Kudlow: Trade Dispute Could Jeopardize Jobs Growth

President Donald Trump

During an CNBC appearance on Friday, Larry Kudlow, director of the National Economic Council, downplayed a tweet in which President Trump broke with decades of precedent and appeared to violate federal law by disclosing information about the May jobs report more than an hour before it was publicly released.

The May jobs report showed the US economy added 223,000 jobs compared with an average monthly gain of 191,000 over the prior 12 months, and that the unemployment rate edged down to an 18-year low of 3.8 percent.

White House Press Secretary Sarah Sanders told reporters that President Trump was briefed on the jobs numbers last night.

But the tweet was followed by a swift reaction from markets and a strengthening of the dollar, sparking criticism of the president's handling of sensitive information.

The yield on the 10-year Treasury note, which moves in the opposite direction of price, was at 2.885% at the time of Trump's tweet, The yield quickly moved up to 2.895% after the tweet, and climbed as high as 2.922 after the official release of the jobs report.

"He chose to tweet, his tweet basically said like everybody else we await the job numbers". Trump has made the roaring stock market a centerpiece of his administration and re-election campaign, though Wall Street has faced recent uncertainty due to the administration's saber-rattling over tariffs.

The strong numbers come as some economists worry that a threatened trade war could damage the U.S. economy and as investors fret that the news will further pressure the Federal Reserve to speed up the rate at which it increases interest rates.

The Bureau of Labor Statistics routinely releases its monthly employment report on the first Friday of the month.

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A former member of the President's council of economic advisers under President Obama pointed out the possibility of leaked information sparking insider trading, and said that any leaks should be investigated. But we shouldn't say it's par for the course, either.

Chris Lu, a former deputy secretary for the Labor Department under Barack Obama, noted the president's tweet was a "comment that violates" the directive.

Trump's decision to seemingly pimp out the job numbers before they were officially released is controversial because it could result in traders taking advantage on positive data that is exclusive to the executive branch. "As has been said so many times by the president's supporters as well as his critics, this is another case where it would be better for President Trump would be wise to spend his time doing something other than tweeting". Friday's tweet, however, was the first time he's ever spoken about the job's report before it was released.

"You should have gotten the employment numbers from the Council of Economic Advisers yesterday".

This is a big deal because the jobs report, also referred to as the nonfarm payrolls (NFP) report, is one of a handful of reports with the power to move global financial markets.

"I don't think he gave anything away, incidentally", Kudlow added. The tweet certainly suggested that a good number was coming.

Tony Fratto, a Treasury Department official who worked in George W. Bush's administration, said that while not illegal, Trump's tease could be deemed inappropriate because "you want market participants to get their data from their government in predictable, official ways, not haphazard ones".

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