Odd Lots: "Lots More on the Big Problem With the Monthly Jobs Report"

Date: September 4, 2025
Hosts: Joe Weisenthal & Tracy Alloway (Bloomberg)
Guests: Steve Englander
Summary by Podcast Summarizer

Overview

In this Odd Lots episode, Joe Weisenthal and Tracy Alloway (with guest Steve Englander and co-hosts Carmen Rodriguez & Dashiell Bennett) dive into growing concerns and controversies surrounding the accuracy and relevance of the US monthly jobs report (NFP – Nonfarm Payrolls). The conversation centers on statistical quirks like the "birth-death adjustment," the persistent downward revisions in job numbers, changing immigration trends, and how these issues are reshaping both economic analysis and policy responses. Steve Englander brings a macro strategist’s perspective to dissect where the numbers go astray and how investors, central bankers, and policymakers should read them.

Key Topics & Discussion Points

1. Understanding the “Birth-Death Adjustment”

[01:08-02:59]

• Hosts’ Confessions: Both Carmen and Dashiell admit confusion over what the “birth-death adjustment” actually is.
  • Carmen: “I used to think it was something about the population of people and the labor supply, but it’s not. It’s about business formation.” [01:15]
  • Dashiell: “I literally always forget what it is.” [01:22]
• Purpose of the Adjustment: Steve explains that this statistical tool compensates for jobs created by new businesses and lost from closed businesses, which are not fully captured in the main survey sample.
• Major Issue: The model for estimating these effects hasn’t evolved, despite shifting dynamics (post-COVID adjustments, immigration swings).
• Potential Distortion: The adjustment tends to systematically add about 100,000 jobs monthly, regardless of actual labor market strength, which may currently overstate real job growth.
  • Steve: “...what you see is that number has, through thick and thin, stayed about 100,000 jobs… They publish a not seasonally adjusted number, but you can do a rough and ready seasonal adjustment. It’s very stable.” [04:56]

2. Revisions and Data Quality Concerns

[02:19-07:30]

• Frequent Downward Revisions: Dashiell: “The revisions always seem to be... downwards lately.”
• Alternative Sources: Steve champions the QCEW (Quarterly Census of Employment & Wages), which is more accurate because it’s based on administrative data (everyone paying into unemployment insurance).
  • Steve: “QCEW is basically the universe. It’s not a sample… That’s why it’s used for the benchmark.” [07:30]
  • QCEW reports come out with major lag but offer more reliable figures – soon to show significant downward revisions to recent job gains.
  • “We think it’s likely to tell us that somewhere between 750,000 and maybe 1.1 million jobs, that’s the overstatement between Q1 2024 and Q1 2025.” [08:53]

3. The BLS and Calls for Change

[09:01-10:35]

• Leadership Changes: The Trump administration installed a new BLS chief, who floated ideas like reducing report frequency (monthly to quarterly releases).
• Steve’s Solution: Rather than radical moves, Steve supports improved statistical methods, leveraging high-frequency sample data and historical relationships to adjust the birth-death component more intelligently:
  • “If continuing firms are telling us that job creation is 20,000 a month, it’s very unlikely that job creation from new firms is going to be 100.” [09:39]

4. How Should Economists and Policymakers React to the Flawed Data?

[12:12-16:36]

• Skepticism of Political Influence: Concerns expressed by analysts about potential data manipulation with new BLS leadership, though some guests downplay the likelihood.
• Focusing on “Rates” Rather than “Levels”: Inspired by Chicago Fed President Austan Goolsbee, some trackers suggest shifting attention from the absolute number of jobs (subject to revision/bias) to more stable labor market “rates” (unemployment, hiring, firing, and wage growth).
  • Steve: “I like rates, but I like the employment-to-population ratio because we know that participation rate is cyclical… We’ve had a pretty consistent drop.” [14:19]
• Forecasting Dilemma: Steve expects little drama in the headline NFP, with consensus around 75,000 new jobs, but emphasizes the range is tight and numbers can swing without much meaning.
  • “There’s so much randomness in the number, it could be 125,000 and not be meaningful. But it’s just the way it goes.” [15:17]

5. Policy Implications: The Fed, Employment, and Interest Rates

[16:36-18:21]

• Labor Market as Inflation Driver: Steve argues that if the labor market is as soft as better measurements suggest, inflation will cool on its own.
  • “If it’s as weak as we think it is and correctly measured, the slack in the labor market will take care of inflation.” [17:31]
• Fed Dilemma: The issue is whether a weak jobs number should have already prompted the Fed to cut rates sooner; if a significantly low jobs number emerges (e.g., below 50k), it may force accelerated cuts.

