Depending on which politicians you listen to, the economy has been roaring lately. But you know politicians - you should take everything they say with a gigantic truckload of salt. This is no different, as the job numbers we’ve been seeing lately are not quite what they seem.
Here are Five Fast Facts on downward revisions to job growth:
- 💨 The Streak - In 2022, the US Bureau of Labor Statistics kept surprising everyone with big payroll gains of more than 10 million jobs over the course of 20 straight months. It was a record streak (and not the kind that goes through the football field and up to the quad)!
- 😉 Catching Up - A standard practice for the BLS when it puts out new numbers each month is to also revise the last two months with current numbers. It’s a convenient way for them to bury the fact that they might have been, ahem, a little overzealous when it comes to delivering the job growth that was promised.
- 📉 The Revision - In July, analysts with JPMorgan Chase estimated that the Bureau’s numbers were off by half a million, and that the revisions would look much less favorable than the headlines originally touted. Other analysts suggest it could be off by as much as 650k jobs! That’s a little more than a rounding error!
- 🤢 What Does That Mean? - This means that there are tens of thousands of jobs being reported each month as economic growth that don’t actually exist. The economy isn’t “booming” so much as, well, sputtering.
- 💸 So What? - The big job growth has been a key factor in the Fed’s decision to raise interest rates to combat inflation. If those jobs turn out to be non-existent, the Fed could take even more severe action, which could make things even more expensive. And we all need that like a slug needs salt.
🔥Bottom line: We’ll see how this all shakes out, but it seems like the job horizon is getting gloomier, and that’s bad news for Paychecks everywhere. Let’s hope they’re wrong.
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