Following on Reuters' August 1 report "US payrolls revisions jolt markets, making Fed look behind the curve" which focused on the revisions to prior releases rather than the not good 73K figure from the latest report.
And they were right to do so. What this means is for the last two Fed meetings the folks who sit at that beautiful table were informed by numbers that were incorrect, and dramatically so.
Based on the revisions the Fed should have lowered their target rate by a quarter point at the June 18 meeting after which Chair Powell said (CNBC):
“The U.S. economy has defied all kinds of forecasts for it to weaken, really over the last three years, and it’s been remarkable to see … again and again when people think it’s going to weaken out. Eventually it will, but we don’t see signs of that now”
And based on the revised jobs number for June - 14,000 versus the initially reported 147,000, a greater than 90% decrease - the Fed should have cut the target by another quarter-point at the just concluded July 30 meeting.
My only quibble with the Reuters report is their headline; the Fed doesn't just look to be behind the curve, they are behind the curve and should immediately do an inter-meeting cut of a half-point.
Even that, because of the time lags between Fed actions and their effects in the real economy, would still leave the Fed behind the curve coming into the September meeting.
From Barron's via MSN, August 1:
President Donald Trump said that he ordered his team to fire Bureau of Labor Statistics Commissioner Erika McEntarfer, accusing her of releasing inaccurate employment data. But swings in the monthly jobs numbers and subsequent revisions are nothing new.
“I was just informed that our Country’s “Jobs Numbers” are being produced by a Biden Appointee, Dr. Erika McEntarfer, the Commissioner of Labor Statistics,” Trump wrote in a social media post Friday afternoon. “I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY. She will be replaced with someone much more competent and qualified.”
The order comes hours after the BLS published its monthly release of employment data, which includes a count on the number of jobs added by employers over the course of the month, as well as the official unemployment rate, among other key labor statistics.
The BLS reported this morning that the U.S. added 73,000 jobs in July and revised lower the payroll gains for May and June by 258,000. It was the largest revision of data across two months going back to 2013, not counting revisions during the volatile 2020 Covid-19 pandemic era. Much of the May and June revisions were driven by updates to government payrolls and some seasonal moves in education workers.
Trump called the revisions a “huge mistake” and said that “similar things happened in the first part of the year, always to the negative.” There have been both positive and negative revisions throughout this year. It is common for the payrolls numbers to be revised multiple times during the year
Trump said he was ordering the dismissal because employment data “must be fair and accurate, they can’t be manipulated for political purposes.” He didn’t provide evidence to support those accusations.
McEntarfer didn’t immediately respond to a request for comment.
The BLS commissioner typically holds the position for four years, unless removed, according to federal statutes. Unlike the Federal Reserve, an independent agency that controls its own funding, the BLS is housed within the Department of Labor, allowing for agency heads to be removed from office before the end of their term.
Labor Secretary Lori Chavez-DeRemer wrote on social media Friday that she agreed “wholeheartedly” with Trump. “A recent string of major revisions have come to light and raised concerns about decisions being made by the Biden-appointed Labor Commissioner,” Chavez-DeRemer wrote. “I support the President’s decision to replace Biden’s Commissioner and ensure the American People can trust the important and influential data coming from BLS.”....
....MUCH MORE
