News: Trump’s scandalous take on the labor market

Thursday, August 22, 2024

Trump’s scandalous take on the labor market

Aug 22, 2024

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QUICK FIX

Donald Trump’s claims of election interference now involve the Labor Department. Just don’t ask his campaign for an explanation.

Let’s back up: The Labor Department’s Bureau of Labor Statistics said Wednesday that the number of jobs the economy added in the year ending March 31 was likely 818,000 less than what was reflected in the monthly reports during that period.

That’s the largest revision in more than a decade. The torrid growth in non-farm payrolls has been a point of pride for President Joe Biden and Vice President Kamala Harris’ administration, and the downward estimate suggests that the labor market was softening earlier than many had anticipated.

That would be a political vulnerability for any incumbent. Trump had to navigate a similar challenge during his time in office when the BLS trimmed 514,000 jobs off the totals reported for the year ending March 31, 2019.

But the Trump campaign on Wednesday didn’t limit its bombardment of Harris to the state of the labor market. Instead, it mounted an all-out assault on both the Biden administration and the Labor Department’s data-collection practices — claiming fraud, “cooking the books” and “election interference.”

“The Harris-Biden Administration has been caught fraudulently manipulating Job Statistics to hide the true extent of the Economic Ruin they have inflicted upon America,” Trump posted on Truth Social.

Of course, Trump often touted positive BLS data while in office — sometimes ahead of its official release. As for his new unfounded allegations, it’s hard to see the advantage Biden or Harris could have gained by manipulating BLS into releasing disappointing labor market revisions less than three months before Election Day.

When asked by POLITICO how the data was manipulated, or how it constituted election interference, Trump spokesperson Steven Cheung said in an email that “clearly it’s election interference by Joe Biden and Kamala Harris to deceive the American people.” He did not respond to a request to elaborate.

It’s not the first time Trump has sought to diminish the credibility of federal institutions or bureaucracies.

He mounted similar attacks against BLS when he was supporting Mitt Romney’s presidential campaign in 2012, echoing former GE Chair Jack Welch’s claims that unemployment data had been manipulated to aid President Barack Obama. During his own presidency, Trump repeatedly hammered Federal Reserve Chair Jerome Powell for not lowering interest rates quickly enough as the economy confronted major political headwinds. Near the end of his term, he sought to increase his administration’s control over federal agencies, stripping protections from career officials who make policy.

BLS is a poster child for why those career officials are necessary, said Keith Hall, a former commissioner of the agency who was appointed by President George W. Bush.

“They follow transparent standard procedures,” said Hall. “They're very transparent about things. The important part about this data is that it's usable, and people don't have to worry about whether somebody's making the data up or not.”

Repeated claims that BLS data has been manipulated — or is otherwise fraudulent — could threaten its credibility over time. Employment reports are revised to provide accurate information that is critical to both policymakers and market participants.

“It is mission critical for BLS and the other statistical agencies to have the trust of data users and data providers,” Erica Groshen, a senior economics adviser at Cornell University and former BLS commissioner, told MM.

“It's a form of killing the messenger,” she added. “The biggest damage is if it makes people who should be paying attention to these numbers disregard them.”

IT’S THURSDAY — Congratulations, you’ve almost survived the DNC. Next up, Jackson Hole. Your host, meanwhile, is headed to his annual fantasy football draft in South Jersey. If you’ve got tips or sleepers, send ‘em my way to ssutton@politico.com.

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Driving the Day

We have a ton of programming all week from Chicago at the CNN-POLITICO Grill. Today’s includes interviews with Speaker Emerita Nancy Pelosi, Reps. Bennie Thompson of Mississippi and Nikki Budzinski of Illinois. Also on tap are Sens. Debbie Stabenow of Michigan and Laphonza Butler of California. Transportation Secretary Pete Buttigieg will round out our programming before the DNC’s Thursday night headliners take the stage.

The Jackson Hole Economic Symposium kicks off in Wyoming … Existing home sales data for July will be released at 10 a.m. … The SEC has a closed meeting at 2 p.m. … and, of course…

Harris will close out the DNC with a (hopefully) prime time speech tonight — The vice president’s economic agenda has focused on making necessities like housing, child care or health care more accessible and affordable. The policy levers she has said she’d use include tax credits, new funds to address housing supply shortages and, of course, the anti-price gouging proposal.

She has also backed previous Biden administration priorities like raising the corporate tax rate and imposing a 25 percent minimum tax on individuals with more than $100 million in wealth (policies that are, suffice it to say, hardly beloved by business leaders worth more than $100 million).

But her speech in Raleigh, North Carolina, last week included a few breadcrumbs about “cutting needless bureaucracy and unnecessary regulatory red tape” and “encouraging innovative technologies.”

Your MM host will be looking for any hints on what constitutes “red tape” and what type of technologies are considered “innovative.”

