2024-08-21 19:10:31
Getty ImagesThe Labor Department said on Wednesday that U.S. job growth appeared weaker last year than previously expected, further fueling a fierce debate about the state of the U.S. economy.
The Labor Department said the latest data showed employers added about 818,000 fewer jobs in the 12 months through March than previously estimated.
The revision is preliminary and reduces the total number of jobs created during the period by about 30% compared with previous estimates – the largest update since 2009.
In a normal year, the release of the new estimates would receive little more than the most bored economic forecasters’ attention. But in the months leading up to a presidential election, it quickly became a political talking point.
What does the report say?
The new estimate shows monthly job gains of about 174,000, rather than the previously understood rate of about 240,000.
Most industries were hit by the forecast downgrade, including information (media, technology), retail, manufacturing and the combined category of “professional and business services.”
Ryan Sweet of Oxford Economics wrote that this meant that job growth during the period was “more dependent on government and education/health care than might be imagined.”
He noted that hiring “remains strong but is below the level needed to keep pace with growth in the working-age population.”
Ultimately, the revisions meant that total U.S. employment was just 0.5% lower than previously expected.
Where do these numbers come from?
The Labor Department publishes estimates of job creation each month based on surveys sent to employers.
It revises the data periodically as more information becomes available, with a final reset at the beginning of each year.
Wednesday’s report is a preview of that update, with county-level unemployment insurance tax data.
Mr Sweet noted that the magnitude of this revision was “significantly” greater than in previous years.
But some analysts believe that figure may be exaggerated, noting that tax data do not reflect the extent to which jobs are lost to illegal workers.
They say this could lead to an underestimation of job growth given the recent surge in immigration to the United States.
In each of the past four years, the final estimate of job growth has been higher than the August forecast.
What has the response been like so far?
Strong job growth is key to the Biden administration’s case that its policies have helped the U.S. emerge from the pandemic as the world’s strongest economy.
But Republicans on Wednesday seized on the data to accuse Democrats of feeding voters misleading narratives about the state of the economy.
The Republican Party responded on social media: “Breaking News: The 818,000 jobs the Harris-Biden Administration claims to have ‘created’ don’t actually exist.”
Donald Trump posted on Truth Social that it was a “huge scandal!” and claimed the “real” numbers were “much worse than this.”
But Jared Bernstein, chairman of President Biden’s Council of Economic Advisers, said the revision “does not change the fact that America’s job recovery has been and will continue to be strong, driving real wage growth, solid consumer spending, and record growth for small businesses.”
So how worried should we be?
For much of last year, U.S. job growth was strong, exceeding economists’ expectations and public sentiment.
The pace of economic growth has surprised many because businesses and households are facing the highest borrowing costs in a generation, which would normally hamper economic growth.
As the Republican response stressed, the changes support the argument that labor market conditions are more precarious than previously thought.
Many analysts said the new data would strengthen the case for the U.S. central bank to cut interest rates at its next meeting in November, which is expected as the Fed seeks to prevent further weakness in the job market.
But the change has not caused widespread alarm.
Financial markets, which had been roiled earlier this month by concerns about the economy, remained largely calm on the latest data, noting that the data were in line with expectations.
“Nonfarm payrolls growth between April 2023 and March 2024 looks weaker than initially thought, but not alarming,” wrote Olivia Cross, North American economist at Capital Economics.
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