Isaac Saul (17:52)
Alright, that is it for what the left and right are saying. Which leads me to my take. Now that the 2025 revisions are all out, we have a pretty clear picture of what's driven the past few years of inaccurate job reports. It's been mostly two things. First, declining survey responses. Fewer businesses are filling out BLS surveys in time for the monthly job reports, which means the BLS's initial estimates are relying less on empirical payroll reports and more on their models. When more complete data eventually comes in through the Quarterly Census of Employment and Wages, which is based on unemployment insurance records and is far more comprehensive, that often tells us a much different story. Second, the statistical method called the birth death model that BLS uses to estimate new business creation and businesses closing is the main driver of these changes. For three years, up until former Commissioner of Labor Statistics Erica McIntarfer's firing, the model had been routinely overestimating job creation, accounting for the bulk of the BLS's reporting errors. And because of the underreporting problem, BLS ended up relying on its faulty predictive model even more making those errors even larger. BLS knew about these problems, and it had begun fixing the model during macintar for his tenure. And then her successor, Acting Commissioner William Viatrovsky, has continued that work. Coming into the second Trump administration, we expected a bit of melodrama out of the federal government. We know Donald Trump likes to lead by splashy fiat and bombastic pronouncements, and he came out of the gate swinging. Budget cuts, tariffs and Justice Department investigations were on the political menu for most of the year. But of all the departments in the federal government, perhaps the positions least likely to provide the settings for musical chair melodramas from Trump 1.0 have delivered them in Trump 2.0, the Federal Reserve and the Bureau of Labor Statistics, usually sleepy departments, but in this case, a little bit more action. Fed Chair Jerome Powell, who will be gone when his term ends in May, has been under constant fire, while former commissioner Erica McIntarfer has already gotten the dreaded past tense honorific prefix to her title. As we've said the last few times we've covered the bls, the jobs reports had missed the mark for a while before McIntarfer's firing last year. We've also said that they didn't seem to justify the decision to fire her, especially when a side effect of that decision was is degrading confidence in the institution that provides much of the data economists and business leaders rely on. To be blunt, the BLS absolutely had an issue with its reporting, and it took an inexcusably long time to fix it. Those routine mistakes led to increased public scrutiny and decreased trust in the institution's monthly numbers. I've read a good deal of apologia for this anemic pace of adjustment. Business creation being slow is a sign of a coming recession. Revisions are just part of a normal process, and revisions have actually been improving when you zoom out far enough. Well, in the last few years, the BLS had been repeatedly and predictably failing, so its model just needed to be updated. Even people in the private sector knew it, and they expected the jobs data to be wrong when they got it. That consistent incorrectness can lead to persistently false beliefs, like that rumored recession we've been waiting for since Biden was in office. Office as president, Trump would have been right to point these issues out. He could have focused scrutiny on the BLS model, set hard deadlines for improvements, or done anything that showed he'd taken the time to understand the issue, to communicate it properly to the public. Instead, this was Trump's response, and I'M quoting here. I was just informed that our country's jobs numbers are being produced by a Biden appointee, Dr. Erica McIntarfer, the commissioner of Labor Statistics, who faked the jobs numbers before the election to try and boost Kamala Harris's chances of victory. She will be replaced with someone much more competent and qualified. Trump not so subtly implied the BLS commissioner position was political, even after Biden had his appointee stay on for years, as Trump had previously done with Obama's. Trump smeared McIntofer's ample qualifications. Then he tried to replace her with a, let's face it, a sycophantic stooge. He accused McIntofer of concocting fake numbers to help Democrats, even though the last report before the election made Biden and Harris look pretty bad. And then he pinned the whole issue on McIntar, even though she inherited the problem and she'd overseen the beginning of its solution. Trump's response did more to inject partisanship into and foment distrust of the BLS than it did to fix the underlying problem itself. And if we're honest and made him appear to have a pretty unsophisticated understanding of the economic reporting system he oversees, that's especially frustrating because it produces a subtle negative polarization effect, whereby people who don't like the president's assault on his economic advisors are influenced toward interpreting the economy as worse than it actually is. Some pundits almost seem eager to discount the good news and root for economic failure. But actually, the economy's doing pretty well. The jobs data from January was solid, even if we do expect another, much smaller revision to this month's numbers. Unemployment is low, GDP growth is up, and the US Economy has avoided most, though not all, of the worst effects economists feared would result from Trump's tariffs. Wages are ticking up, and as Pam Bondi was so keen to tell us last week during an Epstein hearing, the stock market has been incredibly robust. At the same time, not everything is rosy with the economy. Job growth is up, yeah, but it's pretty flat. All in all, consumer confidence lives on the floor, and inflation, though not elevated, is still over the Fed's target of 2%. And even though jobs increased in January, a lot of that growth was concentrated in two sectors, healthcare and social services. Other key sectors, like manufacturing and hospitality are essentially flat. In response, the Fed will probably hold rates steady next month, a proper decision that would reflect the mostly good judgment we've come to expect from its chairman, judgment for which the president wishes to Fire him. I mentioned how negative polarization affects pundits above. It affects nobody more than the President of the United States. And can we just say how much that sucks? It just sucks. The economy is mostly good, and I, like most people, hope it continues to get healthier. And the BLS did need reform, but it just drags our entire discourse down when the president goes after the people who bring him news he doesn't like, while anyone in his administration getting criticized by his enemies gets a pass. I'm optimistic about the jobs data. I'm optimistic that DLS reports will continue to improve, and I'm even optimistic that the bottom won't drop out of the economy anytime soon. But to be totally honest, what stands out to me most clearly when I examine this issue is that I'm incredibly pessimistic about the style of President Trump's leadership. The Paul he's cast on something as simple and usually dry as economic reporting is going to infect all of these conversations within victim for the remainder of his term. That's it for my take. I think Isaac has a little bit to say to disagree with me on somehow, so I'll just let him give it a shot and then I'll be back for the reader question.
