What do major job revisions say about economy?

Ready for her Disney movie debut, Kelly O'Grady, always a pleasure. Thank you very much. I further discussed the job revisions that we just talked about with Kelly with Douglas Holtz-Eakin. He currently serves as the president of the conservative "ackrisy--" I will say that-- advocacy group American Action Forum. Prior to this, he was the director of domestic policy and economic policy for John McCain's presidential campaign. He's also director of the Congressional Budget Office and chief economist for President George W. Bush's Council of Economic Advisors. Here's our conversation. Jobs revisions, it's an annual process. Number seems kind of big, though, 911,000, 6/10 of a percent of the entire US labor market. The historical standard is 2/10 of a percent. How much of a deal is this? And what does it tell us that we didn't already know? So it is a big deal because 6/10 miss is a big miss for the BLS and should be something you pay attention to. So what's going on? Well, the US economy's getting bigger. There are more workers. There are more firms every year. And the BLS has a flat budget and a flat staff, shrinking staff right now, and the same sample every month. So we're getting a smaller and smaller snapshot of the actual economy. On top of that, now we're getting this very low, quote, "response rate." The firms don't answer the survey, or they get to it late. So smaller snapshot. So we're getting a less complete picture in the monthly data. And then when they go to do the revision, they've got a really big picture. And they compare them, and we're off by more. That's what's going on.

Does that mean the Biden economy in its last year was worse than it looked? Certainly half the jobs being created that they thought. One of the--

Interests weren't there, yeah. They just weren't there. And then one of the things that's interesting about it is that the unemployment rate is what it is. We had low unemployment, so we were miscounting the jobs, but we were also miscounting the job openings. Things were filled up more than people thought.

Mm-hmm. What is your definition or description rather of what the Trump economy is today? Dead in the water.

By that you mean? That if you look out there in the labor market, no one's getting hired. We don't have mass layoffs. No one's getting fired. It's just stalled.

Things are frozen. Stalled, absolutely. There's some bad parts. Like manufacturing is in open decline. We're down almost 40,000 jobs this year. The private sector in the past four months, outside of health care, has not really shown any job growth. So that's a very flat labor market.

And it's been described in many articles that I've read, Doug, that this is a very discouraging job market for recent college graduates. Absolutely true. No one's getting fired, but no one's getting hired. And they're coming out there--

Even with good degrees. Yeah. No. But the newest kid on the block. They've got the least experience. And they just can't find an opening. Does artificial intelligence play a role in that? Not yet. It will. I think there's no question we can see it coming. But I'd say right now, AI, and in particular the massive investments in it-- people are spending money on servers and software and all of that. That's been the one bright spot in the economy.

Is that artificially propping up some of the stock valuations, stock prices, and overall economic activity? It is propping up the stock prices, no question about it. The unique thing about, say, the S&P, you hear so much about it, it's basically all tech companies. And they've been the least affected by the president's tariffs. So if you look at GM, GM's in a world of hurt. GM's a tiny part of the stock market these days. So he has hit the places that don't show up in the stock market. That's a little misleading. The economy as a whole has been hit pretty hard. You just don't see it in the market. What is the proper way to describe the United States government taking an ownership stake of either US Steel or Intel? Is that industrial policy? Is that some variation, some Trumpist kind of populist economics? What is that? Unwise. [LAUGHTER] Right. Mark that down as unwise because this is a polite company. This is something the United States has avoided, and not because there was a secret meeting in in the economists that said, these are the rules. It's because it works. When you get the government involved, you put your thumb on the scale and the competition. So Intel has access to taxpayer dollars that other people don't have. It allows them to do things other competitors don't do. Also comes with some baggage. There's no way we're going to let Intel go under now, right? So even if they perform poorly, we pour more money in. We have--

Same thing for US Steel? DOUGLAS HOLTZ-EAKIN: It's the same, yeah. The United States has complained for years about Chinese government involvement in their firms-- unfair, can't have them in the national competition--

Thumb on the scale. --not right. So what happens now when Intel tries to sign a contract with some other country? It's now a state-owned enterprise. They'll be like, no, you don't get this stuff.

This administration says we have to do it for national security. They didn't really say why they did it with Intel.

They said-- I think--

--there were national security considerations. Yeah. But they wave that flag around a lot. That, to me, is a little frustrating. And I'll give you the very specific example why. We passed a law that said you must get rid of TikTok. We must not have it anymore because it is a national security--

Banned. --threat. Right. That's a law. That went to the Supreme Court. The Supreme Court decided the national security considerations were great enough that we could override the free speech, which was real. They said, this is a real infringement on free speech, but it's worth it. TikTok is now--

It's still here. DOUGLAS HOLTZ-EAKIN: Was it not a threat?

Right. DOUGLAS HOLTZ-EAKIN: So I don't know what to make of their view of national security.

It feels arbitrary to you. DOUGLAS HOLTZ-EAKIN: It's convenient. When the treasury secretary said last week, Scott Bessent, that there will be higher GDP growth and nearly a trillion in tariff revenue, you said to yourself what? Gibberish. Makes no sense. These are positions the president has taken. We're going to have better growth. This could be the golden age. We're going to raise all this revenue. But they're not connected to reality. This is a $400 trillion increase in taxes in the United States this year. That's not going to lead to 3% faster GDP growth. There is no mechanical way for that to happen. So you want the revenue? You pay the price on economic growth. You want economic growth? Have policies that support it. You can't have it both ways. Douglas Holtz-Eakin, I appreciate the time very much. Thanks.