US job growth revised significantly downward

The US job boom was not quite as strong as initially reported

Employment growth in the US was weaker than originally expected for most of last year, revised data released by the Bureau of Labor Statistics on Wednesday. Using more accurate figures from state labor offices, the BLS reduced the total number of jobs created between April 2023 and March 2024 by 818,000 – the largest downward revision since 2009.

Initial estimates suggested the economy had added an average of 242,000 new jobs per month over the year through March. However, the new, more accurate data shows that figure is closer to 174,000 jobs per month, a decline of about 28 percent.

What this says about the economy: The labor market was not as strong as initially expected, raising new questions about whether the U.S. economy might be closer to a slowdown than some analysts had thought. The correction was exceptionally large — Ben Casselman of the New York Times reported that the typical revision over the past decade has been plus or minus 173,000 – and that the last time such a large revision occurred in 2009, the economy had already fallen into recession.

CNBC's Steve Liesman noted that the economy looked very different in 2009, with rising unemployment and negative GDP growth, which is no longer the case today. “As a sign of deep weakness in the economy, this major revision compared to contemporary data is an outlier for now,” Liesman said. wrote.

Economist Guy Berger, who heads research at the Burning Glass Institute, told the Times that the correction was consistent with what analysts have been observing in the labor market for some time. “We knew that things were probably starting to move in the wrong direction overall,” he said. “This broadly confirms what a holistic look at the labor market data was saying before today.”

Bloomberg columnist Jonathan Levin said the revision helps explain why inflation has continued to fall despite a labor market seen as overheated. Average monthly job growth of “174,000 is still excellent and broadly in line with what one would hope for if one wanted to contain inflation without triggering a downturn,” he wrote.

White House economist Jared Bernstein echoed similar sentiments, noting that the labor market has remained remarkably resilient despite the new numbers. “This preliminary estimate does not change the fact that the labor market recovery has been and remains historically strong, delivering solid job and wage gains, strong consumer spending, and record small business start-ups,” he said in a statement.

The Fed will likely cut the following amounts: The correction increases the chances that the Federal Reserve will cut interest rates at its next meeting in mid-September. Some analysts say the data could prompt the Fed to cut rates even more than it otherwise would have.

“A deteriorating labor market will allow the Fed to emphasize both sides of the dual mandate, and investors should expect the Fed to prepare markets for a cut at the September meeting,” said Jeffrey Roach, chief economist at LPL Financial, per CNBC.

Diane Swonk, chief economist at KPMG, said it looks like the economy is being supported by relentless consumers despite growing headwinds. “That picture depends on the labor market holding up and layoffs remaining contained,” she said. told The Washington Post. “The Fed must cut interest rates if it wants to maintain the Goldilocks scenario.”

Still, the overall picture may not have changed as much as it first appears. “60 million people have a job,” says Torsten Slok, chief economist at Apollo Global Management. said CNN“Telling me that it wasn't 160 million but only 159.2 million in the last 12 months doesn't change much about how the Fed and the financial markets think about the economy.”

Trump spreads a conspiracy theory: Although the downward revision was expected, with some analysts suggesting the number could be as high as 1 million, and there have been similar revisions before, some on the political right saw nefarious forces at work. Former President Donald Trump led the charge, accusing Vice President Kamala Harris and the Biden administration of manipulating the economic data.

“HUGE SCANDAL!” Trump wrote on his social network. “The Harris-Biden administration was caught fraudulently manipulating labor statistics to hide the true extent of the economic ruin it has inflicted on America.”

Trump provided no evidence to support his claims. Lauren Irwin of The Hill noticed“The BLS is an agency of the Department of Labor staffed by civil servants. There is no evidence that the Biden administration or the BLS staff who prepared the report did anything unethical or illegal.”

Julia Pollak, chief economist at ZipRecruiter, also rejected the accusation. “I was always surprised and impressed by [BLS’s] “Professionalism, non-partisanship and transparency,” she wrote on the social media platform X. “It's a pretty unique gem that accomplishes a lot with modest funding and helps us all make better-informed decisions.”

Philip Bump of the Washington Post pointed out a fact that is inconvenient for Trump: In March 2019, when Trump was in the White House, the BLS issued a downward revision of 501,000 jobs. For some reason, there were no allegations of data manipulation from the Trump administration. “The reality is that there was no scandal under Trump and now there is none under President Joe Biden,” Bump said. wrote“Just a data-centric government agency doing its best to accurately represent the state of the economy.”

For anyone interested in the regular audit process at BLS, Guy Berger provides an overview of how it works. Here.

Quote of the day

“Do I still have to follow the guidelines?”

— Republican presidential candidate Donald Trump responded Wednesday to allies who urged him to focus his campaign on policy issues rather than personal attacks after former President Barack Obama and former first lady Michelle Obama repeatedly denigrated him in their speeches at the Democratic National Convention last night. Perhaps most memorably, Michelle Obama praised Vice President Kamala Harris, including by denouncing Trump's familial privilege: “She understands that most of us will never be given the grace to fail forward. We will never benefit from the positive discrimination of generational wealth.”

Trump hinted on Wednesday that he would continue to dish out personal attacks. “You know, they always say, 'Sir, please stick to the policy, don't get personal.' And yet these people keep getting personal all night long. Do I still have to stick to the policy?” Trump asked a rally crowd in Asheboro, North Carolina. Then he offered advice he has received from allies who fear he could lose to personal attacks: “Sir, you have to stick to the policy. You're going to win at the border. You're going to win with inflation. You're going to win with your great military that you've built…”

Of course, Trump has not focused exclusively on policy in recent days, continuing to pepper his speeches with personal attacks, insults and nicknames. On Wednesday, he admitted he had a hard time choosing a nickname for the vice president, although he may have settled on “comrade,” falsely implying that Harris is a communist.

He later asked the crowd, “Should I get personal or should I not get personal?” The first option received the loudest applause.