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Quinton: [00:00:00] Welcome back to the What's Your 1 More Podcast. I'm your host, Quinton Harris, your dialed in for episode 253. So in this episode, we're [00:00:05] gonna talk about a rigged BBLs slash bs report. We've been talking about that for a while, and what's Trump's [00:00:10] take on it and why did he fire the director of the BBLs? That and more in this episode at What's Your 1 More?.
[00:00:15] [00:00:20]
Quinton: Okay, so welcome back. We're gonna talk a little bit about, obviously, some big news that took [00:00:25] place last week. You know, if you've been listening to this show for some time, we typically hype up Jobs week [00:00:30] because right now it's labor over inflation when it comes to the Federal Reserves requirements of what [00:00:35] it's gonna take to move that needle.
And on our show, one of our major focus points is the Federal Reserve. [00:00:40] And moving interest rates because that's gonna stimulate the mortgage side of the economy and the housing, economy as [00:00:45] well. And all those things are very relative to our audience and our listeners. So that's why we spend a lot of time [00:00:50] on that.
And in this particular episode, I'm gonna talk about what happened last Friday with the BLS [00:00:55] report. around here we call it the BS report. I actually heard some of our friends over MBS Highway refer to it as [00:01:00] that when we had Dan on the show recently. shout out to Dan Habib actually coming back to the show on August 14th.
We'll probably [00:01:05] break down this report and some other things to come. Talk about this Federal Reserve meeting in September, but before we [00:01:10] get to that. Let's talk a little bit about the BLS report. Now. We really have two [00:01:15] major job reports that come out during what we call Jobs Week. We hype that up because it comes out once a [00:01:20] month.
You've got the private sector, which is the A DP, and you're probably familiar with that. It's a payroll company, the [00:01:25] largest payroll company. They give a private sector report, which is very important 'cause it's pretty much talking [00:01:30] about all jobs minus government jobs. And then we get the BLS report, which is a government [00:01:35] agency that releases job information and it pertains.
Pretty much to the government, [00:01:40] and you could argue that maybe it might be altered, inherit, rigged, [00:01:45] disputed. I mean, the list goes on and on by the government. And so let's kind of talk a little bit about that for a minute. 'cause [00:01:50] inside the BLS report, we get a lot of things. Number one, we get the unemployment rate, we get the amount of [00:01:55] new jobs created.
All of these things are put out there for us and the market to digest [00:02:00] and that. Usually leads to what happens in the bond market. They react to that and then ultimately it [00:02:05] happens. It makes its way down to the stock market equity markets, they react to it as well. Anytime we get a [00:02:10] favorable report, you see the bond market react in the form of, you know, higher yields, [00:02:15] which typically would mean not good things for mortgage interest rates.
And then you would see the actual, [00:02:20] equities market react favorably as well, because that means an improved job market means improved [00:02:25] productivity, sales, et cetera. You get the point. So let's just kind of take it. Step back, you [00:02:30] know, what is the BLS report? The Bureau of Labor Statistics, it was established in 1884.
So it's a, [00:02:35] you know, it's a community that's been around in the government for quite some time. and I will say this, that there's [00:02:40] quite a few people that work there, of the people that come up and kind of dissect these numbers and these reports. This is probably a [00:02:45] group of about 50 plus people that do that.
And essentially there's a couple of ways they collect data [00:02:50] in this report. Most of it comes from a household survey, challenges with household [00:02:55] surveys as well. Who's participating, how much participation are you getting [00:03:00] and how accurate is that participation? And I think that's one of the biggest challenges in this report is the [00:03:05] accuracy of the report.
And inside this report you have the jobs that are forecasted, that [00:03:10] are created, and then there's revisions that come in from the previous month's report. And I think that's really important to [00:03:15] understand. So when you get a job report such as what we got in the month of July, 'cause it came out in the last [00:03:20] week of July, last day of July.
Those are June's numbers and you're getting 'em in July. And then there's a [00:03:25] revision that comes out from the previous month of May incorporating that report that says, Hey, listen, we're [00:03:30] revising the previous number. Up or down. And so I think that's important because this [00:03:35] report has a tendency to how always have a negative revision.
