The U.S. economy has added far fewer jobs over the past 12 months than previously thought, delivering a significant challenge for Vice President Kamala Harris as she seeks to shape a winning message on the economy. The Labor Department revealed on Wednesday that the economy added 818,000 fewer jobs than initially reported, marking the most significant downward revision in employment numbers by the Bureau of Labor Statistics (BLS) in 15 years.
While annual job growth revisions are not uncommon, the scale of this adjustment has taken many by surprise. Prior to the announcement, financial institutions like Wells Fargo and JPMorgan Chase had forecasted smaller downward revisions of 600,000 and 360,000 jobs, respectively. Instead, the BLS revision represents a 0.5% decrease from earlier reported figures – significantly higher than the usual 0.1% margin seen in most years.
CNBC reported a significant downward revision in professional and business services, with 358,000 fewer jobs than initially reported:
As part of its preliminary annual benchmark revisions to the nonfarm payroll numbers, the Bureau of Labor Statistics said the actual job growth was nearly 30% less than the initially reported 2.9 million from April 2023 through March of this year.
The revision to the total payrolls level of -0.5% is the largest since 2009. The numbers are routinely revised each month, but the BLS does a broader revision each year when it gets the results of the Quarterly Census of Employment and Wages.
Wall Street had been waiting for the revisions numbers, with many economists expecting a sizeable reduction in the originally reported figures.
Even with the revisions, job creation during the period stood at more than 2 million, but 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. That in turn could provide further impetus for the Federal Reserve to start lowering interest rates.
While decreasing interest rates can provide a short-term boost to the economy, it can lead to long-term negative consequences, such as:
-Inflation Risk: Lowering interest rates can lead to increased borrowing and spending, which can overheat the economy and drive up inflation. If inflation rises too quickly, it can erode purchasing power and lead to economic instability.
-Asset Bubbles: Cheap borrowing costs can lead to excessive investment in certain assets, such as real estate or stocks, inflating their prices beyond sustainable levels. When these bubbles burst, it can lead to severe financial crises, as seen during the housing bubble in the 2000s.
-Savings Disincentive: Lower interest rates reduce the returns on savings, which can discourage people from saving money. This might lead to lower levels of personal savings and can affect future financial security, especially for retirees who rely on interest income.
–Weakened Currency: Lower interest rates can lead to a weaker national currency, as investors seek higher returns elsewhere. While this can benefit exports by making them cheaper for foreign buyers, it can also increase the cost of imports, contributing to inflation and harming consumers.
-Reduced Policy Tools: If interest rates are already low, the Federal Reserve has limited tools to stimulate the economy further in the event of a downturn. This can leave the economy vulnerable during a recession, with few options to spur recovery.
-Debt Accumulation: Cheaper borrowing can lead to higher levels of debt among consumers and businesses. While this can drive short-term economic growth, it increases financial vulnerabilities, particularly if borrowers are unable to repay their debts when rates eventually rise.
In the short term, the updated data arrives at a crucial moment for Harris, who lags behind former President Donald Trump in terms of who would handle the economy better. The news also comes on the eve of the biggest speech of Harris’ career at the Democratic National Convention and complicates her efforts to build a strong economic message, particularly as voters express concerns over job opportunities and financial stability.
Despite these challenges, polls continue to show a tight race. The latest RealClearPolitics (RCP) polling average gives Harris a narrow 1.5-point lead over Trump nationally. However, in the crucial battleground states, Trump holds a slight 0.2% edge. According to RCP, if the election were held today, Trump would likely secure 287 electoral votes, compared to Harris’ 251.
As the campaign intensifies, Wednesday’s job figures are guaranteed to become a bone of contention, with both candidates seeking to sway undecided voters in the final stretch.
This is a breaking news story. Please check back for updates.
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How about Harris being aa habitual liar. She will say whatever you want to hear to get elected then she will give you the middle finger. Every citizen in this country should be thinking wealth tax, loose house
live rest of life in public housing. Harris is pushing for the wealth tax.
In late 2012/early 2013 I concluded that the US Bureau of Labor Statistics, and just about every record keeping federal agency, is politicized and cannot be trusted. It goes back to the 2008 presidential election campaign when Obama said that if unemployment was not below 8% at the time of the 2012 election, don’t vote for him. Lo & behold BLS reported an unemployment rate of 7.8% in the weeks leading up to the election. A few weeks later they revised it upwards to some number greater than 8%. THAT was when I decided to never ever trust a federal statistic. Frankly, I’d dismantle the Labor Department, including BLS.