Trump's jobs report retaliation "raises alarm bells"

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This is

very

not good.

And I'm not just talking about the jobs numbers here either.

From American Public Media, this is Marketplace.

In Los Angeles, I'm Kyle Risdall.

It is Friday today, August the 1st.

Good as always to have you along, everybody.

It is really important to be really clear about what happened today.

We got that July jobs report this morning, as you know, 73,000 new jobs last month, along with sharp downward revisions for May and June.

Not great.

Not great at all.

But then, hours later, President Trump fired the commissioner of the Bureau of Labor Statistics, saying this afternoon, and I'm quoting him here, In my opinion, today's jobs numbers were rigged in order to make Republicans and me look bad.

You are, of course, entitled to your own opinion, Mr.

President, but you are not entitled to your own facts.

And the fact is that until today, there had been no reason to believe government economic data was being manipulated for political purposes.

That is, as regular listeners, no more than I usually say to set up our Friday roundtable, but it is the policy of this program that context matters.

Heather Long is chief economist at the Navy Federal Credit Union.

Courtney Brown is at Axios.

Hey, you two.

Hi, Kai.

Hey, Kai.

Heather, you get to go first, and I guess I just want your reaction to the news of the day.

I gasped when I saw it.

It's unprecedented, and it raises a lot of alarm bells about the data integrity of the United States going forward.

You know, in the short term, the good encouraging news, silver lining, if there is one, is that the deputy BLS commissioner will step in.

He's been there over a decade in that role.

And so I don't think we'll start questioning data integrity tomorrow.

But this,

I mean, look, there's going to come a point in the coming months when we start to see some good data.

And everyone's going to be sitting there wondering, was this good data that was manipulated?

And

that doesn't help anyone.

So, Courtney, we had Martha Gimmel from the Yale Budget Lab on the program yesterday.

And I asked her this specific question of whether there's any reason to believe, and this was in the context of data collection changing, right, for your resources, survey responses, all that.

I asked her if there was any reason to believe up until yesterday that data was being manipulated,

and she said absolutely not.

And then this afternoon, after this news broke, she emailed me and said, Hey, you remember that thing I said yesterday?

And I guess my question to you is:

Do you blame people for starting to think that maybe it's going to be a problem?

I don't.

I don't blame people for starting to think that way.

There are a few things things happening here.

The BLS

is trying to do

what it can with fewer resources.

We know already that it is

cutting back on its collection of data with respect to the CPI report.

We know that response rates

among all of its surveys that kind of compromise the important economic data we look at

response rates have been fallen.

What we cannot say is that there has been political manipulation of the data, as President Trump has suggested.

I spoke to his top economist this afternoon, Council of Economic Advisors Chair Stephen Miran.

You know, he said that there needs to be some innovation on the part of the BLS to get around these issues and help address the massive revisions that we're seeing, but he stopped short of admitting that the problem was political.

He said that he believes what the numbers, what the BLS says as far as jobs growth is concerned.

Heather, talk to me about those revisions because they were big quarter million over the past two months downward.

I mean, that's a big deal.

It was certainly eye-popping, depending upon how you look at it.

The biggest revision since the 1970s outside of April 2020 when everything was just impossible to measure.

So obviously the headline number, 73,000 jobs added, that was pretty weak, weaker than expected, but then June revised down to 14,000.

I mean, that's practically zero.

And May, 19,000.

And the big change there was really state and local government jobs.

They kind of just disappeared in the reports.

So almost all the jobs added in the past three months have come from the healthcare sector.

Without that, those three numbers would be negative.

And so look, I think what this reflects is a number of issues going on.

Courtney talked about a few of them.

I would just add on top of that that we have lost a lot of immigrants in this country in the past few months, you know, and down 1.5 million in the labor force that we know of.

And that's made this really, really difficult to adjust seasonally, seasonal adjustments to do some of the normal statistical revisions that are done.

That's not cooking the books.

That's trying to get an accurate count from a survey.

Yeah, it's important to say here, just so everybody's clear on this, and I don't mean you do, I mean, everybody who's listening, revisions are normal and they happen.

