BONUS First Monday: How Did the BLS Get the Jobs Report So Wrong?

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Paula Pant | Cumulus Podcast Network

Entrepreneurship, Business, Investing

4.6 • 3.4K Ratings

🗓️ 4 August 2025

⏱️ 18 minutes

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Summary

Special bonus episode. The Bureau of Labor Statistics issues massive job revisions on Friday morning. The revisions wipe out nearly 90% of previously reported gains for May and June. This raises fundamental questions about how our most trusted economic data gets calculated. In this episode, we break down how the system works. We examine why the revisions are so large. We explore what this means for understanding the real economy. Friday arrives. The BLS delivers what appears routine: 73,000 new positions added in July. But the revisions tell a different story. May's initially reported 144,000 job gains become 19,000. June's seemingly solid 147,000 drops to just 14,000. These represent 87-90% overestimates. They fundamentally alter the economic picture for those months. The BLS surveys 560,000 businesses each month. They use payroll data from the 12th of the month. But only 60-73% of those businesses respond by the initial release deadline. The remaining portion gets filled through statistical modeling. The models rely on historical patterns. This approach typically produces revisions in the 20,000-50,000 range. But throughout 2025, average monthly revisions reach 66,000. That's triple the normal size. The statistical models aren't capturing current economic conditions effectively. The problem becomes clear when economic conditions shift rapidly. Historical patterns become unreliable guides. The 2024 annual revision was the largest since 2009. What happened in 2009? The Great Recession. Another period when traditional forecasting tools struggled with rapid change. ADP is a private payroll processor. They serve 460,000 companies. They provide useful comparison data. For May, their 37,000 private-sector job estimate aligns reasonably well with BLS's revised 19,000 total. For June, ADP reports a 33,000 job loss. BLS shows a 14,000 gain. ADP's independent data helps validate the revised numbers while highlighting the magnitude of the initial errors. These numbers drive real decisions. Federal Reserve officials use employment data for interest rate policy. Investors allocate capital based on these reports. Workers make career decisions based on perceived labor market strength. When the initial data misses by 90%, everyone operates with fundamentally flawed information. The revisions expose how fragile our economic measurement systems become when conditions change faster than models can adapt. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Transcript

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0:00.0	Welcome to a very short and completely spur of the moment bonus episode that I'm referring to as First Monday.
0:06.6	If you are a longtime listener of this show, you know that on the first Friday of every month,
0:11.3	we cover the latest economic news and we lead those Friday episodes by talking about the jobs report,
0:19.3	which is produced by the Bureau of Labor Statistics, the BLS.
0:23.2	And our first Friday conversations have always been wonky, data-driven, a little in the weeds,
0:29.8	a little for the nerds. But that's who we are. We're not an outrage-bait show. We like data.
0:36.4	We like evidence. We like nuance. And part of the reason why, ever since
0:41.1	the first Friday segments began, we have focused so heavily on jobs data from the BLS is because, as I
0:47.7	have said, time and time again, if you want to understand how the economy is doing, don't look at the stock
0:53.9	market. Look at two things.
0:55.7	Look at jobs data and look at the bond markets. Look at the number of investors who are
1:01.6	flooding into or out of treasuries. Because between those two things, between jobs data and the
1:08.1	bond markets, that's how you get a much better understanding of the economy,
1:14.0	far, far better than anything the stock market is ever going to tell you. So if you're a long-time
1:18.8	listener, and if you listen to our first Friday episodes, you know that we've been covering this
1:23.4	for a very long time. And so it was a surprise over the weekend when the BLS ended up in the headlines.
1:30.3	For those of you who have not heard, on Friday, the BLS issued the jobs report as they do on the first Friday of every month. That report showed that the U.S. gained 73,000 new jobs in the month of July. It also revised the estimates for May and June
1:46.1	downward by a very substantial margin, which we will talk more about in a moment. After the
1:52.4	first Friday report came out, the administration fired the head of the BLS, accusing the BLS
2:00.3	commissioner of politicizing the numbers.
2:03.0	In a post-on truth social, President Trump wrote, quote,
2:08.1	in my opinion, today's jobs numbers were rigged in order to make the Republicans and me look bad.
	...

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