Roughly an hour before the April Jobs Report was officially released this morning, Donald Trump posted a comment on Twitter stating he was “looking forward” to the release of today’s jobs report, while this may seem innocent enough it’s actually a violation of yet another norm of American politics and, potentially, of Federal law:
WASHINGTON — President Trump broke years of presidential protocol on Friday morning by posting a tweet that signaled a strong jobs report was on its way from the Labor Department an hour before the report was released.
The Bureau of Labor Statistics routinely releases its monthly employment report on the first Friday of the month. The night before, under longstanding tradition, the president and several senior administration officials — including the Treasury secretary and the chairman of the Council of Economic Advisers — are briefed on the numbers, which they are not supposed to disclose until the report is made public at 8:30 a.m. Eastern Time the next morning.
But Mr. Trump, who was briefed on the numbers Thursday evening, appeared to foreshadow the strength of the latest report on Friday morning on Twitter.
Social media users saw the message as evidence that Mr. Trump had seen the numbers, and that they were good. Sure enough, the report showed that the economy added 223,000 jobs in May, above forecasters’ expectations. The unemployment rate dipped to 3.8 percent — the lowest level in 18 years.
Larry Kudlow, the chairman of the National Economic Council, said that he had shared the jobs report on Thursday evening with the president but expressed no concern with Mr. Trump’s tweet on Friday morning.
“I don’t think he gave anything away, incidentally. I think this is all according to routine, law and custom,” Mr. Kudlow said on CNBC.
On Wall Street, where the 8:30 a.m. release on Jobs Friday is a major event for the markets each month, traders disagreed on whether the tweet actually moved prices, which fluctuate constantly and make it difficult to determine if any single event pushed them in one direction or another.
(…)
Washington has long tried to prevent market-moving data like the employment numbers from being prematurely released. In 1985, the White House Office of Management and Budget issued a rule governing the release of embargoed federal data like the jobs report, including a requirement that employees of the executive branch not comment publicly on the data until an hour after its release.
“All employees of the executive branch who receive prerelease distribution of information and data estimates as authorized above are responsible for assuring that there is no release prior to the official release time,” the rule states. “Except for members of the staff of the agency issuing the principal economic indicator who have been designated by the agency head to provide technical explanations of the data, employees of the executive branch shall not comment publicly on the data until at least one hour after the official release time.”
Here’s the Trump tweet in question:
Looking forward to seeing the employment numbers at 8:30 this morning.
— Donald J. Trump (@realDonaldTrump) June 1, 2018
And here’s what the relevant rule states in full:
All employees of the Executive Branch who receive prerelease distribution of information and data estimates as authorized above are responsible for assuring that there is no release prior to the official release time. Except for members of the staff of the agency issuing the principal economic indicator who have been designated by the agency head to provide technical explanations of the data, employees of the Executive Branch shall not comment publicly on the data until at least one hour after the official release time.
And, Trump’s Tweet does seem to have had at least some impact on the market in the hour before the report was released:
This is…unusual. Trump tweeted about jobs day at 7:21am EST, suggesting he knew the numbers would be surprisingly good. https://t.co/k35UPSEPI6 That’s how the market took it anyway, with U.S. yields taking a leg higher right after. Raises a lot of questions. pic.twitter.com/TcN9oLNYqU
— Lisa Abramowicz (@lisaabramowicz1) June 1, 2018
The purpose of the rule should be self-evident. The economic data released by the Federal Government, which includes not just the monthly jobs reports but also reports on consumer spending, orders for “durable goods,” quarterly estimates of Gross National Product and other pieces of information are often considered to be especially significant to traders on Wall Street. The direction those numbers take on any given day can move the markets for stocks and bonds alike in significant directions, especially if they diverge significantly from what analysts and traders were expecting from those numbers. Having those numbers in advance of their official release could provide traders with significant advantages since it would permit them to place pre-market trades based on what is, in the classic sense, inside information. It’s because of this that the rule was adopted in the first place. The terms of the rule are so stringent that reporters who cover the Labor Department and other agencies responsible for the release of this data are kept in a room where they are allowed to have advance access to the data so that they can prepare their reporting in advance but from which they are unable to communicate with the outside world.
With respect to the employment numbers, the monthly report is also made available to certain select members of the Administration, including the President, generally late in the afternoon of the day before the report is released. As I understand it, it is generally a small group of people who receive this information, such as the Chief of Staff, Treasury Secretary, the head of the President’s Council of Economic Advisers, and, of course, the President himself. All of these people, including the President are governed by the same rule. This is one reason why you generally won’t see an official statement from the White House or the Administration publicly commenting on any economic report until after the markets have opened in New York City at 9:30 am. Again, the reasoning by this part of the rule is obvious, to prevent comments from the government from having an impact on the market or giving traders advance knowledge of information the public isn’t supposed to have until its official release time.
Not surprisingly, the Administration sought to downplay the whole thing:
I just asked Sarah Sanders if it was appropriate for President Trump to tweet about the jobs report before release this morning. She said it was, because “he didn’t put the numbers out.” She also confirmed that the President was briefed on the number last night.
— Eamon Javers (@EamonJavers) June 1, 2018
On CNBC, Larry Kudlow downplays Trump’s jobs report hype tweet, which appeared to violate federal law: “It’s my call whether to send [the numbers] over to the president. That’s just what I did last evening… he chose to tweet… I don’t think he gave anything away.” pic.twitter.com/6YDMHAzbx5
— Aaron Rupar (@atrupar) June 1, 2018
Given that Trump didn’t report exact numbers, it’s probable that he didn’t technically violate the rule in question, but he certainly came close to doing so, and it raises concerns about the future and what impact this breach of protocol will have in the future. Clearly, Trump sent that tweet this morning because it was relatively good news and he wanted the press, the public, and especially his supporters to pay attention to it. Now that he’s broken this protocol, though, one wonders how traders will react on future days when important numbers are about to be released. If one can draw a postive inference from the fact that the President tweeted a “heads-up” an hour in advance of the jobs report, what conclusion will traders reach if he fails to do so in the future, and what impact will that have on markets? That’s why this violation of a long-standing norm, and potentially the law, is important.
On a final note, Bill Kristol asked a rather blunt question this morning:
By the way, since Trump is tweeting ahead of time about the unemployment numbers, are we confident he isn’t also privately telling family and friends about them ahead of time so they can front run the market?
— Bill Kristol (@BillKristol) June 1, 2018
The answer to this question is clearly that we cannot be sure that this hasn’t or wouldn’t happen thanks to the fact that this President has already violated nearly every other norm that applied in the past. There’s something truly disconcerting about that.