Over the course of the last [00:03:40] 24 months, it's been pretty bad. And over the course of the last six months, it's been even [00:03:45] worse. And you could argue during Trump's presidency, these revisions have gotten. [00:03:50] Far worse than they should be, and they don't match the narrative of the current [00:03:55] administration. You got the current administration, we are in a healthy economy.
It's booming, America's [00:04:00] on track to do things they've never seen before. And you get these reports that are not matching that, [00:04:05] and you could argue, Hey listen, that's because the narrative, the administration's spending isn't correct or. [00:04:10] The report's not correct. It's one of the two. Right. But let's face it, this report has been [00:04:15] inaccurate far before Trump took office.
It was vastly inaccurate during the [00:04:20] Biden administration as well. And so I think that what's interesting is that when you look at this, there's [00:04:25] been a flaw in this. We've been describing that for quite some time. Matter of fact, we've. Approaching our three years doing this [00:04:30] podcast, all three years we've been touting that this report has been highly inaccurate.
And [00:04:35] the challenge with that inaccurate report is that the market is anticipating certain numbers, building momentum, [00:04:40] so that we could see some, windfalls in the mortgage side, the interest rates and the housing [00:04:45] market, and. It seems to be this report is always the one that's kind of like the whammy.
It's always the one that's [00:04:50] messing things up, right? It's never aligning with the previous data that's coming out [00:04:55] before it, such as the private sector, such as the Jolts report, such as the, initial claims report. [00:05:00] There are things that are not in the continuing claims. they're all lining up to show one progression that should [00:05:05] actually represent an accurate BLS report.
And we turn around and we get a astonishing number that doesn't [00:05:10] make any sense. So that's kind of the history of what's happened here recently. And so [00:05:15] Friday we got a report. It was supposed to be about a hundred thousand plus, new jobs created. It was [00:05:20] 75,000 new jobs created. And if you recall, I did an episode last month about the previous [00:05:25] BLS report, which had a higher than normal, Number that came out, right, so the number that came out was hired. It came out [00:05:30] because we were talking about how it was mainly state and local jobs that were created. In this [00:05:35] particular sector, or excuse me, this particular report, 75,000 jobs were created, was under the amount of [00:05:40] expectation, and then there was a revision in there from the previous month that said, Hey, listen, we're going to revise [00:05:45] the previous numbers by 258,000 jobs negative.
Well, [00:05:50] the month before, they didn't create 258,000 jobs, and then they didn't create. A hundred [00:05:55] thousand jobs this month. So you literally have a negative job creation number from the past two months [00:06:00] showing up here, meaning that we're going backwards in the labor market, and so that's not a [00:06:05] good thing because you've got the administration talking about we're in a healthy economy, it's booming, things are going great, [00:06:10] everything's working in our favor, but these numbers don't align with that.
The other challenge is that in the [00:06:15] unemployment number, we saw it go up from 4.1 to 4.2. Now, that's not a huge [00:06:20] jump. It does bode the question if we have that many negative numbers and the [00:06:25] job private sector a DP payroll comes out, is also not hitting expectations. How can [00:06:30] we only go up from 4.1 to 4.2?
Is that 4.2 unemployment? A real number? And [00:06:35] here's one of the things that I kind of wanna take a look at. That's the U three unemployment number. And if you [00:06:40] go back. It was in the, I think, believe the late eighties, early nineties. We stopped using a number [00:06:45] that's called the U six. And the U six includes all of the people that are still [00:06:50] unemployed beyond a year.
And what it also includes is people that I like to say that are willingly [00:06:55] unemployed, like they less their job, they're off unemployment. They're looking for a job, but they haven't [00:07:00] taken a job yet, and that number is closer to 8%. It is [00:07:05] 7.9%. Now, we quit using the U six number because in the eighties, nineties, [00:07:10] we wanted to say, Hey, listen, we're gonna use the U three 'cause it looks better, right?
And so we transitioned to use that number. But [00:07:15] the U six in a lot of different data sets, you could argue, is a far more accurate number of what this [00:07:20] true unemployment rate looks like. And so. You are looking at this and that's closer to 8%. That's [00:07:25] not real healthy. That's not good at all. And so 4.2 looks better than eight on paper.
