US President Donald Trump recently fired the head of the Bureau of Labor Statistics, sparking worries about the trustworthiness of economic data. This move has raised alarms and reminds us of less transparent practices in some regimes. Many are now questioning how reliable future statistics will be. The upcoming non-farm payrolls report on September 5 will include important updates for the period from April 2024 to March 2025. Goldman Sachs predicts a significant drop in job numbers, estimating a downward revision of between 550,000 and 950,000 jobs. This means a monthly reduction in payroll growth of 45,000 to 80,000 jobs for this period.

Concerns About Data Changes

These revisions mostly fall within President Biden’s time in office and could lead to suspicions about data manipulation. The expected reduction in job figures relates to policy changes, including stricter rules on illegal immigration, which affects labor growth and contributes to fewer available jobs. The dismissal of the Bureau of Labor Statistics head last Friday has sent shockwaves through the market. Trusting official economic data is becoming increasingly difficult, which usually doesn’t end well for investors. The VIX, a key indicator of market fear, jumped over 20% following the announcement, showing that traders are preparing for volatility. As we approach the September 5th benchmark revisions, we are anticipating a potential adjustment that could lower job numbers by 550,000 to 950,000. This indicates the economy may have been much weaker than previously thought during that period.

Market Risks and Strategies

For derivative traders, betting on increased volatility seems wise. The uncertainty around the September data release is likely to keep implied volatility high, making long positions in options or VIX futures appealing. We can expect a bumpy road ahead as we assess the credibility of the new numbers. This underlying economic weakness appears linked to significant policy changes. Recent data from Homeland Security shows that border encounters have dropped nearly 40% since new immigration policies were put in place in February 2025. This sharp decrease in labor force growth is likely a key reason behind the weaker employment figures we anticipate. Given the current situation, adopting a defensive or bearish approach to the broader market could be advisable. Traders might consider buying put options on major indices like the SPDR S&P 500 ETF (SPY) to protect against any negative shocks from the September report. A weaker job market will directly affect consumer spending and corporate earnings. We’ve witnessed similar scenarios in other countries, such as Argentina in the late 2000s, where official statistics lost credibility. This decline in trust caused capital flight and a widespread skepticism towards government data. Now, we must navigate the market assuming that headline figures may not accurately portray the true state of the economy. Create your live VT Markets account and start trading now.

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