Job numbers revised: What many fewer jobs mean about the economy
This past Wednesday, the BLS revised previous jobs data for March 2023 to March 2024, revealing employers added 818,000 fewer jobs than previously reported. This is a significant drop of about 30% fewer jobs.
Why such a large revision? While never perfect, the 818,000 job discrepancy is about 5x larger than previous years. Since the data is based on unemployment claims, some experts point to the exclusion of unauthorized immigrants as the cause for the discordance. As many as 500,000 more unauthorized immigrants may be working in the US compared to last year.
What industries were hit hardest? The professional and business services category saw the biggest reduction of jobs, shedding 358,000, or 1.6%, from the prior estimate, followed by leisure and hospitality at 150,000 jobs, down 0.9%. The manufacturing sector saw a reduction of 115,000 jobs, also down 0.9%. In contrast, transportation, warehousing, and health service industries are expected to be revised higher than reported.
Job market outlook: The updated numbers are the latest sign of vulnerability in the job market, which until recently had appeared solid - despite months of high interest rates and economists’ warnings of an impending recession. More recent data, which wasn’t affected by the revisions, suggests job growth slowed further in the spring and summer, and the unemployment rate, though still relatively low at 4.3 percent, has been gradually rising.
Interest rate predictions: The Fed is required under the law to keep inflation low, but also to keep employment high. So the smaller number of new jobs created gives further impetus for the Fed to cut interest rates in September.
Our analysis: While discouraging, we think this revision reflects what many of our community members already feel in the economy. It has been a very tough year for millions of Americans, so to some extent, this data validates the struggle many have had in securing quality employment. Additionally, we hope this more dire picture sparks more action from our policymakers to help working families.
