The hoopla surrounding the great Elon Musk v. Donald Trump social media conflict seems to be calming down this morning so let’s take a moment to focus on the data which is being issued by the Bureau of Labor Statistics(BLS) at 8:30 a.m. this morning.
If one looks at the pattern this year, there has been no apparent major slowdown in job creation with the average hovering around 150,000 new jobs created per the BLS. In 2024, despite a major annual revision issued in the QCEW several months ago, it was still a decent year for job growth as this table from the Richmond Federal Reserve Bank outlining the revisions shows:
This however also proved that there might have been some political influence in the numbers as the party in power was trying to demonstrate economic strength which was floundering at best due to higher inflation during the months leading up to the Presidential election. But there’s no way the current administration would do the same, right?
Please, do not be so naive.
While President Trump has been pounding on Jay Powell and the Federal Reserve to cut interest rates, he can not have the underlying economic data look weak as his it would indicate his policies are having an adverse effect on economic growth. This unfortunately has to be a factor when making calculations for data as third party private calculations like ADP have proven to be wildly inaccurate.
That is why I present the following forecast for today’s data:
Non-Farm Payrolls: +158,000
U-3 Unemployment Rate: 4.0% (NSA) 4.2% (SA)
U-6 Unemployment Rate: 7.5% (NSA) 8% (SA)
Average Hourly Earnings (MoM): +0.4%
The termination of some Federal employees will have an impact on government job creation at the national level. In addition, with the reduction of illegal immigrants and sweeps occurring nationwide, there is a replacement cycle that the data has never captured before with American companies actually having to hire US workers or those who are here legally. This particular surge in job creation will fade however as the trade war impacts begin to hit starting with the June data.
Before my readers ask how did I come up with this number, for once I put up my dartboard last night and grabbed a quality single malt to read some history. While the apples to apples comparison in history is impossible due to the population change and the situation economically being somewhat different, the idea of an era of financial and national duress along with political insanity struck a chord.
Thus the best comparison may not always be the correct one but May is generally a bullish month for hiring and the odds are now, just as in 2007, it shall be again.
The economic strains were quite obvious to those of us reporting on it during that time period just as they are now. And as these pages have documented, employment data is the last thing to reflect economic problems or recessionary events.
Enjoy the show as I’m sure that if I’m anywhere near correct that there will be some fireworks in the credit markets.
And if I’m wrong, it’s just another day ending in the letter ‘y’ as my wife would say.
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UPDATED 0900 ET:
Final Grade: B-
NFP – Missed by 19K
U6 – Close on NSA, missed on SA
U3 – Nailed it
Avg Hourly Earnings – Nailed it
