An annual revision of the Current Employment Status (CES) by the Bureau of Labor Statistics showed that 818,000 jobs the Biden Administration claimed to have created between March of 2023 and March of 2024 never existed. This is the largest downward revision by the Bureau since 2009.
In the report, the sector with the biggest downward revision was the professional and business service, with 358,000 fewer jobs than originally reported. This includes jobs in manufacturing like trade, retail, transportation, and utilities. The government jobs sector had the smallest number of revisions.
This comes after a disappointing July jobs report, which showed just 114,000 jobs created and the unemployment rate rose to 4.3%, the highest level since October of 2021. This has mainly been due to high inflation rates, which make it difficult for businesses to hire more employees. Over the past three months, the unemployment rate has averaged at 4.13%, which is 0.63% higher than the July 2023 average rate of 3.5%. This unemployment trend has now triggered the Sahm rule, which is an indicator of an impending recession.
The Sahm rule has accurately predicted every recession since 1970. Preston Caldwell, chief U.S. economist at Morningstar, said, “The Sahm rule does capture an important aspect of the historical data. Once the unemployment rate gets moving upward, it’s very likely to continue rising. Rising unemployment is part of a vicious process of economic contraction.” When there’s a rise in the unemployment rate, consumers don’t spend as much money, which hurts businesses. This leads to a spike in layoffs, and the cycle continues into an eventual recession.
The Biden administration has overestimated job growth numbers before. According to Forbes, the government overestimated job growth from 2022 to 2023 by 306,000 jobs. In December of 2022, the Federal Reserve Bank of Philadelphia’s report revealed that the administration overstated that year’s second quarter jobs report by over 1 million jobs.
These updated figures, mostly from state unemployment tax records, indicate a steady job market slowdown. The Chief Economist at LPL Financial, Jeff Roach, commented, “A deteriorating labor market will allow the Fed to highlight both sides of the dual mandate and investors should expect the Fed to prepare markets for a cut at the September meeting.” In layman’s terms, this could pressure the Federal Reserve to start lowering interest rates sooner to help slow down inflation.
Throughout 2022 and 2023, the Federal Reserve increased its benchmark 11 times to fight inflation, which had risen to 9.1% by July of 2022 from 1.4% in January of 2021. When it dropped to 2.9%, the Fed was able to cut rates in time for the Midterm elections. Conservative political commentator Ben Shapiro believes the CES numbers report was released “just in time to justify a Federal Reserve interest rate decrease for the election.” In a statement, White House economist Jared Bernstein said, “This preliminary estimate doesn’t change the fact that the jobs recovery has been and remains historically strong, delivering solid job and wage gains, strong consumer spending, and record small business creation.”
Despite the Biden/Harris administration signing the Inflation Reduction Act into law in 2022, Americans are currently paying roughly 20% more for basic goods and services under the Biden/Harris administration. The typical household is spending an additional $11,434 compared to January 2021 to maintain their standard of living. At least 27% of adults are reported to have no savings, relying on credit cards to cover monthly expenses. Credit card debt has increased by $27 billion, and more than one in ten card holders have missed more than 2 months of payments.
E.J. Antoni, a research fellow at the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget, told the Daily Caller, “Wall Street is increasingly waking up to the fact that the economy post-covid has never been as good as the government bean counters claimed, and a recession may have already begun.”