And I'm not [00:07:30] saying that this is, you know, again, I'm not saying that the current administration is saying things that are negative out [00:07:35] there, but I'm saying that number of 8% is almost double what the current unemployment rate is. And that's [00:07:40] been a trend for some time, even beyond this administration.
I guess what I'm pointing to is that the unemployment number [00:07:45] and the job market. May not be as good as we're wanting to believe it is. It [00:07:50] is. It is not as good right now as it needs to be. And this report that came out's atrocious. So the [00:07:55] reaction of the current administration was, Hey, this isn't okay.
these numbers are being cooked to make the [00:08:00] current administration look bad. That's literally what was wrote on there. This is a scam that someone is cooking the [00:08:05] books as a vendetta against the president of the United States right now, and that the job numbers were rigged. And [00:08:10] so as a result, I'm gonna butcher the last name here, Dr.
Erika [00:08:15] McEntarfer was fired as the head of the BLS department. And so. you could argue like, is that the right thing [00:08:20] to do? Is that the fair thing to do? But I would argue these numbers have been wrong for quite some time. This isn't the [00:08:25] first time we've seen an inaccurate report.
I mean, it's being called the BS report, not only by us, but many of our peers [00:08:30] as well, because it's not accurate anymore. I heard someone make an argument like, Hey, I think it's unfair that he [00:08:35] fired the head of the BLS report because it's not like. She compilated those [00:08:40] numbers.
It's not like she put those numbers down. Yes, they were provided to her in advance probably for her to [00:08:45] review, but by no means did she create this. And my argument would be like, my argument to that [00:08:50] would be a counter of you're the head of the department and if you're being told and you're being made aware that [00:08:55] there's massive revisions being revised and that things aren't being done correctly 'cause you're having to revise [00:09:00] it at rapid levels, it just basically uncalculated levels we haven't seen before.
There's a problem. [00:09:05] You need to find a way to fix it.
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let's go back a couple years [00:10:05] ago when a DP, who was the private sector payroll said, Hey listen, our numbers are off. And I think [00:10:10] this gets lost a lot in this. Their numbers were off as well. So what did they do? They took a step back, they took [00:10:15] two months off and said, Hey, we're gonna bow out for a minute and we're gonna find a way to [00:10:20] recalibrate how we calculate our numbers because they're off and they need to be better and they to be more accurate.
[00:10:25] And this was a big thing. 'cause a lot of people go, oh, that's gonna change the dynamic of the market because. It's gonna be less [00:10:30] predictable. We're gonna see things that are off now because it's a new reporting system, and what we found was after that [00:10:35] newness wore off and after they got through three months of reporting, their numbers are far more [00:10:40] accurate, and it's not even close.
Far more accurate. Then, you know, imagine [00:10:45] beyond the BLS report. Yes, you have seasonal adjustments, but they're in line. This BLS report is nowhere [00:10:50] even near in line, but yet it's a market mover. And what, I guess what is challenging to people like [00:10:55] myself on this end is when you get a report, you dive into it, you read the revisions, the headline says, boom, jobs [00:11:00] created, met, beat, or below expectation, the market moves.
But then no one [00:11:05] digests that revision in there. And what's crazy about it is the revision should have showed up last month, [00:11:10] which would've moved and anticipated the market to move better than what it was doing. And we [00:11:15] get these revisions later on. It's almost like a delayed reaction. And the challenging side with that is, I'll use this [00:11:20] example.
So the month before we had a positive BLS [00:11:25] report, meaning it beat expectations leading up to that, the a DP report showed, you know, [00:11:30] favorable data for mortgage rates to be lower and bond rates to go down. Our bond yields to go [00:11:35] down. we had a jolt report that was also favorable. We had continuing claims that were favorable, meaning that [00:11:40] all these things were showing that the job market was steadily declining, maybe even deteriorating.
So the [00:11:45] anticipation was the BLS report would match that at minimum meet expectations. [00:11:50] Instead, it comes in and it's way above expectations. Like I, I don't recall, but I think it was like [00:11:55] 50,000 jobs above expectation, maybe 70,000. That shouldn't have happened. Why? [00:12:00] Because when we got the revision the next month.
