What job growth? What inflation?

By Dr. Harold A. Black
blackh@knoxfocus.com
haroldblackphd.com

Far be it for me to say “I told you so,” but I told you so. I wrote that the monthly jobs report is usually a fabrication. The results come from surveys and are always revised downward when the real numbers come in. On July 7, I said in my blog that the jobs report was a lesson in how to lie with statistics, with employment figures revised downward by 55,000 jobs on average.

When the numbers were announced for May and June and the administration was doing high fives, I asked what would be the revisions? Turns out it was a whopping 258,000 lower, making a three-month growth in jobs of only 35,000. Most of the job growth was in state and local government jobs. The jobs figure for July was a paltry 73,000. Now, if that is the estimate, then what will be the revision? Well, Trump did not like the 73,000 number and fired the commissioner of the Bureau of Labor Statistics. Mind you, Trump fired the commissioner, Dr. Erika McEntarfer, and accused her of being a Biden appointee who was manipulating the numbers. Strange, but didn’t Trump like the numbers she manipulated (estimated) the previous month? The commissioner should have been fired long ago for not dealing with the poor estimates from the job surveys. As a good friend pointed out, her firing smacks of Bolshevism, with the disgraced commissioner sent to the gulag. Would that be Alligator Alcatraz?

Now, Trump’s policies wouldn’t have anything to do with the poor job numbers, would they? I can just hear the chorus now howling for the Fed to cut the target Fed funds rate. Indeed, Wall Street traders just increased the odds of a rate cut from 38% to 70%. But wait a minute. The inflation numbers have just come in as well. The Bureau of Economic Analysis reports that in June, the Personal Consumption Expenditures index (used by the Fed) went up at a 3.4% annual rate. Now, when it was 2.0% in May and Trump and the MAGAverse were beating their chests and shouting to all the doubters (like me), “Where’s the inflation?” Well, here it is. Trump won’t like these numbers either. The Bureau of Economic Analysis is within the Department of Commerce. Watch out! The director is Vipin Arora. Look for Trump to fire him, too.

Analysts say that June inflation is due to the first signs of price increases due to the tariffs. Just remember that importers and companies are bearing most of the initial increase in cost and only passing a small portion on to consumers. Imagine what the inflation figures will be once the full impact of the tariffs is passed on to the consumers. Domestic producers are starting to charge higher prices for their products as the foreign competitors’ goods are priced even higher. Goods prices went up 4.8% in June compared to 0.9% in May. Durable goods prices went up a whopping 5.7% compared to 0.3% in the previous month. In contrast, prices on services went up only 2.8% compared to 2.5% in May. Again, the tariffs are on goods and not services.

These numbers are bad enough, but are they understated, too? Probably. The Bureau of Labor Statistics has reported that it is missing 15% of the data it normally collects on prices due to staffing shortfalls caused by Trump’s firings. This hasn’t gone unnoticed, as Democrat senators have questioned the accuracy of the data, implying that the missing data must be due to the Trump administration trying to hide the magnitude of the change in inflation. They wouldn’t do that. Would they?

What is the Fed to do? The abysmal jobs numbers say cut, cut, cut! But the inflation numbers say to raise the rate. If the Fed were reluctant to cut before, when it was adopting a wait-and-see approach to whether the tariffs were going to cause inflation, isn’t the wait over? What is going to be the Fed’s main objective: job growth or inflation control? If the Fed starts a policy of easy money in hopes of stimulating employment – one of Trump’s many demands – then what of inflation? Regardless of what action is taken by the Fed, they will be the scapegoat. I bet Jay Powell is thinking that May 2026 won’t come fast enough.