Trump tweet on jobs report may have breached a 1985 federal directive

Show Caption Hide Caption Trump tweet causes fervor over jobs numbers U.S. employers added 223,000 jobs in May helping lower the unemployment rate to the lowest point since 1969. In a protocol-defying step President Trump hinted at the good report in a morning tweet. (June 1)

President Trump's enthusiastic tweet before the release of Friday's jobs report may have breached a rule designed to safeguard and depoliticize market-moving financial data issued by the federal government.

At 7:21 a.m. EDT, Trump clearly seemed to signal the report's general tenor as he tweeted he was "looking forward to seeing" the report that was subsequently released at the normal 8:30 a.m. time.

Looking forward to seeing the employment numbers at 8:30 this morning. — Donald J. Trump (@realDonaldTrump) June 1, 2018

Trump had good reason to be happy.

The report showed that the U.S. added 223,000 jobs in May, topping the 190,000 projection of economists surveyed by Bloomberg. The national unemployment rate also dropped -- from 3.9% to 3.8%, a new 18-year low, the U.S. Department of Labor said.

Based on its potential to move financial markets, the jobs report is held under a strict embargo until its official release time.

However, under a longstanding Office of Management and Budget procedure, U.S. presidents are briefed about the report by the chairman of the White House Council of Economic Advisers before the official release time.

Larry Kudlow, appointed in March as director of the National Economic Council, told CNBC he called Trump aboard Air Force One Thursday evening and relayed the job numbers.

"I don't think he gave anything away, incidentally. And I think this is all according to routine, law and custom," Kudlow told CNBC.

White House press secretary Sarah Huckabee Sanders offered a similar view. She separately told CNBC that Trump's tweet crossed no policy, legal or other lines because "he didn't put the numbers out."

The Department of Labor, which releases the job report, did not immediately respond to a request for comment. The Securities and Exchange Commission, the Wall Street regulator that combats insider trading, declined to comment.

However, a 1985 Office of Management and Budget policy directive published in the Federal Register during the administration of President Ronald Reagan outlined an updated procedure to ensure that the jobs report and other significant federal economic indicators would not be released prematurely.

"All employees of the Executive Branch who receive prerelease distribution of information and data estimates ... are responsible for assuring that there is no release prior to the official release time," the directive said.

"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," the directive added.

Does the OMB restriction apply to the president?

Jacob Frenkel, a former SEC enforcement attorney, said protocol, practice and tradition, no matter how long in existence, "are not laws or regulations."

As the nation's chief executive, the president has the right to disseminate information as he sees fit, said Frenkel, who added: "He did not break or violate any securities laws and acted entirely within his discretion."

However, Jason Furman, who chaired the Council of Economic Advisers during President Barack Obama's second term, told The New York Times via email in March 2017: "The interpretation of our administration (like Clinton and Bush) was that this applied to POTUS" (President of the United States). "There were times they wanted Obama to comment, his flight or whatever was taking off at 9:20 and they would hold off until 9:30 so he could comment then."

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On Friday, Furman criticized Trump via Twitter about even hinting at the jobs report before the official release time. He suggested that Trump "should never get" an advance briefing on future reports, a comment that drew tweets of criticism from Trump supporters.

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



And if this tweet is conveying inside information about a particularly good jobs number you should never get them in advance from the Council of Economic Advisers again. https://t.co/Qd3ig89onT — Jason Furman (@jasonfurman) June 1, 2018

At least one close observer of U.S. financial markets viewed Trump's tweet as unusual.

"He clearly knew something, and was telling us," said Eric Hunsader, the founder of Nanex, a company that supplies market data to the financial industry.

Viewing the tweet as unusual, Hunsader retweeted it. Nonetheless, he said the markets were selling off bonds before Trump's tweet, signaling expectation of a strong jobs report. "There wasn't a reaction beyond the markets' reactions to other (Trump) tweets," he said.

Other market experts offered mixed views about the widely noticed social media comment.

"Make no mistake about it, it was good news on the labor market front, and his tweet did move the market,” said Chris Rupkey, chief financial economist at MUFG, a Tokyo-based global bank with offices in New York.

MUFG’s bond trading team “knew this was a gigantic heads-up,” added Rupkey. However, given the headlines that swirled around financial markets Friday — including the U.S. slapping tariffs on allies, and new developments in Italy’s political crisis — Trump’s tweet “didn’t set off a firestorm of trading activity,” Rupkey added.

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.

Trump’s tweet could set a "bad precedent" for future job-related announcements from the federal government, said Gary Kaltbaum, president of Kaltbaum Capital Management.

"If he was sending a message that it was a good number, when there is not a good number, we will now know it because he won’t tweet," said Kaltbaum.

The incident marked the second time that Trump may have strayed beyond the boundaries set by the Office of Management and Budget directive. In August 2017, he tweeted, "Excellent job numbers just released" 15 minutes after a similarly upbeat report.

Excellent Jobs Numbers just released - and I have only just begun. Many job stifling regulations continue to fall. Movement back to USA! — Donald J. Trump (@realDonaldTrump) August 4, 2017

Trump is not the first U.S. president to chart the White House's own schedule for commenting on major economic reports.

MarketWatch columnist Rex Nutting wrote last year that President Richard Nixon ousted one head of the Bureau of Labor Statistics he viewed as a political enemy.

President Dwight Eisenhower leaked jobs reports ahead of time, just before Election Day in 1954, 1956 and 1958, wrote Nutting.

Contributing: Paul Davidson, Jessica Estepa

Follow USA TODAY reporter Kevin McCoy on Twitter: @kmccoynyc