U.S. Government Quietly Revises Jobs Reports, Erasing 439,000 Positions
A closer look at the numbers from the Bureau of Labor Statistics (BLS) reveals that the U.S. government quietly erased 439,000 jobs through November 2023. The initial jobs reports were inflated by this number, indicating that the job market is not as robust as initially suggested. The government’s revisions have significant implications, as U.S. jobs reports impact financial markets, U.S. Treasury yields, and play a crucial role in Federal Reserve decisions regarding interest rate adjustments.
Revisions Spark Concerns
According to the recent data, increased government hiring has been a driving force behind the higher job numbers. In December 2023 alone, the government sector created 52,000 jobs, contributing to a three-month average of 50,000 jobs per month. This has raised concerns about the sustainability of this trend. Acting Labor Secretary Julie Su has been tight-lipped about the sector’s job creation when pressed on its long-term viability.
Impact on Financial Markets
The revision prompted David Rosenberg, founder of Rosenberg Research Associates, to express skepticism about relying on payroll data for trading. He highlighted that over 40% of the payroll growth in 2023 came from the BLS’s “Birth-Death” model, describing it as a “fairy tale” used to estimate jobs reports. The downward revision amounted to an “epic 443,000” jobs, according to Rosenberg.
Overstated Job Numbers Not a New Issue
This is not the first time that U.S. jobs reports have faced scrutiny for overestimating job growth. In August 2023, the BLS issued a preliminary revision, revealing that U.S. job growth for the 12 months through March 2023 was overstated by a net 306,000 jobs. Private sector job creation was adjusted lower by 358,000 in that period, while government payrolls were revised by an increase of 52,000.
Manufacturing Sector Struggles
The recent data also sheds light on challenges in the manufacturing sector, which has been in contraction for 14 consecutive months. While the economy claimed to have “added back” all manufacturing jobs lost during the pandemic, only 6,000 were created in December 2023. This is a concern as manufacturing jobs have a halo effect on other sectors, influencing the service industry and healthcare.
Economic Realities and Workforce Concerns
Despite claims of adding 13 million to 14 million jobs, the U.S. economy under President Biden has “added back” the jobs lost during the pandemic, creating 4.86 million jobs since February 2020. The U.S. labor force participation rate is at a historically low 62.5%, and the December jobs report reveals that 683,000 workers dropped out of the labor force. A record-high 8.69 million people now hold multiple jobs to cope with the cumulative 17.4% inflation rate under the current administration.
The revisions to the jobs reports highlight the complexity of assessing the health of the job market and the broader economy, prompting renewed discussions about the accuracy of official figures and the need for transparent reporting.
