The U.S. job market could lose one million jobs in a major revision.
The US job market may be ready to suffer a big hit, with economists projecting that the country would lose up to one million jobs when the government revises its employment numbers.
If these estimates are correct, it would imply that the job growth reported over the last year was significantly inflated. That might be a wake-up call for the Federal Reserve, which may be more behind on interest rate adjustments than previously assumed.
Goldman Sachs and Wells Fargo aren’t fooling with the figures. Both foresee a huge downturn revisions to the job growth numbers for the fiscal year ending in March.
According to Goldman Sachs, the actual number of jobs could be up to one million lower than previously stated. Wells Fargo is a little more conservative, but they still expect the revision to show nearly 600,000 fewer jobs, or roughly 50,000 per month.
JPMorgan Chase is less gloomy, anticipating a loss of approximately 360,000 jobs. But, no matter how you slice it, it’s a huge number of jobs that might be eliminated.
All eyes are on Powell.
If the labour market has been cooling over a longer and more intensive period than previously anticipated, it may change the entire narrative for Fed Chair Jerome Powell’s impending speech in Jackson Hole, Wyoming.
Jerome Powell
Investors will be waiting on his every word, attempting to determine when and by how much the Fed will begin decreasing interest rates. A significant revision in employment losses could prompt the Fed to act sooner rather than later.
The Bureau of Labour Statistics (BLS) is behind these modifications, which occur every year. They compare their first payroll estimates to the Quarterly Census of Employment and Wages (QCEW), a more accurate but slower method of counting jobs because it is based on state unemployment insurance data.
The most recent QCEW statistics, released in June, already suggested that the employment market may not be as strong as originally anticipated. The BLS now reports that 2.9 million jobs were created between March 2023 and March 2024, average 242,000 per month.
However, if this revision is as large as some expect, monthly growth could fall to only 158,000. That’s still respectable, but nothing to brag about when compared to the post-pandemic hiring boom.
Not everyone believes that the modification will be that significant. Due to the customary reporting lag, several economists believe the revision will come in lower than expected.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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