Government Data Under Fire
DoubleLine Capital’s CEO, Jeffrey Gundlach, is raising serious concerns about the reliability of US economic data. He believes the figures used by the Federal Reserve (Fed) to set interest rates are increasingly unreliable, citing issues with both the Consumer Price Index (CPI) and jobs reports. Gundlach points out that a significant portion of the CPI, which measures inflation, is now based on estimates – a whopping 35%, up from 8% several years ago. He also highlights the low response rate to jobs surveys, suggesting the data may not accurately reflect the true state of the US job market. He essentially claims that a large part of the data is “made up.”
Weak Jobs Report Fuels Rate Cut Predictions
The recent jobs report, showing far fewer jobs added than expected, along with significant downward revisions to previous months’ data, has fueled speculation of a looming recession. This weak data has added weight to Gundlach’s concerns about data reliability.
Gundlach Predicts Fed Rate Cuts
Given the weak economic indicators, Gundlach strongly predicts that the Fed will cut interest rates at its September meeting. He anticipates at least one more cut before the end of the year, though he thinks two cuts are more likely than the three currently priced into the market. He emphasizes that the recent data revisions have significantly weakened the economic picture, making a third rate cut a real possibility.