BLS Does it Again

Market Shock: BLS Beats Expectations Again

Albert Einstein said, “The definition of insanity is doing the same thing over and over and expecting different results.” This week saw a flood of important economic data, capped by the Bureau of Labor Statistics (BLS)April Jobs Report. Despite nearly universally negative results from other recent reports, including ADP’s Employment Report, the BLS once again reported stronger-than-expected findings. Will this report follow the same revision pattern as nearly all prior reports over the past year? And more importantly, will markets trust it? Probably.

JOLTS Report: Job Openings Miss the Mark

The week began with the March Job Openings and Labor Turnover Survey (JOLTS), which showed a drop in openings to 7.19M from a downwardly revised 7.48M – much weaker than estimates.

ADP Report: Private Sector Job Growth Stalls

Next was the ADP Employment Report for April, which tracks private payrolls. Only 62,000 jobs were created, far short of the 120,000 expected. March’s numbers were also revised down by another 8,000. All business sizes showed weakness, including large businesses (500+ employees), which added only 12,000 jobs, a category that normally leads job gains.

BLS Report: Headline Job Gains Surprise

With clear signs of weakness, markets expected a weak BLS report. Instead, the headline number blew past expectations with 177,000 jobs created in April versus 130,000 expected. The unemployment rateremained at 4.2%, but when unrounded, it ticked up slightly from 4.15% to 4.19%.

The BLS Jobs Report is revised for two months following release. For over a year, almost every report has been revised lower – often significantly.

Chart Insight: Revisions Undermine Initial BLS Numbers

This chart of just this year’s reports illustrates this.  The “1^st” column shows the initial report that came out each month (in thousands) and then the “2^nd and 3^rd” columns show the revised numbers.  The columns to the right show how much those revisions lowered the initial number.  Imagine how the markets and rates would have reacted if the final revisions had been reported accurately at the beginning.  This pattern continues to the majority of reports in 2024, as well.  

Consumer Debt: Buy Now, Pay Later Usage Surges

LendingTree surveyed about 2,000 people on their use of Buy Now, Pay Later (BNPL) services. These allow consumers to pay for purchases over time through companies like Klarna, Affirm, PayPal, and Zip Co.

Survey highlights:

• 50% of respondents reported using BNPL
• 41% said they were late on payments in the past year
• 33% used it to bridge the gap to their next paycheck
• 25% used it for basic needs like groceries
• 48% regret using it
• 50% plan to use it again in the next six months

This shows consumers are increasingly relying on debt to live. Since 70% of GDP is consumer spending, it’s no surprise that GDP is underperforming.

GDP: Q1 Turns Negative

Q1 2025 GDP was released this week at -0.3%, the first negative reading since Q1 2022. Personal spendingsurprised to the upside at 1.8%, compared to the 1.2% estimate – possibly driven by BNPL activity.

Inventory buildup added 2.25% to GDP growth, likely due to tariff-driven inventory pull-forward. However, a spike in imports ahead of tariffs removed 4.83% from GDP. This distortion is unlikely to repeat next quarter.

Rental Index: Shelter Inflation Still Lagging

Cotality (formerly CoreLogic) released its Rental Index for February. Rents – a major part of Shelter costs, which feed into CPI and PCE – were reported up 2.9% YoY, including increased demand from California fire displacement.

Yet, CPI and PCE still show Shelter inflation at 4.3%, much higher than current rent increases. As Shelter data catches up to reality, inflation should continue to decline – great news for rates.

PCE Report: Inflation Progress Continues

We also received the March PCE report this week. It showed 0.0% headline and Core inflation, with Core stripping out volatile food and energy. The Core reading beat expectations, and YoY Core PCE dropped to 2.6%, inching closer to the Fed’s 2% goal.

Looking Ahead: Fed Week Is Here

Next week brings a key Fed meeting, along with fresh auction and labor data:

• Tuesday: 10-year Treasury note auction
• Wednesday: Fed Meeting and press conference
• Thursday: Initial Jobless Claims, 30-year Treasury auction