Zero-Sum Jobs: From 291K to 33K—Trump Axes BLS Chief After Historic Revision

By Victor Sperandeo with the Curmudgeon

The Week in Review:

The important financial news this past week included the FOMC meeting, Trump tariff changes, and (most importantly) the BLS July non-farm payroll report with huge downward revisions for May and June.

l As everyone expected, the Fed left its policy rate (Fed Funds) unchanged on Wednesday at the conclusion of the FOMC meeting. Fed Chairman Jerome Powell’s Q&A remarks were more hawkish than expected. He emphasized the need for data-dependent (?) decisions and hinted at potential rate hikes if inflation remains persistent. This stance surprised market analysts who had anticipated a more dovish tone, particularly given two dissenting votes (Bowman and Waller) that favored a 25 bps rate cut at this week’s meeting.

l Trump’s tariff policy changes were consistent with his whimsical bent of changing what he says every other day. As a result, companies don’t know what to expect and uncertainty persists. New tariffs were announced to take effect on August 7^th, modifying the "reciprocal" tariffs on dozens of countries with duties ranging from 10% to 41%. A baseline 10% tariff now applies to countries with a trade surplus with the U.S., while a 15% rate is the floor for countries with a trade deficit. Some countries like Canada and Brazil are facing steeper increases to their tariffs compared to previously announced rates.

l The Bureau of Labor Statistics (BLS) payroll report showed a preliminary +73,000 new jobs created in July, which was well below estimates of 110,000. The big shocker was the huge downward revisions of the May and June numbers. Renaissance Macro Research economist Neil Dutta labeled the revisions “unseemly,” noting that revisions “tend to be cyclical, amplifying the underlying trends in the economy. In good times, revisions are positive and in bad times, revisions are negative.”

BLS Payroll Revisions Prompted Trump to Fire BLS Director:

The BLS has a voluntary, monthly survey of 121,000 businesses and government agencies that employ roughly 26% of all non-farm employees. It extrapolates the responses to produce estimates for the whole workforce.

We wonder why the May and June 2025 BLS revisions were so exceptionally large?

l The previously reported 147,000 jobs created in June were revised down to 14,000.

l The May reported 144,000 jobs added was revised down to 19,000!

l Thereby, the total of 291,000 jobs in May/June became 33,000 jobs or 258,000 fewer jobs than were initially reported!

-->We’ve never seen anything like those revisions in our 60 years of watching the economy and financial markets!

Those downward revisions have led to a reassessment of the strength of the labor market in the early summer months and raised serious concerns about the overall health of the U.S. economy. Economists attributed the sharply slower job growth due to President Donald Trump's tariff and immigration policies, which have resulted in much fewer new hires.

The much weaker jobs numbers caused Trump to fire the director of the BLS, Commissioner Erika McEntarfer. She was appointed by Biden for a four-year term ending in January 2029 and was confirmed by the Senate (Vice President JD Vance voted to confirm her when he was Ohio’s Senator). Trump claimed she manipulated the job numbers for political purposes. Without providing any evidence, Trump posted on social media that the numbers “were RIGGED in order to make the Republicans, and ME, look bad.”

An important question is whether Ms. McEntarfer, like Fed Chair Jerome Powell, can be legitimately fired by Trump?

-->Victor weighs in with his opinion below.

Loyalty Above All Else for U.S. Government Employees:

Trump ‘wants his own people’ in the BLS, according to Kevin Hassett, Director of the White House National Economic Council. Appearing on Sunday morning TV talk shows, Hassett repeatedly declined to furnish any evidence that would substantiate the U.S. President’s claims that the BLS data had been rigged or manipulated to hurt him politically.

“The president wants his own people there, so that when we see the numbers, they’re more transparent and more reliable,” Mr. Hassett told NBC’s “Meet the Press,” explaining at one point that the president sought to ensure jobs numbers could be “trusted.”

In a second appearance, on “Fox News Sunday,” Mr. Hassett claimed there were “partisan patterns” in the jobless data and said that “data can’t be propaganda.”

Data from U.S. Government Agencies Can’t Be Trusted:

We often wonder why BLS so often revises the job numbers DOWN, but not up? Victor says that ~85% of the time, the BLS payroll numbers are revised downward. The Curmudgeon concurs, noting that BLS has revised DOWN the job numbers EVERY MONTH in 2025!

l January 2025 new jobs added revised down by 14,000, from an initially reported 125,000 jobs added to 111,000.

l February 2025 by 34,000 jobs, from an initially reported 151,000 jobs added to 117,000.

l March 2025 new jobs estimate was revised down by 65,000, from +185,000 to +120,000.

l April 2025 new jobs estimate was revised down by 30,000, from +177,000 to +147,000.

-->Common sense dictates that the BLS should have occasionally underestimated job creation which would result in upward revisions.

The unemployment rate is only 4.2% because the “Labor Participation Rate” has fallen to 62.2% as of July, which is lower than the long term average of 63.8%. This rate represents the percentage of the civilian population aged 16 years and older who are either employed or actively seeking employment.

-->As workers leave the work force, the unemployment rate will stay the same or decline. even if unemployment increases.

Also, the number of long-term unemployed (those jobless for 27 weeks or more) increased by 179,000 to 1.8 million in July. The long-term unemployed accounted for 24.9% of all unemployed people!

-->Previously reported robust payroll numbers and a seemingly low unemployment rate are major reasons the Fed has kept short term interest rates high. That has resulted in higher home mortgage rates, higher auto-loan interest costs, as well as higher credit card rates. Those greatly affect the U.S. economy, and almost all consumers in every conceivable way.

