US Added Less Jobs than Reported

In the latest labor report, it shows the US didn’t add as many jobs as previously reported.  The job differential?  A whopping 501,000.  Over half a million jobs were actually not added between late 2018 and early 2019.  This is the largest revision of jobs since the recession in 2009.  These revisions occurred in the retail, hospitality, and business sector. 

This signals a weaker economy than previously believed.  This supports the idea of cutting rates further in September, as rumored by the Federal Reserve.  The revelation makes sense for many economists, who say the average monthly increases seemed too good to be true.  The average increase of jobs monthly was about 223,000.  With the corrected numbers, it was actually around 185,000 jobs. 

While a revision of the actual number of jobs added is typical, this is a more dramatic differentiation than normal.  This adjustment is 0.3%, three times the amount we typically see of 0.1%.  However, final numbers won’t be known until February 2020.

This adjustment also calls into question the wage increase that we saw during the same time.  Over that year, we saw a modest growth in hourly wage of 3%.  If the actual number of jobs gained was much lower, the growth in wages may be in line with what we typically see, which is 4%.

It’s important to note where we saw the dip in job growth.  The three industries that aren’t hiring is retail, hospitality, and professional and business services.  These industries relay heavily on consumer spending.  Confidence in consumer spending is the main driver of a healthy economy. 

With the revised report from the Bureau of Labor Statistics, newer data about employment growth in the next year shows a slowing labor market.  While we are still seeing historic low unemployment rates, analysts are conflicted about the economy for the next year.  Coupled with the current trade war, many more economists are ringing their recession alarm bells.