U.S. job growth was weaker than initially reported during much of last year, according to revised data released Wednesday by the Bureau of Labor Statistics. Using more accurate figures collected from state employment offices, the BLS cut the total number of jobs added to the economy between April 2023 and March 2024 by 818,000 – the largest downward revision since 2009.
The initial estimates indicated that the economy had added an average of 242,000 jobs a month during the year ending in March, while the new, more accurate data show that number was closer to 174,000 jobs a month, a decrease of about 28%.
What this says about the economy: The labor market has not been as strong as initially estimated, raising new questions about whether the U.S. economy could be closer to a slowdown than some analysts had thought. The revision was exceptionally large — Ben Casselman of The New York Times reported that the typical revision over the last 10 years has been plus or minus 173,000 — and the last time such a large revision occurred, in 2009, the economy had already entered a recession.
CNBC’s Steve Liesman noted that the economy looked very different in 2009, with soaring jobless claims and negative GDP growth, neither of which are true now. “As a signal of deep weakness in the economy, this big revision is, for now, an outlier compared to the contemporaneous data,” Liesman wrote.
Economist Guy Berger, who directs research at the Burning Glass Institute, a labor market research firm, told the Times that the revision is compatible with what analysts have been seeing in the labor market for some time. “We’ve known that things on net were probably moving gradually in the wrong direction,” he said. “This just largely confirms what a holistic view of the labor market data was saying before today.”
Bloomberg Columnist Jonathan Levin said the revision helps explain why inflation has continued to move lower despite what was seen as a red-hot jobs market. Average monthly job growth of “174,000 is still excellent, and broadly consistent with what you’d hope for if you’re trying to tame inflation without causing a downturn,” he wrote.
White House economist Jared Bernstein had a similar take, noting that even with the new numbers, the labor market has been remarkably durable. “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,” he said in a statement.
The Fed will likely cut: The revision raises the odds that the Federal Reserve will cut interest rates at its next meeting in mid-September, with some analysts saying the data could push the Fed to make a larger cut than it would have otherwise.
“A deteriorating labor market will allow the Fed to highlight 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 sustained by untiring consumers, despite growing headwinds. “That narrative is contingent on the labor market holding up and layoffs remaining in check,” she told The Washington Post. “The Fed needs to cut if they want to sustain the Goldilocks scenario.”
Still, the big picture may not have changed as much as it first appears. “One hundred sixty million people have a job,” Torsten Slok, chief economist at Apollo Global Management, told CNN. “Telling me that over the last 12 months it wasn’t 160 million, it was only 159.2 million is not making too much of a difference to how the Fed and financial markets are thinking about the economy.”
Trump pushes a conspiracy theory: Although the downward revision was expected, with some analysts guessing that the number could be as high as 1 million, and similar revisions have occurred 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.
“MASSIVE SCANDAL!” Trump wrote on his social media network. “The Harris-Biden Administration has been caught fraudulently manipulating Job Statistics to hide the true extent of the Economic Ruin they have inflicted upon America.”
Trump did not provide any evidence to back up his claims. As The Hill’s Lauren Irwin noted, “The BLS is an agency within the Labor Department staffed by career civil servants. There is no evidence that the Biden administration or BLS employees who produced the report did anything unethical or illegal.”
Julia Pollak, chief economist at ZipRecruiter, also pushed back on the accusation. “I have consistently been surprised and impressed by [BLS’s] professionalism, non-partisanship, and transparency,” she wrote on the social media platform X. “It is a pretty unique gem that accomplishes a great deal with modest funding, and helps us all make better-informed decisions.”
The Washington Post’s Philip Bump pointed out an inconvenient fact for Trump: In March 2019, when Trump was in the White House, the BLS issued a downward revision of 501,000 jobs. Somehow, there were no accusations of data manipulation coming from the Trump administration. “The reality is that there was no scandal under Trump and none now under President Joe Biden,” Bump wrote. “Just a data-centered government agency doing its best to accurately represent the state of the economy.”
For those who are curious about the regularly scheduled revision process at the BLS, Guy Berger has a rundown on how it works here.