6. Bond Market and Macro Backdrop

[18:21-22:31]

• Bond Rally on Weak Jobs Data: Softening job figures have triggered a rebound in bonds due to growing expectations of a Fed cut, despite earlier global bond selloffs.
  • Steve: “...the market pays attention to it...Then you sort of come in this week and every number seems to be soft. You say, oh my God, the Fed’s going to cut.” [19:04]
• Short-Term vs. Long-Term Drivers: Fiscal worries dominate global bond markets, but Steve expects short-term rates and FX to be driven mainly by US economic and Fed policy decisions for now.
  • “We expect dollar weakness in the next couple of weeks, but by the time we get to the end of the year, we could see the dollar strengthening.” [20:50]

7. Europe’s Financial and Political Instability

[22:31-25:23]

• European Yields and Fragility: Recent surges in French and UK bond yields signal deeper political and fiscal dysfunction.
  • Steve: “The structural problems they face are enormous... the French deficit’s about as large as the US deficit, and their interest rates are way lower... the European situation isn’t that good.” [22:50]
• Comparisons to US: While the US faces its own challenges, it retains a potential edge due to technological leadership and possible productivity gains (AI). Europe’s energy costs, weaker capital markets, and lack of innovation threaten growth prospects.
  • “You can tell a story that’s somewhat optimistic [for the US]...Whereas if you look at Europe... they’re kind of lagging on the technology side.” [24:12]

8. Quality of Life and National “Business Models”

[25:23-26:04]

• Memorable Comparison:
  • Carmen: “What’s that line again? The US innovates, China iterates and Europe writes the regulation.” [25:23]
  • Steve, on France: “The quality of life of the median French worker is well above that of the median US worker.” [25:42]
  • Dashiell: “The question is whether it’s sustainable. It’s like living on your credit card.” [25:56]

Notable Quotes

• On the reliability of the jobs report:
  • Steve Englander [06:50]: “QCEW... is not a sample... And so, if you sort of say, oh, QCEW and the business employment dynamics tell us that in 2024 there was almost no job creation from newly opened, let’s just closed firms, you believe it because you’re not going to get a better source.”
• On the market’s forecasting challenge:
  • Steve Englander [17:31]: “Some people get their pleasure from banging their head against the wall. The wall I bang my head against once or twice a year is taking all these incoming data on labor market indicators and trying to predict nonfarm payrolls. None of them work. A bucket of spit.”
• On European social model sustainability:
  • Steve Englander [25:56]: “The question is whether it’s sustainable. It’s like living on your credit card.”

Timestamps for Important Segments

• Birth-Death Adjustment Confusion – [01:08–02:59]
• Systematic Downward Jobs Revisions – [02:59–07:04]
• QCEW’s Superior Accuracy – [07:04–09:31]
• Debate on Changing Jobs Report Frequency – [09:01–10:35]
• Current Market Expectations for Job Creation – [12:12–16:36]
• Labor Market/Inflation Link & Fed Implications – [16:36–18:21]
• Bond Market Volatility Explained – [18:21–22:31]
• European Fiscal Crisis & US-EU Contrasts – [22:31–25:23]
• Quality of Life Tradeoffs – [25:23–26:04]

Takeaways

The monthly jobs report is increasingly fraught with noise, model risk, and structural bias—especially in a post-pandemic, high-immigration volatility context. Steve Englander urges greater reliance on slower, but more comprehensive data sets like the QCEW, and suggests both investors and policymakers should read headline jobs numbers with skepticism. As the Federal Reserve and bond markets navigate uncertain waters, reliability in statistics has never been more consequential for both policy and market outcomes.

The panel also points out that while the US grapples with job growth illusions, Europe faces its own existential challenges of political dysfunction and slow innovation. Meanwhile, on a lighter note, life in France sounds pretty sweet—if you can afford it.