And this is what you want because that's how you get verifiable and trustworthy data.

Courtland, let me ask you this.

So, Chair Powell says,

has said all the time, and he said it in his press conference on Wednesday: look, the labor market is holding up.

I wonder, do you think, had he had today's news on Wednesday, that the rate cut decision might have been different?

I'm going to spend the next week,

I think, trying to trap down members of the Federal Open Market Committee and ask this very question because I think it's such a good one.

What if you had had this data on Wednesday?

What would have changed on your outlook about the economy?

Because as you say,

you know, Fletcher Powell sounded like he was thinking the economy was fine, which In all fairness, it kind of did look fine before today.

This report completely flipped our understanding of the economy's health on its head.

And we have concerns today that we just didn't have on Wednesday.

I wonder, Heather, what you think of this, that President Trump is now likely to get his rate cut in the September meeting.

It won't be anywhere near what he wants, right?

So let's be obvious about that.

But he's going to get it for the wrong reasons.

You mean in the sense that he's going to get it because the economy is weaker.

Right.

The economy is weakening and no incumbent president wants a weaker economy.

Yes, I fully agree.

And you're right, it looks now like there could be a September rate cut, an October rate cut, and a December rate cut.

I mean, we'll see.

A lot can happen.

But

certainly, one of the things that stood out to me in today's jobs report, besides what we were just speaking about, those revisions, was a lot of sectors are actually doing layoffs.

It's not just the federal government.

You know, warehouse is down, retail sector is down, professional business, even manufacturing sector that we're trying to revive, you know, has lost lost jobs in the last three months now and and that does you know really send a red a red alarm you know me I've been calling this a frozen job market for months and now I call it a red alarm job market so yes it's time to cut in September but we saw this playbook last summer right almost the exact same thing happened there was regret they didn't cut in July and they got on it in September Courtney let me ask you this and I don't want to get too inside baseball but much was made on Wednesday of the two dissents right uh from uh waller and bowman uh two governors right members of the board of governors as opposed to regional fed presidents um first time in 30 years whatever the two have dissented how big a deal do you oh federal reserve expert think that is

you know what i think i think dissents are healthy i'm i i've come around to that idea so i think it's totally fine that uh top fed officials are saying actually, I disagree with this.

I'm going to stake a claim here.

But what it signals is that we are entering a different period.

We are entering a period in which these decisions might

get, I don't know, more difficult when it comes to what the Fed is deciding to do with respect to interest rates and kind of thinking about the labor market weakness on one hand and the still very persistent inflationary pressures that are evident across the economy.

So, disagreement is fine.

And I think that

Fed Governor Waller, Christopher Waller, who was appointed by Trump, both we should say, were appointed by Trump, they've kind of staked this,

they've put their ideas out there that they think a cut should have happened this week.

You know, they are worried about the downsides to the labor market.

Fed Governor Waller expressed that clearly.

And I don't know, maybe he was right.

Yeah, yeah, it was interesting to to read those two dissents.

They put out statements today, I guess.

Heather, last question to you.

You got about a minute, and I want to draw on your

expertise as the chief economist at NFCU.

You've got all kinds of data, I'm sure, that comes to you.

Talk to me about the general overall health of this economy.

What are you seeing, and where does that leave your gut feeling about the economy?

Yeah, it really looks a lot like a K-shaped economy again, where the top is doing really, really well and the bottom has been struggling.

And now we're starting to see the middle struggle some what I mean by that our data shows that for instance credit card spending generally growing for people earning 170,000 or above but really flatlining or even pulling back for people in the middle and more moderate income another one that really stands out to me is a lot of people are increasing their savings and I don't mean in their long-term savings account I mean it's literally saving more cash in their checking account and using their debit card instead of their credit card because they don't want to run up more debt.

And it's just these signs of caution, abundance of caution.

K-shaped economy.

We haven't heard that in a long while.

Heather Longstreet's chief economist at Navy Federal Credit Union.

Courtney Brown is at Axios.

Thanks, you two, for your wisdom.

Thanks, guys.

Have a nice weekend.

You too.

Ugly from the jump on Wall Street today, although not as ugly as I kind of thought it would be.

