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U.S. Economy Added 143,000 Jobs to Start 2025; Judge Pauses Deadline for Fed Workers to Accept Buyout Offer; New CNN Reporting on the Team Behind DOGE's Government Overhaul. Aired 10-10:30a ET

Aired February 07, 2025 - 10:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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PAMELA BROWN, CNN ANCHOR: A good Friday morning. You are live in the CNN Newsroom. I'm Pamela Brown in Washington.

And we begin this hour with breaking news on your money. We have the first jobs report of 2025 and the first of President Trump's second term. This morning, we've learned that employers added 143,000 jobs in January, but there's a lot more behind that headline.

Joining us now is CNN's Matt Egan and Diane Swonk, the chief economist and managing director at KPMG. That's a global firm that provides audit, tax, and advisory services.

So, Matt, to start with you, walk us through these numbers and what they signal.

MATT EGAN, CNN REPORTER: Well, Pamela, January has a history of having really messy jobs reports, and this one definitely lived up to the hype, right? There were a lot of revisions, a lot of mixed signals here. The big number is 143,000 jobs. That's how many were added in January. Now, that's not a bad number. That's kind of in line with where things before COVID-19. But it was worse than expected, and it was a significant slowdown from the gangbusters growth that you can see on your screen at the end of last year in December, the economy added 307,000 jobs. So, this is less than half that pace.

The good news, though, is the unemployment rate went down to 4 percent. That is historically low. You can see on your screen. There's been so much improvement on the unemployment front, and it's just stayed low for a long amount of time.

And so when you put those things together, it really shows that people are generally not getting laid off right now. But workers are also not really quitting. And so we've had the pace of hiring slow down significantly.

Now, there had been some thinking that hiring might slow down in January because of the Los Angeles wildfires and because of the extremely cold temperatures. But the BLS put in a note where they said that there really was no discernible impact from the wildfires or from the cold temperatures. Although some economists, and Diane may want to weigh on this, some economists do think that that may have been a role.

We do also have to talk about prices, right? Because when we think about the economy, it's all about the cost of living. I think there's some good news on that front, because today's numbers show that paychecks increased by just over 4 percent year-over-year in January. That is a solid pace, and that is well ahead of the inflation rate, which was just under 3 percent. So, that means that paychecks are going further, right, that wages are going up at a faster pace than prices. We want to see that trend continue.

One last point here, Pamela, is when we look at these numbers, we now have more than four years of consecutive job growth. That is the longest streak that we've seen, the second longest streak that we've seen on record.

BROWN: Right. So, to bring you in, Diane, how are you looking at these numbers and the factors that contributed to them?

DIANE SWONK, CHIEF ECONOMIST, KPMG: Well, the BLS always says that the disasters don't dramatically affect the numbers. That's pretty much how they did it because it means the surveys, they were able to make the surveys. What's important is to look under the hood and particularly under the hood of the household survey. What we saw was 591,000 people could not get to work due to inclement weather. That's the highest January since 2011 when we had a blizzard and the highest on record was, of course, February 2021 when Texas went off the grid and we had a cold snap in the southern part of the country. But that's important to understand because we only see those kinds of numbers when you really have a big disaster like you did in L.A.

We also saw a loss in leisure and hospitality jobs, which we expected to be hit hardest by the fires. The hiring in retail was a bit of a head fake because we didn't see as much run up in the retail hiring due to the shorter and compressed holiday season. And then therefore there weren't as many layoffs as you usually see in January. So, seasonally adjusted, it looked like a better January in terms of that than we had in the past.

The other thing that was interesting in the numbers is that the participation rate actually increased. That was due to a rise in prime age men participating more. But the places where, again, we see disasters tend to hit women, women tend to participate less in the labor market when either their small children, when they have small children and their small children can't get to school due to disasters, and/or, which it was both this month, we also see a number of illnesses rise. The month of January had the highest number of people out sick and unable to work due to illness that we had since January 2022 during the height of the Omicron wave of COVID.

So, all of that suggests that, yes, there was an imprint of the fires in Los Angeles, but that the underlying labor market is still stable. Some people think it's stuck because, of course, what Matt made the point of is exactly right, people are not quitting, we're not seeing a lot of hiring, and we're not seeing a lot of firing. Any increase in firing, that means, could see a much more rapid acceleration in the unemployment rate.

BROWN: All right. Thank you to both for helping us better understand these numbers.

And now to escalating confusion in the federal workforce after a judge pauses the deadline for the Trump administration's so-called buyout offer. Government employees had until midnight on Thursday to accept this plan, but now they have until at least Monday to decide. That's when the next hearing is.

