At 8:30 a.m. ET tomorrow morning the Bureau of Labor Statistics issues it’s latest greatest act of fiction with a guesstimate of how many jobs were created in February based on less than 40% of respondents and the data collected through surveys.
What could go wrong?
For one thing, the financial media is so focused on political information they are absolving anyone for the data, be it under the Biden administration or Trump. But the reality is that the deterioration, especially as revisions pile in, indicated economic issues long before Trump took the oath of office.
Unfortunately for President Trump, anything that happens will be his fault, but the wild first sixty days with wild swings in executive orders, legislative goals, and the growing reality that the threats of tariffs creating economic instability for US companies is being ignored while the slow down accelerates.
For example, the non-seasonally adjusted data heading into January 2025, purely based on the Biden economy, indicated a more realistic 8.2% unemployment rate as displayed by U-6:
That was the same number as July 2024 which is historically a quite a historically high number as the US economy began to show indications of a fourth quarter slow down.
That brings our happy, smiling faces to tomorrow’s nonfarm payroll forecast.
Blame is 100% irrelevant so dismiss all the blather and commentary immediately. If the number is somewhat severe, in other words outside of the normal range or in contraction, the immediate blame will be the DOGE gang firing too many government employees. Mel Brooks had the best answer to that commentary in the movie Blazing Saddles and my readers will have to look that up for themselves.
The truth is that Trump inherited a slowing economy and has no immediate solution other than following US Treasury Secretary Scott Bessent’s call for a lower US ten year treasury yield plus the a repeat of the old protectionist ideology. This is not ideal heading into a potentially major economic contraction.
So for my readers, the reality is that the data does not lie, but does tell a different tale from what the financial used car media might tell someone. Anna Wong did an excellent analysis on Bloomberg and via X (Twitter) stated the following:
Without revealing all of the proprietary detail, her forecast is for a sub 80,000 NFP print, a lot less than the “experts” touting the ongoing expansion theory on most financial media.
However, tonight, Federal Reserve Governor Waller stated the following also:
Sadly, this simple statement provided this author with a refreshed perspective on where this forecast was going. Thus looking back into non-pandemic post election year NFP announcements from the BLS, let’s review some of the information BLS has provided.
Pretty solid number, no indication of major economic strife despite people complaining about wages being flat for over a decade and inflation becoming a larger issue on necessities.
Again, nothing to complain about despite an abnormally high U-3 reading.
The wind down from the GFC continued and nonfarm payrolls increased dramatically but is this a trend or indicative of more lower paying jobs being produced?
Let’s move back further in history and see what the pre-GFC numbers where many of us, including this author, were concerned about a recession beginning in 2007.
This brings my forecast based not on the history displayed above, but the poor measurement criteria being used by the BLS that is in drastic need of revisions and updating (that’s for you Elon).
NFP jobs added: + 89,000
U-3: 4.2%
U-6: 8.4%
Hourly earnings: +0.4%
The results of this data which are lagging, not leading indicators, will create chaos in the fixed income markets. Those who depend on layoff data and claims will not understand that the true indicators, business closures and prolonged temporary layoffs have not been properly measured nor accounted for in the new gig economy.
The larger issue is that individuals would rather “sign up” for the gig economy versus collect non-inflation adjusted claims benefits until they have to. Hence the report tomorrow will be inconclusive and lead to more market distress as individuals nor the government are prepared for the “new” economy nor the new data collection techniques necessary to measure the economic distress of the citizenry.
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