Cooking next month’s jobs numbers is not going to be easy

Following the dismal jobs numbers that were released last Friday, Trump fired the commissioner of the Bureau of Labor Statistics Erika McEntarfer, accusing her (without any evidence of course) of cooking the books to get low growth numbers in order to make him look bad.

These jobs numbers are used by the Federal Reserve as one measure in its efforts to control inflation, and are also used by the broader business and investment communities to gauge the state of the economy and make appropriate decisions. Hence it is important that they see these numbers as credible as otherwise they are useless. Up until now, the BLS has been seen as credible. Following McEntarfer’s firing, the BLS is temporarily being run by Bill Wiatrowski, the deputy commissioner, who is a career professional with the agency, until Trump appoints a new commissioner. But Trump’s action has resulted in the credibility of the BLS being seriously undermined, irrespective of whatever the new permanent head does or however sterling their reputation, because that person will have the taint of being seen as being ordered by Trump to get good numbers in the future. The only way that person will be able to gain some credibility is if the August jobs numbers (that will be released on Friday, September 5) are really terrible. If they are middling or good, people will strongly suspect that the numbers have been fudged, unless it can be shown to the contrary.

But manipulating the numbers of such a massive operation without it being obvious that you are doing so is not at all easy and Trump is stupid if he thinks that whatever lackey he appoints to that position can simply replace one set of numbers in the final report and replace them with new ones. It is going to be a very tricky process.
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Trump will send the economy into a tailspin

The US economy is huge and like anything huge, it has a lot of inertia which makes it slow to respond to external forces. Since Trump has come into office, he has made sweeping and reckless economic moves that are not based on reality-based analyses but more on his pet theories, revenge against perceived wrongs, and sheer capriciousness, all designed to satisfy his need to be a bully. The tariffs have been his primary vehicle for the last feature and it has thrown global markets and trade relationships into turmoil. It was inevitable that this would lead to negative impacts on the economy but until this month, those consequences had not manifested themselves.

The July jobs report may be the first indicator. What was alarming was not the numbers for July itself but the steep downward revisions for May and June, which reduced the job growth to almost zero, usually a sign of an impending recession. Trump has responded angrily, as usual denying any fact that shows him in a bad light, claiming that the numbers were rigged against him, and firing Erika McEntarfer, the commissioner of the Bureau of Labor Statistics (BLS).

Needless to say, this has alarmed pretty much everyone outside the Trump cult because whatever crackpot economic theory you may be using, you still need accurate data to make decisions. If you appoint someone who will only give you numbers you want to hear, you enter a very vicious spiral indeed. Trump’s team has fanned out with a media blitz to try and minimize the damage of the jobs report but pretty much everyone in the reality-based world is alarmed by these moves, including some Republicans.
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Trump reveals his weakness with China

Trump has been boasting that the large tariffs he slapped on many countries (and then reduced, and then reintroduced, and then suspended, and then … well, you get the idea) had the effect of the heads of those countries begging to talk to him and make deals that would be favorable to the US. Maybe, maybe not. So far there have been few concrete deals announced.

But one place where that has definitely not happened is with the most important trading country of all, and that is China. They have clearly called his bluff and now it is Trump who seems to be pleading with the Chinese premier Xi Jinping to take his call but Xi is playing it cool.
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Reflections on the working poor

(Every year at Case Western Reserve University where I used to work, the incoming class of students were assigned a book to read which formed a theme for some of the programs during the year. The first one was a welcoming program at Severance Hall, the performing center of the Cleveland Orchestra. The university president and other officials would give remarks and the program would end with me sharing my reflections on the book. I am posting today (slightly edited) the text of the talk I gave in 2007 about that year’s book, journalist David Shipler’s The Working Poor: Invisible in America. I stumbled across this while going through my computer archives.)
 
Welcome to Case Western Reserve University! The people you will encounter during your four years here , the staff, faculty, and fellow students, are very different from the people described in David Shipler’s book The Working Poor: Invisible in America and I would like to address the question: What has created that difference?
 
Two answers are usually given. One is that we live in a meritocracy, and that we got where we are because of our own virtues, that we are smarter or worked harder or had a better attitude and work ethic than those who didn’t make the cut. I am sure that everyone in this auditorium has been repeatedly told by their family and friends and teachers that they are good and clever, and it is tempting to believe it. What can be more gratifying than to be told that one’s success is due to one’s own ability and efforts? It makes it all seem so well deserved, that there is justice in the world.
 
Another answer is that luck plays an important role in educational success. I suspect that most of us were fortunate enough to be born into families that had most, if not all, of the following attributes: stable homes and families, good schools and teachers, safe environments, good health, and sufficient food and clothing. Others are not so fortunate and this negatively affects their performance in school and later in life.
 
But there is a third possibility that is not often discussed and that is that the educational system has been deliberately designed so that just a small number end up like you and a much larger number of people end up like the people in the book, people who not only have failed but more significantly have learned to think of themselves as failures.
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Tariff uncertainty not over

Chinese and US trade representatives agreed to suspend for 90 days 115% of the sky-high tariffs each had imposed on the other. This still leaves tariffs of 30% on Chinese goods to the US and 10% on US goods to China, plus a few other assorted tariffs that had been in existence earlier.

Trump had been bluffing that the US could withstand the pain that the high tariffs that were clearly causing, in his usual childish way.

Donald Trump on Wednesday acknowledged that his tariffs could result in fewer and costlier products in the United States, saying American kids might “have two dolls instead of 30 dolls”, but he insisted China will suffer more from his trade war.

