Newscasts - Market Talk: Jobs report accuracy 'in question' at critical moment

C3.ai

04/09/2025 22:22

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Source: 'Reuters - Business videos'

Description: A day before the release of the U.S. Labor Department's closely watched August nonfarm payrolls report, Robert Conzo, CEO and managing director of The Wealth Alliance, wondered how "real" the data would be given the controversy over the substantial downward revisions in the prior month's report. Lisa Bernhard has more.

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Video Transcript:

Markets brace for Friday's jobs report. Joining us is Robert Conzo of The Wealth Alliance. Okay, Robert, tomorrow we get the critical non-farm payrolls report with September typically being a weak month for stocks. How much is riding on this report for markets?

This report is important. I think what's more important, though, is not so much the number, but the how these numbers are being put together. The BLS is in question, Trump is riding hard, fired chairperson. And now we're getting questions on what's going on? Last year, if you remember, Lisa, we had 800,000 job revision down. That was staggering. The recently, May and June, 258,000 revised downward. That was huge. That set Trump on a tear. We looked out from January to June, the total revision so far, 460 downward. That's tracking what it did last year. That's dangerous because governments, mega-cap companies, economies are looking at these numbers and trying to drive policy. If you don't have faith in the numbers, then what? So, the 75,000 job number that's supposed to come out. How stable is it? How real is it? That's a big question. It's a problem.

Well, that leads me to what was going to be my next question for you, which is, since this is the first jobs report with after Trump having fired the chief of the Bureau of Labor Statistics, how closely will you scrutinize this? Do you think it needs closer scrutiny, this report?

Yes. Well, if the mechanism by which the report is being generated, which are, it's very old school. You’re talk about phone calls, surveys, handwritten mailings. I mean, these things are antiquated. So, if the methodology is an issue when you start questioning the number itself. Look, right now, it's the best we got. And it's been used for a long time. So, we have to take the number seriously, whatever it is, and it will be scrutinized, maybe a little bit more, but from a perspective of is it important? Sure, it's important if the labor market is pulling back, remember between 100 and 150,000 jobs is considered good if you're at 75,000 and it gets revised down to 19,000, the labor market is changing and that's a concern. But by the way, that change probably is more that companies are just holding off. Rather than hiring, they're waiting to see, and that that's a direct derivative of the uncertainty related to tariffs and how people could create budgets and manage their balance sheets going forward. CEOs having a very hard time doing that right now with all these changes that are happening.

Lots of Fed drama, of course, today the US Justice Department launched a criminal probe into Fed Governor Lisa Cook for alleged mortgage fraud. Meanwhile, on Capitol Hill, we have Stephen Myron, who is Trump's pick to be on the board of governors. He's testifying. Do you see, I'll just ask you this flat out, do you see the Fed's independence as fraying?

The Fed has been pressured by administrations in the past, and again, I don't have evidence to that but defend the government and what they do is very well connected. So right now, we know one thing, they're being pressured. Trump has been pressuring Powell for a long time. He was threatening to fire him, saying he's stupid. I mean, it's really kind of really hard line and we know one thing, Powell has held the line. He hasn't changed his view, which was hold rates, and maybe he did it because of pushing back against Trump. He also did it because he didn't want to be Burns in the 1970s. Was cut it short and then Volker had to come in and save the day. He also didn't want to be in recent history, Canada and Australia, who cut too early. So, he held the line. He's held his independence. This attack against Lisa Cook is probably what motivated Trump, for many reasons, doesn't believe she's qualified for the job, and he wants to put a person there that he believes would agree more with him. So, there's pressuring going on. I still believe, though the Fed is acting independently, I think they've shown that, and they continue to show that, and I believe they will going forward.

Markets are pricing in a 25-basis-point rate cut at the September policy meeting, depending on what happens with tomorrow's jobs report. Do you see that as potentially being a jumbo 50 basis-point-cut, which was what we saw exactly one year ago? What do you think?

Well, the 50-basis point cut that happened a year ago, remember before that the cut happened four years before in 2020. So, it was a long time before the 50-basis-point cut. And on top of that, we had to run up in interest rates in 2022 from 0 to 5 in less than a year. So, cutting 50-basis-point, the last cut in September, it wasn't as dramatic as it may have seemed now. Now, you have a different scenario. 25-basis-point cut is pretty much on the table. People feel it's happening, it's warranted. Going up to 50 is a different ballgame altogether. And the reason why is you have people on the opposite sides of that fence. Some people believe, "Hey, a rate cut dropping should happen. Should happen greatly because the rates are restrictive, they're high, they're hurting small caps follow the rest of the world and start to do it. You're behind the curve. Cut." And other people feel that's not really necessary. You don't have to spur the economy. It's just that you don't have to do it. So, you have many people on either side and that extra 25 basis points is not as clear cut as maybe it once was. I believe 25 basis points is very well warranted. He should do it. The 50, I don't think it's really 100% necessary right now. I think we have to see how this labor report and what continues to go on, if corporate profits still continue, well, then maybe that 25 basis points really isn't necessary. I think a little bit more data is necessary for a 50.