We will have the details when we do the numbers.

Tariffs, as we all know,

right, we know that, they are not in fact paid by the country upon which they are imposed.

They are paid by importers, American importers, for the purposes of this discussion, which means the costs are ultimately borne by American consumers.

And all along the supply chain, from ports of entry to store shelves, are businesses that have to decide how much of those import taxes to pass along and how much to absorb.

There's some research out from the J.P.

Morgan Chase Institute that shows the degree to which a business is exposed to the Trump tariffs depends a lot on its size.

And it turns out, mid-sized companies, not the really big ones, not the really small ones, mid-sized companies are disproportionately vulnerable.

Marketplace Adjustin Ho said about finding out why.

Argonaut Manufacturing Services is a pharmaceutical manufacturer based in Carlsbad, California.

It makes drugs and diagnostic tests tests for other companies.

And depending on the product it's making, the company imports chemicals and other raw materials.

Really, all over Europe, a number of materials come from China.

Wayne Woodard is the company's founder.

If you look at the whole supply chain of the raw materials that go into those products we buy for our customers, they are generally speaking global.

Which means the company is exposed to all kinds of tariffs.

Woodard says that's not only because it has to import its raw goods.

It's also because as a mid-sized drug manufacturer, Argonaut doesn't have as much leverage with its suppliers compared to bigger drug companies, which have the scale to negotiate discounts.

If you were going to use thousands and thousands of kilograms of this material, you're going to have a different negotiation with the raw material suppliers than the small and mid-sized companies.

There's no official definition of a mid-sized business.

The J.P.

Morgan Chase Institute says mid-sized companies' annual revenues can range anywhere from $10 million to a billion dollars.

So think, you know, more than 10 or 15 employees but not like the big public companies that you hear about all the time that's chris wheat he's president of the jp morgan chase institute and he says mid-sized companies also have disadvantages compared to smaller ones that's because small companies often buy their supplies from the same places consumers do big retailers which are more likely to absorb the cost of tariffs but wheat says mid-sized companies typically buy directly from importers if you're a medium-sized business and you're buying something more specialized or you really need to get it from a particular supplier, there's quite a bit of exposure.

The J.P.

Morgan Chase Institute found that mid-sized companies with the most tariff exposure include chemical manufacturers, think drug companies like Argonaut Manufacturing Services, also auto parts manufacturers and retailers.

Our primary business is retail grocery, specializing in Asian food.

Chris Dewong runs Hawaii Supermarket, a grocery store near Los Angeles that sells products from China, Vietnam, Thailand, and Cambodia.

He says some of his suppliers are passing along tariff surcharges as high as 20 and 30 percent, especially on the cheaper imports he sells, items that cost less than 10 bucks a piece.

So, like sauces or seasoning packets, a lot of the dried goods, just because the margins are already so thin on those.

Duong says he's doing what he can to avoid having to raise his prices.

He's trying to negotiate with his suppliers to lower those tariff charges.

He's also reducing his profit margins.

Duong says says the fear is that consumers just won't buy those products if they're too expensive.

On the retail end, we kind of know how price-sensitive certain products are.

If you take too big a price increase, then the demand will just fall off a cliff.

But absorbing the cost of tariffs can have consequences for the economy.

The J.P.

Morgan Chase Institute says mid-sized businesses are responsible for about a third of private sector employment.

Our company is about 35 people.

We've reduced it by about 10%.

That's Lyman Munson.

He runs S.L.

Munson ⁇ Company, which manufactures and imports various tools used to make auto parts.

He says when he tried passing along tariffs as an added surcharge, people had really bad reactions.

They said, oh, we're not accepting surcharges, but you have to sell it.

You have to deliver because we have a purchase order with you.

And on line 37, it says we don't accept any tariff charges.

So Munson says he has a new strategy.

He's simply charging his customers more for his products.

No mention of tariffs.

We just have a new price that is based on our cost.

Costs have gone up.

Should costs go down, we'd be glad to reduce our price.

Munson says he doesn't have any other options.

After all those layoffs, the company doesn't have much else to cut.