The US president has tried to reassure a nervous country that his tariffs will not provoke a recession, after a new government report showed the US economy shrank during the first three months of the year.
…

“You know, somebody said, ‘Oh, the shelves are going to be open,’” Trump said, offering a hypothetical. “Well, maybe the children will have two dolls instead of 30 dolls. So maybe the two dolls will cost a couple bucks more than they would normally.”

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Welcome to America? Not so much

David Lindorff has done many trips abroad to Asia and Europe and describes his experience on returning to the US after having been in Europe since October 1, 2024. He says that these returns are always unpleasant, with a long flight followed by long lines at US immigration with other grumpy fliers anxious to get to a comfortable bed.

But this time it was different. The arrival hall at Newark was nearly empty and there were no lines at any of the three sections for US passport holders, permanent resident green card holders, or other foreign passport holders. Of course, while highly unusual, this may have been partly due to a statistical fluke. Sometimes several planes arrive close together creating massive crowds, at other times just a single plane may arrive, though that is unlikely at a major airport like Newark. But he says that the statistics show that the number of people coming to the US is dropping due to worldwide coverage of the alarming way that people are being treated by ICE at US entry ports.
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California is now the world’s fourth largest economy

It has just surpassed Japan.

California’s economy has surpassed Japan’s, making the Golden state the fourth largest economy in the world, Governor Gavin Newsom announced on Thursday.

The state’s nominal GDP reached $4.1tn, according to data from the International Monetary Fund and the US Bureau of Economic Analysis, edging out Japan’s $4.02tn nominal GDP. California now ranks behind the US at $29.18tn, China at $18.74tn and Germany at $4.65tn.

This took me by surprise. I knew that California had a large economy but did not realize that it was this large, and because of its high growth rate, maybe on track to become even larger than Germany and be third.

The state has outperformed the world’s top economies with a growth rate in 2024 of 6% compared with the US’s 5.3%, China’s 2.6% and Germany’s 2.9%. This week’s new rankings come six years after California surpassed the United Kingdom and became the world’s fifth largest economy.

The state’s population is just under 40 million, which places it at #39 in rankings of population by country, just below Canada. The per capita GDP of California is $102,500 while that of the rest of the US is $73,529.

Like many other Democratic states, it sends more to the federal government than it receives from them, whereas most Republican states receive more than they send. So Republicans, who love to whine about how ‘their’ money goes to the undeserving, are in reality the ones who are living off the wealth of others.

California is a major contributor to economic growth nationally, with the money it sends to the federal government outpacing what it receives in federal funding by $83bn, according to a statement from Newsom’s office.

Despite an enormous shortage of affordable housing that has fueled a homelessness crisis in the state, the population has grown in recent years. Meanwhile, last year the state reported its tourism spending had hit an all-time high – though California has seen a drop in some areas.

Canadian tourism in California was down 12% in February compared with the same month last year amid Trump’s tariff war. In response, the state has announced a new campaign to draw Canadians back, while one city has put up pro-Canada signs across its downtown.

But the governor Gavin Newsom warns that California’s economy could be hurt by Trump’s actions.

Trump’s China obsession will hurt him and the US

One of the features of Trump is how he seems to view China as not merely a trade rival to be competed with but as an arch enemy to be vanquished, while viewing Russia as a friend. There are many pieces of evidence for this but perhaps the most significant is how he he has imposed massive tariffs on just China (while backing off on most of his tariffs on the rest of the world) while Russia was excluded from all the tariffs. It is a curious reversal of long standing US foreign policy that viewed Russia (as the successor to the Soviet Union) as the enemy symbolizing the evil empire of Communism while Richard Nixon began the policy of engaging with China.

The contrast between China’s and Trump’s policy-making cannot be starker. China is big on long-term planning with its five-year plans, ten-year plans, and even longer-term strategic planning while Trump careens from one policy to another as the whim seems to strike him, reversing himself sometimes within a few days. He wants to somehow hurt China and thinks that high tariffs will damage their economy and cause them to grovel before him.
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Trump has blustered himself into a corner

What happens when you are confronted by an enemy and you fire all the weapons in your arsenal at it but after using up all your ammunition, you still fail to stop it and it keeps coming at you? Your only option then is to run like hell in the opposite direction. This is what Trump is learning.

Trump is finding this out the hard way as we can see from his reversals on tariffs, something that is comical to watch if it were not causing serious gyrations in the world economy. To his ignorant brain, the problem with the US economy was that it was running a global trade deficit in terms of goods. (It is running a global trade surplus in terms of services but since that is not something tangible, he does not seem to care as much about it.) He wants the US to have a global trade surplus on goods and thinks that the way to do that is to hugely raise tariffs on imports, making imports more expensive and thus reducing the local demand. He also wants to raise government revenue so that he can provide a tax cut for the wealthy, the desirability of which has long been an article of faith for Republicans, but which is in stark contradiction to their professed goal of cutting the deficit since their tax cuts would cause the deficits to skyrocket.

One can see how Trump would think that he could solve both problems with one stroke, by massively raising tariffs on imports. This would result in imports getting reduced while also raising revenues for the government, never mind that those two results work against each other since reduced imports would also mean reduced revenues. No doubt he thought that even if imports came down, the extra tariffs would still increase revenues. Of course there is the problem, known to anyone with even the mildest grasp of trade, that tariffs are paid by the importer and passed on to the consumer so any rise in revenues is effectively a tax increase on US consumers. Trump tried to bluff his way out of that by falsely claiming that the exporting countries would be paying the tariffs, something that even he, as ignorant as he is, could not possibly believe but thinks that the rubes will buy it.
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