The latest astonishing jobs revision revealed there were vastly fewer jobs than previously reported. This is significant in a number of ways. First, the downward revision of 818,000 jobs is the largest such downgrade in 15 years. That effectively means there were 818,000 fewer job gains than first believed from April 2023 through March 2024. That averages out to 68,166 fewer jobs created per month than the government reported. On Wall Street, this is called “painting the tape” — artificially inflating or manipulating data to create the appearance of a better situation than actually exists.
The largest downward revision was in professional and business services, with estimated payroll lowered by 358,000, followed by a 150,000 downgrade in leisure and hospitality and 115,000 in manufacturing. Put another way, the average monthly jobs increase over the past year was revised downward from 218,000 to 150,000. That’s a decline of more than 31 percent.
Second, the non-farm payroll for July reported earlier this month of only 114,000 — way below the consensus of 170,000 — calls into question what the real number was. The Dow dropped 1,000 points in reaction to the report amid what is being called a growth scare panic attack. And what if the trend of shedding 68,000 phantom jobs were applied to the July non-farms payroll print of 114,000? That would imply only 46,000 jobs were created.
Of late, some economists at Goldman and other firms are saying the 818,000 downward revision is overstated because it doesn’t consider the one million or so jobs that went to illegal migrants. Now the government is adjusting for the underground and cash economies. That’s not reassuring at all and shows just how unreliable the reporting of true employment conditions is. To say the Bureau of Labor Statistics isn’t politicized is a major understatement.
Third, it is clear that the outspoken critics of the labor market stats put out by the government were right about the employment situation being not nearly as robust as the federal establishment survey claims it to be. Here’s the rub. The federal bureaucracy employment survey takes into account total jobs — whether full-time or part-time — and not total people employed. The last time there was this kind of major downward revision was 2009, when the economy was dealing with the Great Recession. So much for the “blowout” jobs report the mainstream financial media repeatedly touted throughout 2023 and early 2024.
Fourth, household surveys have corroborated what many economists have been saying for quite some time — that full-time job growth flattened out 11 months ago whereas growth in part-time jobs has increased at a decent clip. One can argue that the most recent employment reports reflect an economy where workers who do have jobs are increasingly making ends meet by working two or more jobs.
Lastly, the Fed has finally asserted themselves to commit to lowering the fed funds rate at the Sept. 18 Federal Open Market Committee (FOMC) meeting. Bond futures market puts a 76% probability on a quarter-point cut that takes fed funds to 5.00-5.25%. The next set of employment data will be released Friday, Sept. 6, and will be the most important economic datapoint to cross the tape following the Aug. 28 release of Nvidia’s earnings.
If Bidenomics is so successful as boasted by its proponents, then how do they explain the rising level of businesses and individuals going bankrupt nationwide, especially in 2024? Across all bankruptcy chapters, there is a consistent uptrend, especially within Chapter 11 filings. Chapter 7 filings — a lifeline for many struggling households — increased by 14.06% year over year.
According to a recent article published by www.themortgagepoint.com, “Overall bankruptcy filings, including both commercial and individual cases, painted a grim picture of financial distress across the nation. Total bankruptcy filings reached 251,012 in the first half of 2024, marking a notable 15% surge from the 217,483 filings reported a year earlier. Individual filings mirrored this trend with a similar 15% increase, totaling 235,878 in the first six months of 2024 compared to 205,301 in the same period in 2023.
“Looking ahead, the U.S. Department of Justice projects a substantial increase in bankruptcy filings. Its U.S. Trustee Program has estimated that bankruptcy filings will double over the next three years. This prediction, although bold, is corroborated by the broader economic data, including escalating corporate bankruptcies, tightening loan standards by banks and the surge in delinquent debt balances and consumer debt.”
To summarize, the data suggests there is more stress in the labor market, households and small businesses than is being reported, and the Fed will likely have to slash rates at a faster pace than what is currently projected to counter these troubling trends.
