Jobs data spurs political response, focus on Fed

The recent massive downward revision of jobs created in the United States in a one-year period prompted political reaction and also raised questions on whether the Federal Reserve has waited too long to cut interest rates.

The US government reported on Aug 21 that the economy created 818,000 fewer jobs from April 2023 through March 2024. It was the largest revision to federal jobs data in 15 years, according to the Bureau of Labor Statistics (BLS).

The revision represented a total downward change of about 0.5 percent, meaning that? monthly job gains during the period averaged roughly 174,000, compared with the previously reported figure of 242,000.

If the number remains in place through a final revision in February, it would be the largest downward revision since the 902,000 downgrade to employment in March 2009.

"What you're seeing is an echo of the large (pandemic-era) shocks that we're just working our way through," said Joe Brusuelas, chief economist at RSM, The Washington Post reported. "We're trying to ascertain the size of the labor force and its flows."

The Biden administration has maintained that the job market is still robust in the United States, with unemployment from April 2023 through March 2024 averaging under 4 percent.

"This preliminary estimate doesn't change the fact that the jobs recovery has been and remains historically strong, delivering solid job and wage gains, strong consumer spending, and record small business creation," Jared Bernstein, chair of the White House's Council of Economic Advisers, said in a statement.

Biden has often mentioned jobs creation in his public comments and did so again in his speech on Aug 19 at the Democratic National Convention. He said that he had helped create "a record 16 million new jobs".

Former US president Donald Trump, however, the 2024 Republican presidential candidate, seized on the revised BLS number at a campaign rally in North Carolina on Aug 21.

He accused his Democratic opponent in the November election, Vice-President Kamala Harris, and Biden of "fraudulently manipulating job statistics to hide the true extent of the economic ruin that they've inflicted on America".

"They said they existed and they never did exist," Trump said. "They built them up so that they could say what a wonderful job they're doing." Trump also unleashed repeated criticism of the revision that day on his Truth Social platform.

Jodey Arrington, a Texas Republican and the chair of the GOP-controlled House Budget Committee, said in an Aug 21 statement: "The economy is the top issue in this presidential race and the recent downwardly revised job numbers taken together with persistently high prices and interest rates (belies) a much weaker Biden-Harris economy than we were led to believe.

"The tax, spend, and regulate economic agenda of Biden-Harris has failed and no one knows that better than working Americans."

The revision also could change the Fed's rate-cutting timetable.

"This is a noticeably larger than … normal revision ... it wouldn't be a stretch for the Fed to assume that recent job growth is also being overstated, strengthening its decision to shift attention from inflation toward the labor market," said Ryan Sweet, chief US economist at Oxford Economics, Reuters reported.

"This doesn't challenge the idea we're still in an expansion, but it does signal we should expect monthly job growth to be more muted and put extra pressure on the Fed to cut rates,'' said Robert Frick, economist at the Navy Federal Credit Union, to The Associated Press.

Fed policymakers could consider a weaker job market as they mull future rate reductions after the initial cuts expected at their Sept 17-18 meeting.

In July, payrolls were weaker than expected, eliciting talk that the Fed may have waited too long to begin cutting rates, as the unemployment rate rose to a post-pandemic high of 4.3 percent.

The central bank has kept its benchmark overnight interest rate in the 5.25-5.50 percent range for more than a year, having raised it by 525 basis points in 2022 and 2023 to tackle high inflation.

The jobs-creation revision also generated responses on social media.

"This more than any other data has given the illusion of a strong economy this year, in stark contrast with other jobs data — e.g. household employment," posted economist Albert Edwards on X.

Journalist John Carney wrote on X, "Contrary to what you might have heard from GOP officials, the revision to jobs numbers wasn't evidence of the BLS cooking the books." But he speculated that there was "a huge number of jobs created during the Biden administration" that went to people in the United States illegally.

Julia Pollak, chief economist at ZipRecruiter, defended the BLS in a series of posts on X on Aug 21.

"Is the Bureau of Labor Statistics a massive pro-Biden Admin shill? And are today's revisions to labor statistics evidence of (a) huge conspiracy to inflate the economic data? The answer is a declarative NO."

She also wrote that she has "consistently been surprised and impressed by (BLS') professionalism, non-partisanship, and transparency. It is a pretty unique gem that accomplishes a great deal with modest funding, and helps us all make better-informed decisions."

Pollak qualified her praise by saying she is someone who is "deeply skeptical of government, is shocked at how rampant corruption is in the US, and is by no means naive about the political leanings of most DC residents or govt employees".

Agencies contributed to this story.