It was negative 200,000 that [00:12:05] should not have matched up like that, meaning that the market never got the chance to digest that negative [00:12:10] revision because we went ahead and printed a positive number that didn't exist. So then they had to go [00:12:15] back and revise that data, but yet that revision doesn't get calculated 30 days [00:12:20] ago in the market.
So instead of seeing favorable rates, instead of seeing favorable terms. Rates [00:12:25] either paused and went up, and that's the problem with these reports, that they're market movers like that [00:12:30] and that they're getting so much weight put on 'em when they're not accurate. So Trump does what Trump does. He's [00:12:35] taken action.
Fired the director of the BLS now. Again, I also look at [00:12:40] this, you've heard me say this numerous times on here. could you imagine your kids, right? Because this is a [00:12:45] government agency. Lemme back up. It's a government agency, so government agency, printing numbers for the [00:12:50] government on the government's behalf.
Lots of government data in there in the form of government jobs, state, [00:12:55] federal, local, and that's altering the market. Think about that. This report alters the [00:13:00] market more than any other job report, and it's a government, like the government should not be able to control the markets [00:13:05] with a report that's about them that they control.
I think there's a problem because again, could [00:13:10] you imagine kids going to school making their own grades? Like, okay, hey, I'm gonna [00:13:15] make Yep, got an A on this one. Mom and dad excited. Four weeks later revision. It was actually [00:13:20] a C, right? We've talked about that. I mean, literally, it's almost the analogy you could say, you're putting the [00:13:25] cartel in charge of giving me drug data.
What do you think I'm gonna get from that? Right? So the reality is when the [00:13:30] government who should not be in charge of this report, they should literally eliminate this report, is where I'm getting at with this. [00:13:35] Either eliminate it completely from the reporting system because. Government jobs. That's great.
We know they're not [00:13:40] super high paying jobs. They don't alter the economy. The jobs involved in that are not really [00:13:45] they. They shouldn't move the market. The private sector are your better paying jobs. They should be moving the [00:13:50] market because that's where most of the consumer spending is going to come from and most of the dataset should arrive from, and it's [00:13:55] more accurate that we've seen since they've revised their reporting over two years ago.
That's what should happen here. We should [00:14:00] literally eliminate the BLS report altogether, if anything, minimize its effectiveness in the [00:14:05] market and not relay so much information, or excuse me, so much, data dependency on that, especially from the [00:14:10] Federal Reserve setting. Let's come up with an accurate way to do the unemployment.
and get the A right [00:14:15] unemployment number. I go back to that U six. That also includes people that have a part-time job. And that [00:14:20] 8% number, that 7.9% number I was referring to, that includes people that have a part-time job that are [00:14:25] trying to get a full-time, but they can't. So they're having to settle for a part-time.
And we know for a fact we have the [00:14:30] highest number of records of people that have more than one job. And again, that could be two part-time jobs. It [00:14:35] could be a full-time job and a part-time job. There's a lot of things you could pair off there, but we have an all time high record of that. [00:14:40] And the data suggests it's people that have two part-time jobs, not one full-time job, so they're also [00:14:45] included in that 7.9%.
We see the continuing claims are rising. We see that [00:14:50] people are still, the unemployment line isn't getting any shorter, right? We're still seeing high [00:14:55] numbers on that. They're not the highest of records, but we're still seeing higher numbers on that, and the reality [00:15:00] is that doesn't match a 4.2 unemployment rate, is what I'm getting at.
That number is probably [00:15:05] higher, but again, because of the way it's being calculated. The way that it's actually, the data is [00:15:10] collected, the participation rate, the accuracy of people participating in that, all of that [00:15:15] is what arrives to that number. And that's also one of the reasons why I think it suggestively we [00:15:20] put in, we should not put so much weight on that as a, as an economy.
And when you go and take a look at the Federal [00:15:25] Reserve, one of the things that I'll continue to say is, you know, it's interesting to me [00:15:30] how oblivious. Powell and the group are, not all the group, but Powell and the [00:15:35] group are to the economy being quote unquote healthy to the economy being quote unquote [00:15:40] resilient, when in fact there are some stubborn factors showing up that many people, including two [00:15:45] people in particular of the Federal Reserve are coming out and they're saying, Hey, listen.
