Trump right again…on jobs

Trump warned Fed Chair Powell he was under estimating job weakness. Powell being a good bureaucrat was unmoved. But this morning the massive revision in June job numbers has proven Trump right and the markets dropped from record highs. The Fed with its 500 economic PhDs couldn’t predict the uptick in inflation. Two days after Powell mouthed off, presumably informed by his 500 economists, he is proven hopelessly out of touch again. The best Fed chairs have always had an instinct for trends not always immediately apparent in the numbers…not Powell.

Here’s the country’s most noted stock advisor, Jim Cramer, advising the Fed Chair:

’We have very little job growth, and we have wages that are not going up,” Cramer said during “Squawk on the Street.” “That is when you cut.”

Before the open, the government reported nonfarm payroll growth of 73,000 in July — much weaker than the 100,000 economists had expected. May and June were revised down a combined 258,000. The nation’s unemployment rate ticked up, as expected, to 4.2% last month. Wages, as measured by average hourly earnings, rose 3.9% year over year — only slightly higher than estimates.

“I’ve been a big backer of Jay Powell,” Cramer added. “But this is a number that says, ‘Jay, you didn’t need to wait’ to cut rates.”

It's obvious that Powell has partisan bias...a few months to go...will be gone long before the mid terms, so his obstruction won't matter.

President Donald Trump has fired Erika McEntarfer, the commissioner of the Bureau of Labor Statistics (BLS), after July's jobs report showed only 73,000 jobs created—far below expectations—and included major downward revisions for May and June, reducing previously reported job creation by 258,000. Trump accused McEntarfer, a Biden appointee, of manipulating the employment data for political gain, claiming the numbers unfairly reflected poorly on his administration.

Despite these allegations, there is no substantiated evidence that the BLS rigged or fabricated the jobs data. The BLS operates with longstanding independence from political figures, and experts stress that its data is vital to market confidence and is produced according to rigorous, transparent methodologies. Economists and outside analysts have pointed to the ongoing effects of Trump's trade and immigration policies as the primary explanation for the slowdown in job growth, not the manipulation of the numbers.

When inflation rises at the same time as unemployment increases, it creates a difficult situation for policymakers—often called a “policy dilemma” and historically known as “stagflation.”

Why Is This a Contradictory Challenge?

1. Classic theory (Phillips Curve): Normally, there’s an inverse relationship between unemployment and inflation. Cutting interest rates lowers unemployment but risks pushing up inflation. Raising rates cools inflation but increases unemployment.
2. When both rise: Policies to fight one can worsen the other. For example:
3. Combatting high inflation usually means raising interest rates or tightening policy—actions that risk increasing unemployment further.
4. Trying to reduce unemployment (e.g., by lowering rates or stimulus) often increases inflation.

Real-World Example: Stagflation

1. In the 1970s, many economies experienced both high inflation and high unemployment—contradicting the simple Phillips Curve model.
2. This scenario showed that outside factors (like oil price shocks or supply chain problems) can push both inflation and unemployment up at the same time.

Policy Implications

1. Central banks face “trade-offs.” They may have to prioritize—often focusing on taming inflation first, even if it means tolerating higher unemployment for a time.
2. Fiscal policy tools: Governments can use targeted support (such as benefits for the most affected households) to cushion the pain of unemployment while monetary policy focuses on inflation.
3. No easy solution: The usual tools (like adjusting interest rates) are “blunt instruments”—solving one problem can make the other worse. This requires careful, targeted, and sometimes innovative policy responses.

Bottom Line

Rising inflation and unemployment together create a conflict, because most economic policies that help one tend to worsen the other. It’s a tough balancing act for central banks and governments, and history shows it can take time, creativity, and sometimes hard choices to manage both challenges at once

He fired Mcfartur….say it isn’t so

Trump warned Fed Chair Powell he was under estimating job weakness

When, I'm aware of Trump frequently pressuring the Fed for interest rate cuts, but I'm not aware of specifically citing job weakness...I mean he's even disputing the July job numbers reports, never mind the fact that most economists say Trump's economic policies contributed to the weak jobs market growth and inflation. There was no warning from Trump.

To say nothing of all these attacks on how terrible Powell is as FED Chair, when it was Trump who first appointed him.

He fired Mcfartur….say it isn’t so

He fired a person for doing their job and you think it's a joke? If Trump starts firing people for posting hard data he doesn't like and then appointing people that will only give him good news it calls into question the trustworthiness of the US's economic data.

Emm….when somebody says the economy is weak, most economically educated people would assume that includes or primarily means the job market. Here’s Chat:

When an economist says the economy is weak, they typically mean that aggregate activity is subdued—low GDP growth, soft demand, slowing industrial output, declining business investment—and a weak labor market is often a central component. It's one of the most important variables guiding this assessment.

Emm….when somebody says the economy is weak, most economically educated people would assume that includes or primarily means the job market.

But Trump hasn't been saying the US economy is weak.

