Larry Kudlow: US Economy Weakened by Flawed BLS Data and Fed Inaction

Flawed Job Data and Economic Revisions

• 📉 Bureau of Labor Statistics (BLS) data is criticized for being broken, with a significant 911,000 job loss revision for the past 12 months ending March 2025.
• 💡 Initial estimates of 146,000 jobs per month were revised down to 71,000, indicating 76,000 fewer jobs than reported.
• ⚠️ The BLS surveys only about 2% of US businesses, with a response rate yielding less than 1% of all businesses.

Federal Reserve's Inaction and Market Signals

• 🏦 The Federal Reserve is accused of being overly dependent on flawed data, failing to cut interest rates when it should have.
• 📈 The Fed should have lowered its target rate from 4.5% to 3% by now, especially as private payrolls have been flat for three months.
• 📉 An inverted Treasury yield curve (three-month rates above 10-year rates) signals overly tight monetary policy.
• 📉 Crashing lumber prices and a flat Dr. Copper indicate a deepening housing recession and suggest the Fed should reconsider its stance.

Economic Strengths and Policy Recommendations

• 🚀 Despite data issues, Q2 GDP grew at 3.3%, and Q3 is tracking at 3%, with factory orders and business equipment showing strength.
• 💰 This economic resilience is attributed to the Trump tax cuts, which are boosting the economy.
• ✅ Implementing tax-free tips and overtime faster would further improve the economy and provide a clearer picture of job growth.