The Economy Has Added Half a Million Fewer Jobs Than We Thought

JM Ashby
Written by JM Ashby

At times it has felt -- at least to me -- as though the labor market is inexplicably strong, with businesses adding more jobs than they seemingly need to meet falling demand and facilitate stagnant investment, but we now know the job market actually has not been as strong as advertised.

The Commerce Department routinely updates economic reports upward or downward after revisions based on more comprehensive data are made, but this is the most significant revision we've seen in the last decade.

The Bureau of Labor Statistics reported this morning that the economy added 501,000 fewer jobs than previously estimated over the last year.

The U.S. economy had about 501,000 fewer jobs as of March 2019 than the Bureau of Labor Statistics initially calculated in its survey of business establishments. That’s the largest revision since the waning stages of the Great Recession in 2009.

The newly revised figures indicate the economy didn’t get a huge boost last year from President Trump’s tax cuts and higher federal spending. They also signal the economy is a bit weaker than previously believed and could give the Federal Reserve even greater reason to cut interest rates in September. [...]

The average 223,000 monthly increase in employment in 2018 — the strongest in three years — could be trimmed to 180,000 to 185,000, economists estimate.

Fewer jobs were created in restaurants, hotels, retailers and professional business services. Leisure and hospitality employment was reduced by 175,000, business services by 163,000 and retail by 146,400.

I think we can infer how almost all revisions of economic data under Trump are negative or downward and sometimes very significant.

Updated economic reports are more accurate because they're based on more comprehensive data whereas initial estimates at partially based on expectations and assumptions.

The problem is twofold -- routine expectations and assumptions cannot account for the weekly disruption of Trump's whims and, moreover, the federal agencies charged with setting expectations are run by incompetents like Commerce Secretary Wilbur Ross.

They're not necessarily cooking the books, but the end result of executive happy talk is more or less the same. A culture of proclaiming better-than-expected results surrounds Trump and everyone close to him.

  • muselet

    Kevin Drum:

    This is half a million out of 150 million, so it’s not some sort of epic disaster or anything. Still, it’s a big revision and yet another indicator that the economy is perhaps a little weaker than we’ve been thinking.

    Let’s face it, Drum does have a knack for understatement.