The economists had it all wrong, here’s a classic example:

With the labor market holding up and the impact of tariffs on inflation starting to rear its ugly head, the Federal Reserve has plenty of ammunition to justify keeping interest rates unchanged at the July meeting," Oxford Economics chief U.S. economist Ryan Sweet said in a July 24 research note.

…….

Meanwhile Trump warned of impending slowing if rates weren’t cut, this in April:

"With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW," Trump said in a post on Truth Social.

……

Trump was right that slowing was a potential problem. And so many of the economists were wrong. Powell hopelessly wrong just 2 days before the latest data came out!

Now, these guys who all resisted Trump because he is Trump and never supported rate cuts, are trying to repurpose their argument by saying tariff anticipation created the slowdown.

#TrumpLoyalists

...

He looks good because the given wisdom is so often wrong.

Julien Berman

4–5 minutes

For a few rosy months, it looked as if the American labor market might emerge unscathed from President Donald Trump’s trade war. Despite constantly shifting tariff rates that have created enormous uncertainty for businesses, initial readings of the labor market’s health showed it holding strong. Throughout the first half of the year, unemployment remained relatively low and the economy kept adding jobs.

Turns out, this was an illusion.

On Friday, the Labor Department reported that employers added only 73,000 jobs in July — far fewer than the 115,000 forecasters had expected.

More important, the department published sweeping revisions to earlier reports that had made the job market look strong all spring. The estimated number of new jobs in May was lowered to 19,000, from the initial 144,000. June’s numbers fell to just 14,000, from 147,000. Together, these changes amount to an overall decrease in new jobs of almost 90 percent.

What’s worse, three-quarters of the added jobs were in just one sector: health care. Along with the lower numbers, this suggests that America is starting to see the effects of Trump’s tariffs ripple through the economy.

Follow Trump’s second term

Sectors such as manufacturing rely on global supply chains to provide raw materials and parts — steel, aluminum, machinery and so on — that they turn into finished products. When tariffs raise the costs of these input materials, businesses have an incentive to scale back. Then investment declines — and hiring slows.

Health care, in contrast, is far less exposed to trade policy. As a service industry, it relies much less on imported goods. Unlike a factory, a hospital faces virtually no foreign competition. In most cases, nursing can’t be outsourced, and medical checkups can’t be imported. Most of the work is done locally, so health care keeps hiring while other parts of the economy stall.

Add to this the growth estimates from the first half of the year, which show a slowdown in both overall consumption and investment, and a bleak picture comes into focus: The American economy is losing steam.

This makes it more likely that the Federal Reserve will decide to lower interest rates — especially if the jobs numbers disappoint again next month.

But whether a fall in rates would soften the blow is another question. Next month, the Labor Department will release its annual benchmark revision — a once-a-year adjustment that matches the monthly jobs survey data to more complete payroll records. If past trends hold, the jobs numbers could be revised downward even further — suggesting that the labor market has been weaker than realized for some time.

A deeper problem here is that the monthly jobs reports might be getting less reliable. The Labor Department always modifies its estimates as new data comes in, but revisions as large as the one for the spring numbers raise concerns that the government’s statistical infrastructure is starting to buckle. Note that the Bureau of Economic Analysis has lost about 20 percent of its employees since the beginning of the year.

Even more troubling is that in response to the weak numbers, Trump fired Erika McEntarfer, the commissioner of the Bureau of Labor Statistics, baselessly accusing her of manipulating the jobs report for political ends. His action undermines the independence and credibility of one of the government’s most important statistical agencies, and will cast doubt on the credibility of future data releases on employment, inflation, productivity and other key indicators.

Reliable economic data is essential to crafting sound economic policy. Had the Federal Reserve known at its most recent meeting that job growth was collapsing in May and June, it might have acted more aggressively.

For now, it seems that Trump’s trade war is starting to bite, and more pain could be on the way.

Powell will probably have to cut interest rates now that unemployment is rising. If Trump was right about this, it's probably not something he wants to take credit for. And by claiming the bad job numbers are fake, he’s certainly not trying to take responsibility for the rise in unemployment either.

It is another funny topic. Trump has battered most of the things, the US are openly an institutionally corrupted country. Now the FED is the one thing that admittedly has saved his autonomy partially and still plays the part expected from it.

The FED was established as an independent entity that makes its decision without dictating the economic policies of the US. WeThePeople is in charge through their representatives and the economic decisions are determined by the legislature. Otherwise, the FED would encroach on the sovereignty of WeThePeople. Trump claimed that the economy was booming, numbers were hitting new records every day. And now, Trump is pushing a blatant failure of his economic policies on the FED and the FED must use its power to bring the change. Trump is a liberal and as such, shameless, he blamed the FED for underestimating the labour market situation and as if it was not enough, for the farming sectors. It is incredible because the farming sector was promised as provided well paying jobs for US citizens following Trump's economical policies. The current situation is a major failure from Trump. But he needs the FED to bring the change for him. Trump is slowly merging all the institutions together, when liberals claims the independence of various institutions was key to the success of a society.