior economists, they said there were 'many reasons' to confirm McEntarfer as commissioner of labor statistics, citing her 'wealth of research and statistical experience'. She was ultimately confirmed by a vote in the Senate, with 86 votes cast in favor and eight against. Gene Sperling, chair of the national economic council under Bill Clinton and Obama, and who worked as an official under Biden, said he expected Trump to 'destroy the credibility' of economic data when his administration suffered its first bad jobs report. 'Now: first bad job report, and he just fired BLS head over absurd claims of bias,' Sperling wrote on X, formerly Twitter. Trump's decision to fire McEntarfer was 'outrageous but not surprising', said Julie Su, former acting US labor secretary under Biden. 'He hates facts, so he blames truth-tellers.' The US 'needs and deserves trustworthy economic data', added Su. 'This is a pathetic attempt by the president to gaslight everyone about the consequences of his disastrous economic policies.'