I'm Justin Ho for Marketplace.

Coming up, finance-wise, right now, I'm definitely taking a gamble.

The post-grad gig economy.

But first, let's do the numbers.

Yeah, the wawas.

Things headed where you might expect today on Wall Street, given the president's moves on global trade.

And oh, by the way, the firing of the messenger over that jobs report.

The Dow Industrial is down 542 points, 1.2%, 43,588.

That was not the low for the session.

The NASDAQ stumbled 472 points, 2.2%, 20,650.

The SP 500 subtracted 101 points, 1.6%, 62, and 38%.

For the week, the Dow off 2.9%, the NASDAQ down 2.1%, S ⁇ P 500 declined 2.3%.

Bond prices went up.

The yield on the 10-year T-note down 4.20%.

That's all about expectations of weaker economic growth.

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Is it time to reimagine your future?

The right business skills may make a difference in your career.

At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world.

We'll teach professional skills to help you pursue your goals, like business management, strategic planning, and effective communication.

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A different future is closer than you think with Capella University.

Learn more at capella.edu.

This is Marketplace.

I'm Kai Rizdahl.

If you're going grocery shopping this weekend, keep your eye out for digital price labels.

That is to say, labels on which prices can be changed easily and frequently with the mere tap of a keyboard.

Walmart, for instance, has them in nearly 10% of its stores working this way up to half of them soon.

The United States, though, is kind of behind the curve on this compared to some grocers over in Europe.

Jennifer Williams wrote about digital labels in the Wall Street Journal the other day, how stores are using them now, and how they might use them here.

Jennifer, welcome to the program.

Thank you for having me.

So I love this piece because it's so behavioral economics, but we'll get there.

The first thing I want you to do, though, is tell me how these stores in places like Norway and the Netherlands are using these electronic labels sort of day to day.

Yeah, so

Europe has been, European grocery stores have been using electronic shelf labels for years.

And in Norway, for instance, at Remo 1000 grocery stores, prices can change up to 100 times a day, more during the holidays, with just a touch of a button to match their competition.

They always want to be meet match their competition or be lower in price.

And so, for the consumer, if you're shopping for eggs or milk, for instance, and you see one price, it could change by the time that you're checking out, but it would only be lower.

Right.

And then

at Albert Hein, they change prices less frequently, as much as as four times a day for any one item, and they are doing it to reduce food waste.

So it has to do with items that are about to expire on any given day.

Right.

So,

and this is where it gets so interesting because, as you said, usually these stores are lowering prices.

My gut when I read this piece was, oh man, they're going to be jacking up prices because they're going to know that they've sold, you know, 14 pints of milk and the 15th is going to cost a dime more or whatever it is.

But in practice, that is not what happens.

That isn't what happens.

That is the fear.

Consumers worry about this.

Lawmakers in the U.S.

and in Europe worry about this, and they have pressed the stores to ensure that they are not going to do some kind of like Uber-style surge pricing.

Right.

So,

by the time I get back from the bread aisle, the milk is more expensive, right?

Yeah, yeah.

And I talked to some researchers who have studied these labels and what grocery stores are doing with them, and they don't find any evidence of search style pricing.

And the reason or a main reason for that is we have so many options for groceries.

If my experience at one particular store is by the time I check out, the cost of the things in my cart have gone up.

I'm just going to go to another grocery store.

And the chains know that this is the dynamic and they don't want to risk losing that customer.

Right.

Of course, we should say prices do go up.

They just raise the prices on these electronic labels when the consumers aren't in the store, right?

They do it overnight.

Yes.

Yeah.

So I talked to Remo 1000, for instance, about this.

They do sometimes raise prices after a period of lowering them, but the customer doesn't see that.

It happens overnight.

There was also the interesting thing about

that

Belgian and Netherlands company about reducing food waste that you mentioned.

Items that are expiring,

they'll lower the prices on those too and do it not infrequently.

Right, yeah.

So let's say you're at a shelf where there are blueberries expiring in three days and blueberries expiring today.

They'll start with a discount of 25% for the ones expiring today, and then as needed, they'll go up to 40%, 70%, and then finally 90%

for the expiring fruit versus the one that will last a few days longer.