More than 65, 000 employees have already accepted the offer. Some 10,000 USAID workers are waiting to hear if they'll be put on leave furloughed or just fired outright. It's all part of President Trump and Elon Musk's widespread efforts to dismantle the humanitarian agency. Less than 300 USAID employees are expected to keep their jobs. Two labor groups representing workers there are now suing the administration.

So, I want to bring in CNN's Arlette Saenz. Arlette, so much has been going on. But first off, let's talk about this Monday hearing and what to expect.

ARLETTE SAENZ, CNN WHITE HOUSE CORRESPONDENT: Yes. Well, Pam, the federal judge in Massachusetts wanted more time to hear the briefings and consider this case. That is why he put this pause on that deadline that was supposed to go into effect last night for federal workers to decide if they were going to take this so-called buyout.

Those workers now have until at least Monday to make up a decision or potentially risk being laid off, as the Trump administration has signaled that they could potentially have massive layoffs for those who decide not to take this offer.

Now, so far, the White House has said that 65,000 people have accepted this so-called buyout. That amounts to about 2 percent of the eligible workforce. The White House is targeting between 5 percent and 10 percent. And yesterday, the White House press secretary tried to say that they were grateful for the judge pausing this deadline to try to give workers more time to accept that offer.

But for those who are going to accept that offer, there are real big questions about how this will actually play out, whether the Trump administration will follow through with their promises to pay people out until September 30th. And there's a lot of people who are, frankly, skeptical about what the Trump administration has put forth. You've heard from Democrats and unions telling workers not to accept this offer because they believe that it's not legal and also just unclear whether the Trump administration will follow through.

It's also important to remember that people think of Washington, D C., has this massive federal workforce, but it's not just people in D.C. who are going to be impacted as there are tens and thousands of federal workers across the country who could also be impacted by these so-called buyouts, but also the potential for layoffs down the road.

BROWN: Yes, I think that's a really important point. It's not just Washington. It's all over the country.

So, then what about, you know, the tens of thousands of workers who have already taken this buyout option? What's going to happen for them?

SAENZ: Well, I think that's the big question is if they -- they're waiting to see what the details of these plans will look like, whether the Trump administration will follow through. And then there's the question of those who are staying behind, people who want to stay in these jobs, people who don't trust that the Trump administration will actually follow through with the plans that they have laid out. So, there's still a lot of uncertainty for those who have accepted the buyout. The White House is hoping that they'll be able to get that figure a little bit higher.

BROWN: All right. So, let's turn to USAID. A lot's been going on that front. There's less than 300 workers who are expected to keep their jobs out of 10,000 employees. So, who is the agency keeping on? Why? What could be the impacts of USAID being downsized so drastically?

SAENZ: Well, so far they haven't exactly outlined who those essential workers will be, but this is going to impact people not just here in the U.S., but those stationed around the world, as so many tens of thousands are now going to face this deadline of the next 30 days to come back to the U.S.

Now, the USAID is facing this deadline of this evening at 11:59 P.M., which is when people will find out or by then they'll find out whether they are being placed on administrative leave or potentially fired. There have been two labor unions representing workers at USAID who filed a lawsuit, saying that the actions that have been taken to dismantle USAID fall outside of congressional authorization.

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And they've also tried to outline some of the impacts of what dismantling this agency and firing these workers would be. They say that these would shut down efforts to prevent children from dying of malaria, stopped pharmaceutical clinical trials and threatened a global resurgence of HIV.

Now, one thing that's unclear is that this lawsuit was filed yesterday. It's unclear whether a judge could potentially step in to pause this before tonight's deadline, similar to what we saw relating to that buyout, so-called buyout offer. But, certainly, there's a lot of uncertainty facing so many federal workers and especially at the USAID, as the Trump administration has been very clear they plan to dismantle this agency, plan to really reduce the workforce there and then major questions about the widespread ramifications that could have around the world as USAID is one of the key groups offering assistance when it comes to treating disease, push recovery after humanitarian disasters and those types of issues.

BROWN: All right. Arlette Saenz, thank you for bringing us the latest there.

And joining us now is the attorney general of California, Rob Bonta. Thank you, Rob, for joining us.

So, you're part of this coalition of 12 attorneys general that have urged federal workers not to take this resignation offer. You said, quote, the Trump administration's so-called buyout offer is appointed attack aimed at dismantling our federal workforce and sowing chaos for Americans that rely on a functioning government. With the deadline now paused, what is your message to these employees?

