260,000 non-farm jobs evaporated out of thin air! The U.S. statistical system is in a trust collapse: survey response rate falls below 60%

The Zhitong Finance APP noted that the latest employment report shows that U.S. employment growth data has been revised down by the largest margin since the pandemic, completely rewriting the recent labor market landscape. The U.S. Bureau of Labor Statistics (BLS) released the July employment report on Friday, indicating that non-farm employment numbers for May and June were revised down by nearly 260,000 in total. Part of the revision for these two months stems from seasonal adjustment issues, but economists believe it also reflects a widespread trend of low response rates. U.S. President Trump quickly seized on this revision, stating on social media that it was a "major blunder," while announcing the dismissal of BLS Commissioner Erica McTavish. The revisions were primarily concentrated in the education sector of state and local governments—this area had significantly boosted total employment in June, but was substantially revised down a month later. The BLS explained in a statement that these sectors account for about 40% of the total revision, "mainly due to the inclusion of supplementary/revised samples in the routine operations after the initial value release." This reveals a deeper trend that is more concerning than the labor data itself: the response rate for statistical surveys has been continuously declining. The BLS conducts wage surveys of businesses over a three-month cycle, and as more businesses respond, a more complete picture will emerge. However, the response rate for the initial survey has been steadily shrinking, with recent initial collection rates repeatedly falling below 60%—far below the pre-pandemic norm of about 70%. Omar Sharif, president of Inflation Insights, pointed out, "The more missing data there is and the more concentrated the late reporting, the greater the risk of revisions exceeding expectations," adding, "A 50% response rate is simply not enough." The employment report consists of a business survey (which generates wage data) and a household survey (which calculates the unemployment rate), with the latter's response rate also declining. However, the BLS stated that analysis shows "the collection rate has no significant correlation with subsequent revisions of wage data." Initial response rates for employment surveys have significantly declined As public frustration with cumbersome surveys increases and trust in government agencies declines, statistical response rates have been on a downward trend for many years. Statistical agencies are also facing budget cuts and staff shortages, a situation that has become increasingly severe during Trump's administration. Gregory Daco, chief economist at EY-Parthenon, stated, "Cuts to government agency funding are affecting the ability to collect and analyze economic data," and "All reports from the BLS may experience greater volatility in the future." Earlier this week, the U.S. Bureau of Labor Statistics stated that, on average, about 15% of the data in its Consumer Price Index (an important inflation report) sample has been suspended from collection. Previously, the agency announced in June that it had suspended data collection in three metropolitan areas and indicated that data collection would be paused when existing resources could not support it. Trump Effect Derek Holt, head of capital markets economics at Scotiabank, suggested another possible reason: the dramatic policy shifts in Washington. Holt stated in a report: "Amid the turmoil as employers grapple with the impacts of rapidly changing trade, immigration, fiscal, and other policies, data quality may further deteriorate due to low response rates." Before this report, Federal Reserve Governor Christopher Waller listed "expected data revisions" as a reason to support a rate cut in this week's vote, contrary to the position of most of his colleagues. In addition to the rolling revisions of employment data conducted by the Bureau of Labor Statistics (BLS), a larger annual revision is released every February to compare with more accurate but less timely data sources. The Bureau of Labor Statistics releases preliminary revision forecasts several months in advance, with last year's forecast being the largest since 2009