The Bureau of Labor Statistics just zapped 818,000 jobs out of existence.
That’s one heck of an eraser.
Month after month, we’ve been regaled with headlines extolling the strength of the U.S. job market. Virtually every month, the mainstream has enthusiastically reported “better than expected” job creation. This, we’re told, reflects the strength of the economy and the wisdom of Biden-Harris economic policies.
And now we get the inevitable revisions.
The BLS revises the numbers every month. As we have seen, the overwhelming majority of those revisions have been downward.
Once a year, the agency does a broader revision based on the results of the Quarterly Census of Employment and Wages. Those updates recently came out and as it turns out, actual job growth was about 30 percent less than all those blazing headlines reported.
It was the biggest annual downward revision since 2009.
Based on the revised numbers, the U.S. economy added an average of 174,000 jobs each month. That compares to the originally reported average of 242,000.
CNBC sheepishly reported, “The report could be seen as an indication that the labor market is not as strong as the previous BLS reporting had made it out to be.“
Ya think?
A cynical person might think that the government agency is cooking the books to make the current administration look better than it is. We’ll leave you to draw what conclusion you may.
The professional and business services category saw the biggest downgrade, with 358,000 jobs erased. Hospitality, manufacturing, and trade transportation and utility categories also charted big downward revisions.
But you’ll be glad to know they didn’t erase any government jobs.
Of course, revisions get much less play in the media than the initial numbers. You rarely see big market moves because the BLS erased a bunch of jobs from the economy with a few clicks of its calculator. The revisions happen quietly in the back alleys. Most people don’t pay any attention to them. That creates the illusion that the labor market is much stronger than it is.
So, why should we trust any of these numbers, much less make decisions based on them?
And notice that the revisions are almost always down. If the BLS was making honest mistakes month after month, you would think sometimes they would underestimate the number of jobs created. But they always overestimate the numbers. If you flipped a coin and it came up heads 90 percent of the time, you’d start to wonder about the integrity of that coin, wouldn’t you?
It’s important to wrap your head around the pattern here.
Month after month, the government reports good news. Everybody celebrates. Markets move. Later, the government quietly revises everything downward and reports that the good news was really bad news.
And pretty much nobody pays attention.
It might be a good idea to pay attention — to the revisions too. Things aren’t nearly as rosy as the headlines would indicate.
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