The federal government overestimated the number of jobs in the U.S. economy by 818,000 between April 2023 and March 2024, according to data from the Bureau of Labor Statistics released Wednesday, stoking fears of a slowdown in the U.S. economy.
Economists at Goldman Sachs (GS) and Wells Fargo anticipated the government had overestimated job growth by at least 600,000 in that span, while economists at JPMorgan Chase had predicted a lesser decline of 360,000, according to Bloomberg. The downward revision follows a trend of the BLS overestimating the number of nonfarm payroll jobs added, with the cumulative number of new jobs reported in 2023 roughly 1.3 million less than previously thought as of February 2024. (RELATED: It Turns Out Biden’s Economy Isn’t So ‘Cured’ After All)
“There’s been a clear pattern of economic data being revised down (worse) in the last several years,” E.J. Antoni, a research fellow at the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget, told the Daily Caller News Foundation. “It is very similar to the onset of the Great Recession, when the BLS was struggling to keep up with rapidly deteriorating economic conditions. Assumptions built into models no longer represented reality, although they may have just a year or two prior. ”
Something to watch this week: Preliminary annual payrolls revisions get released on Wednesday, covering April 2023 through March 2024. Economists expect jobs added to be revised down by as much as 1 mil. pic.twitter.com/dfuYp3yPm9
— Liz Young Thomas (@LizThomasStrat) August 19, 2024
Fears of a slowdown in the U.S. economy surged earlier in August following a disappointing July jobs report that saw unemployment rise to 4.3%, up 0.2% from June.
The rising specter of an American recession led to a global market sell-off, with Japan’s Nikkei 225 index dropping 12.40% on August 5, its largest decline since Black Monday in 1987. The S&P 500 also fell 3.00% in its worst single-day loss since late 2022.
Nevertheless, the indexes recouped much of their losses the following day, with the Nikkei and the S&P rising 10.2% and 1.0% respectively, according to ABC News.
Wednesday’s downward revision has also heightened concern that the Federal Reserve has waited too long to begin cutting interest rates, Bloomberg reported. If the FOMC hesitates to cut rates for too long, it could result in recession instead of a soft landing — an economic slowdown in which inflation is brought down without causing recession.
The Federal Open Market Committee (FOMC) decided to hold its target federal funds rate between 5.25% and 5.50% in July, marking the eighth meeting in a row the FOMC has decided to keep rates at their current 23-year high.
“Wall Street is increasingly waking up to the fact that the economy post-covid has never been as good as the government bean counters claimed, and a recession may have already begun,” Antoni told the DCNF. “These revisions are a violent shove in the direction of reality.”
The White House did not immediately respond to a request for comment.
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