Bond King Jeffrey Gundlach Says Fed Rate Cuts Incoming, Warns US Inflation Data Appears To Be ‘Made Up’

DoubleLine Capital CEO Jeffrey Gundlach says the US government’s economic data now appears to be largely fabricated out of thin air.

In a new interview with Bloomberg Television, Gundlach says data used by the Fed to determine rates is full of estimates, including the Consumer Price Index (CPI), which tracks the cost of a basket of goods, and jobs reports.

“I feel like this data that is coming out is getting much less reliable, and this has been building for a long time. People are saying that the surveys that get sent out to be filled out for the jobs report, only 60% are being responded to, and that’s been rising over time.

Also, the CPI data is getting kind of suspect. Several years back, about 8% of CPI input prices were estimated. Now it’s 35%. It’s jumped way up. So 35% in the most recent CPI report of the inflation inputs are just kind of made up, and so people are starting to get really worried about the reliability of a lot of this data.”

The Fed’s data has gained a lot of attention lately after the most recent jobs report showed jobs grew by just 73,000 last month, short of the expected 100,000, while July and May job numbers were drastically revised downward by a combined 258,000. The revisions have lead some to suspect the US economy is suddenly flashing a recession.

Gundlach says that Fed will likely cut rates at its next meeting in September given the jobs data, and make at least one other cut before the year’s end.

“I think it’s a virtual certainty that the Fed is going to cut rates. And in fact, now, even though there’s not that many meetings left in the year, we’re starting to see market pricing of perhaps as many as three rate cuts this year. I’m skeptical of that.

One thing I’ve been consistent with all year is I think two rate cuts maximum here in 2025. Now I think that the data has weakened so substantially with these revisions that it’s possible that we get a third, but I still think my base case is two rate cuts this year.”

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