That last phrase has major implications for crypto — Brian Nelson, who left the Treasury Department to oversee policy for the Harris campaign, told reporters Wednesday that the candidate was “going to support policies that ensure that emerging technologies, and that sort of industry, can continue to grow.”

“Obviously they’ve expressed that one of the things that they need are stable rules, rules of the road, and that was a principle that she highlighted in her speech on Friday,” he added, per POLITICO’s Adam Cancryn.

What Team Harris is saying — Nelson’s remarks came during a reporters’ roundtable hosted by Bloomberg at the convention. He also told reporters that Trump’s tariff proposals are a prime example. Trump has proposed imposing 10 percent tariffs on all imports, but “a week ago he said it was 20 percent. We don't know: Is it 10? Is it 20? If I’m a businessperson I don’t know how to operate my business in that environment.”

Build, baby, build — Acting Housing and Urban Development Secretary Adrianne Todman told Victoria Guida on Wednesday that Harris’s top priority should be housing. “It has to be, right?” she said during an interview at the CNN-POLITICO Grill. “It actually has to be.”

Guida's column from the DNC digs further into Democrats' striking elevation of housing in primetime speeches, even as the "build, baby, build" message doesn’t fit neatly into other Democratic economic policy themes. And potential fissures on the topic loom underneath the surface.

DON’T MISS OUR AI & TECH SUMMIT: Join POLITICO’s AI & Tech Summit for exclusive interviews and conversations with senior tech leaders, lawmakers, officials and stakeholders about where the rising energy around global competition — and the sense of potential around AI and restoring American tech knowhow — is driving tech policy and investment. REGISTER HERE.

The Economy

Where Trump might have a point — Wednesday’s payroll revision was supposed to go out at 10 a.m. but was delayed. Bloomberg’s Elena Popina, Matt Turner and Natalia Kniazhevich report that “at least three banks managed to obtain key payroll numbers Wednesday while the rest of Wall Street was kept waiting.”

Setting aside the “fraud” claims — Wednesday’s revision could have significant consequences for the Fed’s next move.

“If the labor market started to deteriorate sooner than 2024, I think there’s a case that the Fed could indeed cut by 50 basis points in September,” LPL Financial’s Chief Economist Jeffrey Roach told your MM host Wednesday.

According to the minutes from the Fed’s July meeting, which were released on Wednesday afternoon, a “vast majority” of Fed policymakers observed that “if the data continued to come in about as expected, it would likely be appropriate to ease policy” at next month’s meeting. What’s more, “many” of the meeting’s participants said the reported payroll gains might be overstated and may be lower than what’s necessary to keep the unemployment rate flat.

“The broader trend has been toward a slowdown,” Skanda Amarnath, executive director of the worker advocacy group Employ America, told MM after the revision was published. “A lot of the strength [we saw in] previous years was cooling — and that’s fine to a point — but I think we’re past the point where seeking out more cooling is the right call.”

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At the regulators

FDIC’s brokered deposit rule under fire — Several major Wall Street industry groups are demanding the FDIC withdraw a proposal that would reverse Trump-era changes that narrowed the scope of companies that are considered deposit brokers in an effort to make it easier for banks to partner with outside firms.

“As a result, banks, affiliates and other relevant parties would need to reassess numerous arrangements currently in place relating to deposits, potentially leading to substantial changes in those arrangements and how customers access financial services, for seemingly no significant benefits,” according to a letter obtained by MM. The letter — which was signed by The Bank Policy Institute, American Bankers Association, American Fintech Council, Consumer Bankers Association, Financial Services Forum, Financial Technology Association, Independent Community Bankers of America, Innovative Payments Association, Institute of International Bankers, National Association of Industrial Bankers and the Securities Industry and Financial Markets Association.

The toxic avenger? — The FDIC has hired former federal prosecutor Carrie Cohen, now a partner at Morrison Foerster LLP, to oversee the agency’s efforts to address findings that it fostered a toxic workplace culture, Michael Stratford reports.

Elections have consequences — The latest court ruling unwinding the Federal Trade Commission’s prohibition of noncompete agreements is another sign that Biden-era regulatory policies might not survive, regardless of who wins in November, Marcia Brown reports.

— Bloomberg: “TD Takes $2.6 Billion Hit on US Probe, Sells Schwab Shares”

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Fly Around

The Donald Trump Business — Declan Harty covered how Trump could face challenges selling off the shares in his social media business. One area where he’s definitely not hurting? Golf. “The golf and resort business is the biggest driver of the [the Trump Organization’s] cash flow — accounting for about four-fifths of the approximately $80 million in cash after operating expenses,” Reuters reports.

Kicked to the pavement — “The oldest members of Gen X are turning 60 next year. Many can’t afford to stop working any time soon,” The WSJ’s Hannah Miao reports.

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