U.S. job market weaker than reported
San José, CA – On Wednesday, August 21, the U.S. Department of Labor released an initial estimate reducing the number of net new jobs created from April 2023 to March 2024 by 818,000, or about 28%. This is the biggest adjustment since 2009, the year after the Great Financial Crisis. The adjustment was about five times as big as previous years’ adjustments.
The monthly jobs report is based on a survey of businesses, while the revision is based on more complete state records of unemployment taxes which businesses pay for each of their workers. The latest monthly jobs reports have weakened, with the latest report for July showed only 114,000 new jobs. The revision shows that the labor market was much weaker for over a year.
This revision was not surprising, since reports from a survey of households showed unemployment rising and far fewer people becoming employed. Some economists questioned the revision downward, pointing the growing numbers of undocumented immigrants who are ineligible for state unemployment. However, almost half of the downward revision was in the white-collar professional and business services, which has very few undocumented workers.
This revision should be finalized in February of 2025, with monthly adjustments of the payroll jobs number. The revision also puts the payroll jobs report, which economists use to determine when a recession starts, within striking distance of a negative, or net job loss, report. This means that a recession is much more possible in the near future.