According to the Bureau of Labor Statistics, the U.S. added 818,000 fewer jobs than previously estimated from March 2023 to March 2024. The revisions were released Wednesday morning, suggesting that prior data significantly overestimated recent labor market recovery. This adjustment reduces the total employment growth for the 12 months from 2.9 million to about 2.1 million jobs.
That translates to an average monthly growth drop from approximately 242,000 to 174,000 jobs. In response to this news, the stock market reacted positively, with the S&P 500 rising by about 0.3%. It ultimately extended its daily gain to 0.5% and reached its highest price since mid-July.
The update was part of the regularly scheduled first benchmark revision to the government’s monthly nonfarm payroll data, which is a key measure of the overall U.S. employment picture. The significant revisions stem from the government’s shift to more accurate quarterly unemployment claim data.
Previously, they relied solely on monthly employer surveys, which form the basis of the initial monthly estimates. Economists had anticipated a sizeable downward revision. In fact, Goldman Sachs economists forecasted a revision of 600,000 to 1 million jobs.
Massive revisions have become relatively common. Last August’s correction reduced job growth estimates for the period ending in March 2023 by 306,000 jobs. Similarly, in August 2019, job growth for the period ending in March 2022 had been underestimated by 462,000 jobs.
Some economists argue that the headline revision number on job growth is misleading.
Goldman economist Walker suggested that the 818,000 downward revision likely overstated the error by 400,000 to 600,000. He attributed inaccuracies to the methodology’s exclusion of unauthorized immigrants, which significantly contributed to overall job growth.
“We’re not sweating this report,” wrote Ed Yardeni, founder of Yardeni Research. He called the revision “old news” since it involves employment data from several months ago. Recent employment data showed a slowdown in nonfarm payroll expansion.
From April to July, an average of 154,000 jobs were added monthly. Unemployment also increased to 4.3%, the highest rate since October 2021. This trend had briefly ignited fears of an imminent U.S. recession.
However, more recent data has helped restore confidence in the economy’s direction. The downward revision adds to growing evidence of a weakening job market. Despite still being relatively low, the unemployment rate ticked up to 4.3 percent last month.
Downward adjustment adds job market doubts
This adjusted figure is part of an annual revision process. Monthly employment figures from the Labor Department are reconciled with more accurate state unemployment reports.
This year’s revision was unusually large. Over the past decade, annual updates typically adjusted job numbers by around 173,000 on average. We’ve known that things on the net were probably moving gradually in the wrong direction,” said Guy Berger, director of economic research at Burning Glass Institute, a labor market research and data firm.
The Federal Reserve, which is closely monitoring signs of an economic slowdown, is expected to consider these revisions when it meets next month. Fed officials may also note a shift in consumer behavior. Americans affected by years of high inflation have been more cautious in their spending.
Still, some indicators suggest that the economy remains robust. Inflation continues to cool, and gross domestic product growth has been strong. The revision comes at a politically critical moment for Vice President Kamala Harris.
She is attempting to present the Biden administration’s economic track record in a positive light as she steps into the role of the Democratic presidential nominee. Joe Biden, who had earlier claimed at the Democratic National Convention to have helped create 16 million new jobs, will now need to adjust that figure to approximately 15 million. Despite the correction, this achievement still far exceeds the nearly 7 million jobs created during Donald Trump’s administration after accounting for pandemic-related job losses.
As Democrats gather momentum with Harris at the forefront of their presidential campaign, recent polls reveal that Trump holds a 9-point lead over Harris on key issues like the economy and inflation. Public sentiment towards the U.S. economy has been predominantly negative. Less than a quarter of Americans rated it as good or excellent in July.
The political discourse surrounding job creation has also touched upon race. Trump has inaccurately claimed that undocumented immigrants have filled most jobs created under the Biden administration. He has further sought to divide Democrats by suggesting that foreign-born workers are taking jobs from Black and Hispanic communities.
On a more optimistic note, many economists expect the Federal Reserve to cut interest rates in September. This could lower borrowing costs and bolster the job market and overall economy. In contrast to Trump’s economic approach, which includes imposing tariffs to increase domestic production and making tax cuts permanent, Harris proposes extending tax cuts for most Americans while raising taxes on the wealthiest.
Her proposals also include tax credits for families with children and first-time homebuyers. While the revision may add to the public’s unease about the economy, experts suggest it does not fundamentally alter the overall economic outlook. The labor market remains strong, albeit “a little less hot” than previously believed.
As the political landscape evolves, the Biden administration and Vice President Harris must navigate these economic challenges and voter perceptions to solidify their standing before the upcoming election.