And they've reduced, they say, 250,000 kilograms of food waste, which is about 550,000 pounds by doing this.

I'll take the expiring blueberries.

I'll pass on the expiring chicken, though.

That's the one that always gets me.

You can't discount that stuff enough.

So look, just to wrap it up, fears of being exploited, perhaps overblown?

So far, it's not showing up.

In the U.S.,

we're starting to see more of the electronic and digital shelf labels like Walmart, Kroger, Whole Foods.

They're starting to roll them out.

The ones that I talk to, like Leto U.S., they say they have no plans for surge-style pricing.

So for now, it

may be overblown.

No plans is doing a lot of work there, though, right?

Right.

Jennifer Williams at the Wall Street Journal.

Jennifer, thanks a lot.

Good to talk to you again.

Thanks for having me.

We started the program today with the macro story on the U.S.

labor market.

We're going to bookend it with a micro story on labor.

The Federal Reserve Bank of New York says unemployment for younger workers, people 20 to 27 specifically, is up since the beginning of the year, including for recent college graduates.

That was our cue to call Troy Swinner.

We've been talking to him since he graduated in 2023.

And a little bit more than a year ago, he made the move from Ohio to Los Angeles to try to make a go of it in entertainment.

The first year went about as well as I think I could have hoped for since I'm still out here.

And when I originally moved, it was on like a six-month lease of sort of like, we'll try this and see what happens.

And since I'm still out here, I'm really enjoying it.

Like 11, 12 months ago,

I still hadn't worked in entertainment.

I had just gotten back on with the Lego store, which is the job that I had right out of college.

And then it quite literally changed in an instant because one of my good friends out here now, she texted me just out of the blue basically being like, hey, do you want to come work for me for a couple of days?

And I said, oh my God, money, yes.

And she said, lesson one, always ask the rate first.

That production gig, it was for two days at first, and then two days became three, three days became four, and then eventually they just booked me for the entire season.

Finance-wise, right now, I'm definitely taking a gamble.

I'm quitting the Lego store,

because I'm getting a little bit more opportunities in the production world, and like one day of these, like, production day rates, 12-hour days, is more than I make in a week at Lego.

And so if I can open myself up to more of those opportunities, even if it is a bit more of of a gamble, I feel like

it's a good trade-off to

make myself be able to commit then have to say no, which I have before because like I couldn't shake a shift in Lego or I'd already used up my sick time.

The biggest challenge right now is that

finding.

gigs.

I have like one lined up right now in the middle of August.

I'm somebody who likes having stuff planned out that I can be like, oh, I know what I have each week and each day.

And

the entertainment world as it stands right now is very seat of your pants.

The job market still feels

that same sense of daunting that it did when I graduated.

I feel better about it simply being

here than I did in Ohio because I kind of got to that point where that realization of sending in applications that took so much time and it never got me anywhere so much as simply meeting people did out here.

It

feels

better simply being here because truly everyone's in the same boat.

And if all else fails, honestly, my manager was super nice at Lego.

They said, you know, if you ever need extra cash, come back.

We love you.

And I said, thank you so much.

Troy Swinner making his way in LA.

This final note on the way out today.

I said on this program back in February that the institutions of this democracy, upon which the institutions of this economy and the fortunes of all of us in it depend, were under threat.

It is very tough to read today's developments as anything but another dangerous step down that road.

One more thing, actually totally different subject.

Today makes it 20 years to the day that I've been hosting this program.

And I just want to say thanks for coming along.

Our theme music was composed by B.J.

Lederman.

Marketplace's executive producer is Nancy Fargo.

Joanne Griffith is the chief content officer, Neil Scarborough's Vice President and General Manager.

And I'm Kyle Risdall.

Have yourselves a great weekend, everybody.

We will see you again on Monday.

This is API.

Is it time to reimagine your future?

The right business skills may make a difference in your career.

At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world.

We'll teach professional skills to help you pursue your goals, like business management, strategic planning, and effective communication.

And you can apply these skills right away.

A different future is closer than you think with Capella University.

Learn more at capella.edu.