This isn't [00:15:50] good. These things don't match up. And we probably should be thinking rate cuts. We probably should be looking at, [00:15:55] you know, forward printing data instead of rear view data and that this is a [00:16:00] problem. I think saw report where Powell told the rest of the Federal Reserve, Hey listen, I'm not leaving.
No matter what, Donald Trump [00:16:05] says, I'm not leaving. So we know we've got that battle on the forefront. I think that's more of a stage battle than [00:16:10] anything I'll kinda repeat what I said in the last episode.
Powell, leaving the Federal Reserve would be the worst thing that could happen for Donald Trump [00:16:15] because then he doesn't have a punching bag and he has no one he can point to and blame for the economy. However, as long as [00:16:20] Powell is there, Trump has a runway of doing exactly what he's doing right now, which is, [00:16:25] Hey, listen, I can't fire Powell, so I'm gonna say as many things about what he's doing [00:16:30] wrong as I can possible, because I know he's not gonna quit, right?
He's gonna be on my punching bag and I'm gonna blame him for a lot [00:16:35] of the things that aren't going the way I want him to go in the economy. And then when he finally does leave and I put someone in there, I'm [00:16:40] gonna talk about how far he set us back by X amount of years, that we should be so much [00:16:45] further, but we're not, because we had,a,Insubordinate person running the Federal Reserve. Even if the right guy gets in there, [00:16:50] the right person gets in there, he'll still use that as an example. But he is doing what he can do right [00:16:55] now to kind of say, Hey, listen, I'm gonna fix this. One of the things I'm gonna do is fire the head of the bls, right?
She's [00:17:00] gone, let's get this. Let's get this person outta there. They don't know what they're doing. Now. Let's get the right person in there. [00:17:05] And so I think the question that poses is this. Does the Federal Reserve under [00:17:10] Powell's leadership start to look at these numbers and still add the same level of weight to them with a [00:17:15] new person in there?
Because clearly Trump's gonna put someone in there and get prints the way that he wants it to look. [00:17:20] Does that alter the Federal Reserve's initiative of Labor over inflation right now? [00:17:25] Which I believe it's going to. And how accurate is that reporting going to be? Or do you just [00:17:30] dismiss it all together and put all of your accuracy in a private sector
So what I'd like to [00:17:35] see is a combination of maybe the BLS report just completely being eliminated, right? And [00:17:40] let's put all the weight in the a DP report, that private sector report, the one that can't be controlled or [00:17:45] altered by the government, or even, you know, manipulated by the government. Let's put it in that sector, which has proven to be [00:17:50] far more accurate over the course of the last two and a half years since.
They broke down their report, rebuilt [00:17:55] it, and started revising it appropriately. And let's get away from one over here that doesn't show the numbers [00:18:00] that are accurate and is coming with massive consequences of revisions to the market. And let's set something up to where [00:18:05] we can get an accurate unemployment number.
And more importantly, as this Federal Reserve starts to kind of [00:18:10] transition from the Powell error to the next chairperson's error, let's. Let's really [00:18:15] focus on what matters here and what matters here is our economy and not what side of the [00:18:20] table you're on and what battle lines you have with a person that's in office.
What's more important is [00:18:25] there are homeowners. There are Americans that wanna be homeowners, and there are people that have equity that they need to be able to [00:18:30] use right now to help. Them, maybe it's to get rid of some of this debt they have that they've built up over the years is [00:18:35] trying to survive from this inflated market that we're in.
Let's focus on how we can help people the right way on that. [00:18:40] And those are things that we're going to continue to dissect and look at on this show for our audience and our listeners, and for [00:18:45] people that are not listening to the show, if you would go ahead. Tell 'em about our episodes. Tell 'em to check us out.
[00:18:50] Check us out at Apple. Check us out at Spotify, five star Review our podcast. Check us out on YouTube. Our producers a great [00:18:55] job of putting all our charts when we have 'em in there, as well as just dissecting the episode at What's Your 1 More with the number one. [00:19:00] Subscribe to that channel. We'd love to hear your comments and feedback on there.
And until the next episode, we'll see you. What's Your 1 More. [00:19:05] [00:19:10]
