President Donald Trump’s Friday morning tweet may have seemed harmless: “Looking forward to seeing the employment numbers at 8:30 this morning,” he wrote just before 7:30. But that simple message upended a carefully calibrated system designed to insulate financial markets from politics.
The President gets to see monthly jobs reports ahead of time, and White House officials confirmed that Trump saw the numbers last night. The report is strong: the U.S. economy added 223,000 jobs and lowered the unemployment rate to an 18-year low of 3.8 percent.
But a 1985 directive from the Office of Information and Regulatory Affairs says that when monthly jobs reports are released, “employees of the Executive Branch shall not comment publicly on the data until at least one hour after the official release time.”
That’s because it’s critically important that these statistics, which comes from the nonpartisan federal Bureau of Labor Statistics, are apolitical. The embargo on Executive Branch employees talking about the numbers is “to create in the minds of the public the clearest possible separation between when the nerds speak and when the politicians spin,” says Justin Wolfers, professor of economics and public policy at University of Michigan. “What is important is not just that the numbers are independent, but that they’re perceived to be independent.”
(It’s worth noting that this isn’t the first time Trump has mixed politics with these numbers: he often called them “phony” as a presidential candidate.)
Lawrence Summers, Treasury Secretary under President Bill Clinton and head of the National Economic Council under President Barack Obama, and Jay Carney, White House Press Secretary under Obama, both noted on Twitter that this would have caused a major scandal in other administrations.
Rules are strict for reporters, too. Journalists covering the report can only view it on site at the Labor Department in a locked room, and they have their phones and Internet taken away to ensure they can’t communicate anything about the numbers before the appropriate time.
White House spokeswoman Sarah Sanders argued that it was fine for Trump to tweet about the jobs report before its release because “he didn’t put the numbers out,” CNBC reports. But his preview tweet implied that they would be strong. This raises a few separate issues.
First, there’s a concern that Trump could have tipped people off to the numbers before they were made public, giving them an unfair advantage and eroding trust in trading.
“If this is a guy who is so excited by the number he can’t stay away from the keyboard at 7:21 [in the morning], of course one wonders if he’s ever been equally indiscreet with friends,” says Wolfers. Whether or not Trump actually told anyone, Wolfers explains, “You just don’t want to raise that perception.” This wouldn’t be fair, and would make financial markets work worse if people balked at making trades for fear others are privy to more information.
Then there’s the fact that a tweet like this from the President can move markets, creating a big potential downside for future reports. Trump previewed this month’s strong report with a tweet, so if in upcoming months he doesn’t say anything before the report is released, people could panic that the report will be weak and the market will plunge. And it could create volatility in the market as people begin trying to infer things about the economy from other Trump tweets.
Wolfers cautions that Trump’s tweet should be kept in perspective compared to the situations in other countries like Greece and Argentina that have suffered major financial crises. “Did he do what the Argentinians did and order up a fake set of inflation numbers? Absolutely not,” Wolfers says. “But he took a step down the road that every economist understands is a road that there’s no upside to walking down.”