MENU
component-ddb-728x90-v1-01-desktop

Trump jumps the gun with early tweet hinting at strong May jobs report

President Donald Trump attends a Change of Command ceremony at the U.S. Coast Guard Headquarters, Friday, June 1, 2018, in Washington. (AP Photo/Jacquelyn Martin)

The Friday Bureau of Labor Statistics (BLS) report showed U.S. unemployment is at an 18-year low, a fact that was apparently so exciting that President Donald Trump tweeted about it more than an hour before the data was officially released.

The president traditionally has access to the BLS statistics the day before they are made public, but under a 1985 policy directive he and other members of the Executive Branch are prohibited from commenting on the numbers until an hour after they're posted.

At 7:21 p.m. EDT, President Trump tweeted, "Looking forward to seeing the employment numbers at 8:30 this morning."

It was worth looking forward to. The U.S. added 223,000 jobs, notably higher than economists' early estimates. The unemployment rate hit 3.8 percent, the lowest it's been since April 2000 and labor participation remained steady with signs that more people are returning to the workforce.

Economists, market-watchers and former government officials flagged Trump for the early tweet that cast a vague but favorable glow on the yet-to-be-released report.

"If the president just tipped that the numbers are good, he broke the law," tweeted Austan Goolsbee, former chairman of Barack Obama's Council of Economic Advisers.

While some argued there was nothing appreciable about the president's message, the markets responded with a jolt upward almost immediately after the tweet.

Economist and former Treasury adviser Ernie Tedeschi explained, "Just a 'good', 'bad', or 'meh' from someone you trust gives you a huge leg up in early trading."

Citing a sharp uptick in 10-year U.S. Treasury yields right after the tweet, former Deputy Secretary of Labor Seth Harris wrote, "Here's why US government employees are supposed to stay quiet about the #jobsreport until 9:30AM on the day of the release."

The White House dismissed the notion of wrongdoing, telling reporters on Friday that the president did not release any relevant information. "This is very important, no one revealed the numbers to the public," said Larry Kudlow, the head of Trump's National Economic Council.

Kevin Hassett chairman of the Council of Economic Advisers said Trump sent the message because "he loves the economic numbers." Asked if the president's tweet was appropriate, he replied, "He didn't put the number in a tweet or anything."

Aparna Mathur, an economic policy scholar at the American Enterprise Institute said the tweet sounded innocuous, but it was certainly "suggestive" given the good jobs report that followed.

"I do think it is serious that he suggested it was a report we should be looking forward to. I don't think that's a precedent we should set for future reports," she said.

While this was the first time Trump preempted the public release of the jobs report, it was not the first time he commented on it before he should have.

In August 2017, Trump was much less subtle and tweeted about the "Excellent Jobs Numbers Just Released" 15 minutes after the data was published. Two months later, former White House officials Sean Spicer and Reince Priebus also jumped the gun, commenting on the numbers minutes after they were made public.

According to Aaron Sojourner, who served as a senior labor economist on Trump and Obama's Council of Economic Advisers, stressed that the rule is in place for a reason, to safeguard the data from being "tainted by political spin."

For years, U.S. employment data has fueled endless theories about false or manipulated statistics, including by President Trump. Before taking office, Trump routinely denounced the monthly job statistics as "phony numbers," claiming the real unemployment figures were as high as 40 percent. Since becoming president, he has strongly defended the record-low jobless rate.

Releasing information about the jobs report early feeds skepticism about whether the numbers are truly objective, Sojourner warned.

"It's frustrating," he told Circa. "The policy is there to create a separation between the official, independent, scientific estimates that everyone relies upon ... and the political spin that gets laid on top of that."

Additionally, he noted, the 7:21 a.m. tweet diverted attention from an otherwise positive report.

'CHUGGING ALONG' OUT OF DEPTHS OF RECESSION

Economists generally agree that the addition of 223,000 in May keeps the United States on the slow but steady crawl out of the Great Recession. Since October 2010, the economy has been on an unbroken course, adding jobs every single month.

The reason for the growth is, in part, because of the depth of the recession and the fact that when it took hold around 2007, labor participation rates, wages and other indicators were already relatively poor.

"We had a really big fall and its taken us a long time to climb out of the hole," Sojourner said. "We've had a lot of room to make up, and it's been basically steady chugging along."

Elise Gould of the Economic Policy Institute (EPI) added a caveat to an otherwise solid job report, warning a large percentage of the drop in unemployment is for "the wrong reasons."

In the past two months, about 85 percent of the drop in unemployment was the result of people leaving the labor force, including a large number of Baby Boomers entering retirement. Only about 15 percent actually found jobs, according to Gould.

There is more to the story than the top-line figure of 3.8 percent in unemployment. Other indicators have also been trending in the right direction over recent months, a sign that the recovery is taking hold, Mathur stated.

The number of involuntary part-time workers has been on the decline and was relatively unchanged in May as were the number of discouraged workers. The number of long-term unemployed (without a job for 27 weeks or more) has declined by 470,000 over the past year.

"I think it suggests optimism about the economy," Mathur said, noting the president's tax cuts and reform will likely help drive the recovery.

While the stable growth pattern is a sign of health, it still falls short of the rate of rate of expansion President Trump promised on the campaign trail and in office.

Trump has said he would create 25 million jobs over the next decade. That breaks down to 2.5 million jobs per year or about 208,000 per month, Sojourner explained. He added that even with significant gains in May, Trump is still about 367,000 jobs behind that promised pace.

LOW UNEMPLOYMENT NOT TRANSLATING TO WAGE GROWTH

For many American families, the pace of the economic recovery has been painfully slow, particularly wage growth. Since the recovery began, it has been one of the most stubborn factors, barely keeping pace with price inflation and increases in the cost of living.

This month, wage growth ticked up a fraction of a point (0.3 percent) which translates to an annualized rate of 2.7 percent. For many economists, the best thing that can be said about the number is it's not negative.

"The challenge for working families is price inflation has crept up," Sojourner said. "So it's basically wiping out this modest wage growth."

Price inflation in April was 2.5 percent and averaged above 2 percent in 2017. Real wage growth, adjusted for inflation has been falling and is now close to zero.

It's a conundrum. The official numbers tell a story of a competitive job market with the U.S. economy at or near full employment. Yet the average employer is not responding with higher wages.

"I think it's because the unemployment rate is overstating the strength of the economy," Gould told Circa. "There are other measures that tell us there is more slack than that unemployment rate would suggest."

Among those measures is data showing 71 percent of new workers are just entering the labor force after being dropped from official estimates — that is to say, the statistically forgotten men and women.

"It shows you there's still a lot of slack," Gould said. Employers are interpreting that as a sign that it is not yet time to offer higher salaries, because there is still a reserve of new workers flowing into the labor market.

"It's a diminishing reserve, but there still is a reserve out there," Gould said. "So workers don't really have the leverage to bid up their wages yet. I think they will. I think the wage growth will come if we let the economy continue to go towards full employment."

As the economy continues to absorb the new workers who were sitting on the sidelines, the wages will go up, Mathur stated.

"I think it's inevitable that process will happen, but we have to be patient because there was a huge backlog of workers who were not getting jobs who are now getting jobs," she said. "We need to be patient and wage growth will happen."





close video ad
Unmutetoggle ad audio on off

Trending