ROB BONTA (D), ATTORNEY GENERAL OF CALIFORNIA: Listen to your union, who's flagging the multiple issues in this proposal. Thank you for your service. Your service is important. Federal employees do all sorts of important things, from protecting our veterans, making sure we have clean water and clean air, providing health services and housing services. The list goes on and on. This attempt to purge our past federal workforce should not stand.

And there are no guarantees in this proposal. There is no congressional appropriation to fund it. There's no guarantee that you might not get fired immediately after you take it or that you'll even get paid or that you'll even -- that you still have to -- that you won't have to work and that you will still have to work under this arrangement.

So, all the flags, the red flags that have been put up are appropriate. I think it's appropriate that the court paused the proposal for now and continue to know your rights and thank you for your service because it's important. Don't let the Trump administration purge the federal government's critical, essential services.

BROWN: So, then what do you say to the 65,000 workers who have already accepted this buyout offer?

BONTA: Everyone has an opportunity to make their own decision. It's important to make the decision eyes wide open with, you know, fully informed. The unions shared with them their members what the concerns were and you know, still people can make their own decision. So, if they're comfortable with that decision, and they balanced all the different factors and weighed them, you know, that's up to them. But it's important that they know that there are a lack of guarantees and unenforceability, a lack of funding for this proposal this buyout. And so if given all that, that's what they decided, that's up to them.

BROWN: All right. So, I want to take a listen to what Democratic Senator Mark Warner said.

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SEN. MARK WARNER (D-VA): Every scam artist is the same. They want to, you know, rush, take this offer right now, it expires at midnight. How many times do we see that?

My fear is these folks are going to get scammed and then be the first to be fired because they've raised their hands.

(END VIDEO CLIP) BROWN: So, you've echoed that concern, but, you know, some employees, some who have accepted this offer, might say, look, this seems to be a better option, take the risk, go ahead and sign it, and potentially be paid through September, or not and then just get fired and not have that benefit. What's the drawback from that? What do you say?

BONTA: I deeply believe that workers deserve dignity, respect, fair treatment, promises made must be promises kept. This is a high pressure exploding offer meant to coerce and urge federal employees to take it out of desperation and under pressure and with no guarantees. So, it's not something I'd take but every individual can make their own decision. And if they think it's worth the risk, if they want to take that risk, if they think they're going to get paid, if they are fine going back to work, if they want to take the risk of being fired, that's up to them.

But, broadly, for our federal government and the critical services that it provides and the stated and articulated mission of the Trump administration to purge and dismantle the federal government from within, it is not a good policy. But each individual, again, can make their own decision and I respect whatever they decide.

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BROWN: Attorney General Rob Bonta, thank you so much. We appreciate your time.

And up next, we're learning new details about the people supporting Elon Musk's hostile takeover of the federal workforce and just how much access they're getting to some of the government's most sensitive systems.

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BROWN: Now to new CNN reporting. We're learning more about some of the DOGE team gaining widespread access to federal agencies. One member of that team is a 23-year-old software engineer from Nebraska who helped decipher an ancient scroll buried for centuries. Another was the runner up in a hackathon contest last year as a Harvard senior. A third is the CEO of a multibillion dollar startup.

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Just weeks into Trump's second term, the DOGE team has been involved in multiple organizations, and that includes the Treasury Department's payment systems, including tax returns, disability and Social Security benefits and federal worker salaries. DOGE has also accessed or plans to access systems at USAID, the Center for Medicare and Medicaid Systems, NOAA, the Department of Energy, the FAA and the Department of Veterans Affairs. That's a lot in just a few weeks.

Joining us now for more on this is Power and Platforms reporter at WIRED, Vittoria Elliot. Vittoria, I was speaking to all of this. He said Elon Musk has just been laser-focused on this effort. He's been in Washington for weeks, which is unusual. And they're really on a mission year and you have some new reporting about the access that this team has had at the treasury. Tell us about that.

VITTORIA ELLIOT, POWER AND PLATFORMS REPORTER, WIRED: Yes. So, initially, our reporting found that one of the young DOGE engineers who had previously worked for X appeared to have access to the Treasury's payment systems. And to sort of offer some context on that, the Treasury is responsible for around $5 trillion-plus of payments a year at these specific systems. You know, if you like getting your tax returns on time and things like that, these systems are critical to that.