Victor’s Comments and Analysis:

1. If Ms. McEntarfer or other BLS officials contests her firing, how will the Trump administration and the courts respond? Whatever the outcome, this incident raises important questions about government agencies “fudging” data for political purposes.

Certainly, this deserves scrutiny into the U.S.“Deep-State establishment." If Ms. McEntarfer fudged the numbers, she should be charged and be trialed in court. If she didn’t, she should be reinstated as the head of the BLS, despite Trump’s objections.

2. The BLS methods of reporting jobs should be completely revised. For example, if you use the estimated “seasonally adjusted” jobs from 1/2/25 to 7/31/25 it shows a total of +597,000 jobs added this year. But if you count the “non-seasonally” adjusted jobs, it shows (-696,000) jobs were lost this year!

-->How can anyone reconcile that discrepancy?

There is nothing wrong with seasonal adjustments to smooth the jobs data, as long as the BLS reports BOTH numbers. But they only show the fabrication of seasonal adjusted jobs, which is very misleading. It basically means the public is being brainwashed so the elites and bankers can execute their agenda. It allows the BLS to manipulate the data, as it pleases, month to month.

In addition, if you deduct the non-seasonally adjusted Birth Death Model (BDM) jobs (which are 100% estimated by some unknown BLS metric, net new jobs that are not actually counted), it shows (-871,000) jobs for a total potential of (-1,567,000) lost jobs this year ending in July. The BDM is showing an add of +871,000 jobs (not counted) this year. How is that possible when actual jobs are being reduced by lay-offs, plant closures, bankruptcies, etc.

According to Challenger, Gray & Christmas, U.S. companies have announced 806,383 job cuts so far this year, the highest YTD since 2020 when 1,847,696 were announced. It is up 75% from the 460,530 job cuts announced through the first seven months of last year and is up 6% from the 2024 full year total of 761,358.

This disparity begs the question: What is the algorithm the BLS uses for the BDM to get +871K jobs added?

3. The relationship between Trump and Powell is like the family feud between the Hatfield’s and McCoy’s [1.], given the well-documented public disagreements between the two men.

Trump has publicly attacked Powell's performance and competence, using very strong language. Trump has demanded much lower short-term interest rates (mainly to lower U.S. debt service costs), while Powell has prioritized managing inflation and maintaining price stability. As a result, the Fed has NOT cut rates this year and has held the Fed Funds at ~4.33% (Fed’s policy rate target is 4.25% to 4.5%).

Note 1. The Hatfield–McCoy feud involved two families in the West Virginia–Kentucky area along the Tug Fork of the Big Sandy River from 1863 to 1891. It has become part of American folklore.

4. The Federal Reserve Board in Washington, D.C., employs over 400 Ph.D. economists. They conduct research and provide policy analysis for the Fed Board of Governors and the Federal Open Market Committee (FOMC). Their expertise covers a wide range of topics in economics and finance. Yet they are not trained to find errors in the data they use from the BLS to help determine the Fed policy rate.

Kindly consider this quote: “We cannot solve our problems with the same thinking we used when we created them.” Albert Einstein

Furthermore, the other metric used by the Fed as an excuse to keep rates elevated is high “inflation” as measured by the core Personal Consumption Expenditures (PCE) index, which is currently +2.8% YoY.

As we’ve stated in Curmudgeon posts for the past 13 years, inflation is NOT an increase in prices. It is a monetary phenomenon such that prices rise as the RESULT of inflation. “Printing” paper fiat currency (increasing the money supply) above what is produced in goods and service results in price increases by debasing the currency.

High tariffs or a particular egg shortage are temporary occurrences rather than a “continuous general rise in prices.” If the money supply is not increased, then prices remain steady (i.e. when one price goes up another comes down).

5. Danielle DiMartino Booth, CEO for Quill Intelligence and a popular media pundit, recently made some very strong anti-Fed comments. In particular, she noted that the Cleveland Fed created a new “Tenant Rent Index” which was down -9.8% last quarter. DiMartino Booth said that Powell wanted to include that index in the core market-based PCE (the Fed’s favorite “inflation” gauge) last December “at the podium.”

Take a listen to her video interview: “Did Fed Doom the Economy? What 'Policy Error' Means for Jobs, Home Prices…”

At 8:45 minutes into the interview she says that if that new Tenant Rent index were included in the core PCE, it would be at -0.3% year-over-year. “Fed policy error,” she strongly stated implying the Fed should have cut the Fed funds rate this year, rather than holding it steady.

End Quote:

As an iconoclast philosopher so elegantly put it……

"Madness is something rare in individuals — but in groups, parties, peoples, and ages, it is the rule,” Friedrich Nietzsche.

Nietzsche’s views on madness are multifaceted, often reflecting on the nature of human behavior and the role of society in shaping individuality. The above quote suggests that while individual madness may be rare, it is more common in larger groups and societal contexts.

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Wishing you good health, success and good luck. Till next time…

The Curmudgeon
ajwdct@gmail.com

Follow the Curmudgeon on Twitter @ajwdct247

Curmudgeon is a retired investment professional. He has been involved in financial markets since 1968 (yes, he cut his teeth on the 1968-1974 bear market), became an SEC Registered Investment Advisor in 1995, and received the Chartered Financial Analyst designation from AIMR (now CFA Institute) in 1996. He managed hedged equity and alternative (non-correlated) investment accounts for clients from 1992-2005.

Victor Sperandeo is a historian, economist and financial innovator who has re-invented himself and the companies he's owned (since 1971) to profit in the ever-changing and arcane world of markets, economies, and government policies. Victor started his Wall Street career in 1966 and began trading for a living in 1968. As President and CEO of Alpha Financial Technologies LLC, Sperandeo oversees the firm's research and development platform, which is used to create innovative solutions for different futures markets, risk parameters and other factors.

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