And not only did this person have what's known as read access, where you can actually go in and read the code and sort of do auditing there, they also had write access, which means they could actually go in and change the code. And this is particularly important because we first reported that appeared to be the case. And then representatives from the White House and the Treasury both said at a later time that that was not the case. And our reporting from yesterday seems to also indicate that it was, in fact, the case that this person's access was initially to be able to write and deploy code.

And that is particularly concerning because, you know, these systems are big and complex. And, you know, with a startup where you're moving fast and breaking things, you know, if your app goes down for a little bit, if there are glitches, you know, it can annoy your users. But this is the U.S. government and it could potentially impact tens, if not hundreds of millions of people.

BROWN: So, to be clear, though, now, they just have read-only access, correct? Because that's what my understanding is of our latest reporting. So, initially, that wasn't the case from your reporting, but now is it just read-only?

ELLIOT: Well, now that person has resigned from Treasury. They resigned yesterday. The Wall Street Journal contacted them around social media accounts that appeared to be linked to them with what appeared to be racist comments, and they resigned shortly after. So, that person is no longer there.

But I think it's pretty reasonable to expect that someone else from Doge will eventually be in Treasury again. There do seem to be, you know, a lot of people possibly interested in just working with the effort more generally. Obviously, when musk put a call out in the fall for people who wanted to work with DOGE, there seemed to be a pretty big groundswell response on X.

So, I think we can expect that we may see someone else in Treasury eventually. And just because that person's gone doesn't mean that the changes they made to the code are, I think the biggest thing right now is we don't know what changes are made and we may not know until something breaks.

BROWN: So, I'm going to play some of what Treasury Secretary Scott Bessent told Bloomberg about DOGE.

(BEGIN VIDEO CLIP) SCOTT BESSENT, TREASURY SECRETARY: When you say the DOGE team, these are Treasury employees. They're two Treasury employees, one of whom I personally interviewed in his final round. There is no tinkering with the system. They are on read-only. They are looking, they can make no changes. It is an operational program to suggest improvement.

Elon and I are completely aligned in terms of cutting waste and increasing accountability and transparency for the American people. I believe that this DOGE program in my adult life is one of the most important audits of government or changes to government structure we have seen.

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BROWN: Does this characterization square with what you've been hearing?

ELLIOT: Well, I think there's a real difference between people who are very technically talented and people who have government experience. You know, I think, you know, maybe some of these young people who are being brought in may have really exceptional coding abilities or technical talent, but that's very different than understanding the complexities of, say, U.S. privacy law and how data should be accessed and how systems need to be structured to abide by that.

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And I think what's really important to note as well is that, you know, no matter how talented someone is, these people weren't touching these systems until at least January 20th. You know, they probably do not have a fully robust understanding of the systems that they're tinkering with yet, whether or not they are totally pure of motivation and great at their jobs.

And so I think the idea that they're coming in, they're making change, they've had the ability to make changes and that we really don't know what's happening. And even read-only, when we're talking about access, you know, there's still a lot that people can glean from seeing government payment data from getting these sort of inside data points that other people wouldn't have.

And I think what's important to note is a lot of these DOGE people are coming in as special government employees. They are not permanent government hires. They're not subject to the same level of transparency that a regular civil service employee would be. And that is also concerning.

BROWN: Yes. Let me just follow up quickly because there is a lack of transparency around all of this. And, frankly, most of the information we're getting is from reporters like you and here at CNN about what is happening behind the scenes.

And, you know, you talk about this Treasury system and I wonder, I mean, could they potentially access, you know, information about Elon Musk's competitors, right? I mean, there are concerns about potential conflict of interest here and there aren't disclosures coming from Elon Musk right now that I've seen. So, I mean, could that be part of this?

ELLIOT: Yes. I mean, I think the reality is it's very important to highlight that Musk and some of his other allies, like Peter Thiel, who's chair of the board of Palantir, which is a big data company that works with the military, you know, Musk's SpaceX has billions of dollars in government contracts, like a lot of these people in the tech industry rely on contracts with the government for the success of their companies. And it definitely is concerning that people who are close to them or who have worked for them who are coming in on the DOGE effort might have access to data about their competitors, have access to, you know, government contract information.

When companies apply for government contracts, they share information that is not public in order to have a level of transparency with the government. And, you know, yes, it's entirely possible that they may be able to access information on their competitors.

BROWN: Vittoria Elliot, thank you so much for coming on and sharing all of your excellent reporting.

We'll pick up the pace. That's the White House message to ICE despite the agency arresting thousands of undocumented migrants since Trump took office. Up next, we have CNN's new reporting on the Trump administration's frustration with its immigration crackdown.

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