Barrons senior writer Megan Leonhardt reacts to the US economy adding 818,000 fewer jobs than originally reported in Cavuto: Coast to Coast.
Federal Reserve Chairman Jerome Powell said on Wednesday the central bank had considered reports that the latest jobs numbers may be “inauthentically high” and was set to be revised as policymakers assess the health of the labor market ahead of their decision to cut interest rates by 50 basis points.
Powell explained during the post-meeting press conference that since the Fed’s last meeting at the end of July, policymakers have received two employment reports and inflation reports each, as well as the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages (QCEW) .
“We have both employment reportsJuly and August. We also had two inflation reports, including one that came in during the blackout. We had a QCEW report suggesting… that the earnings report numbers we’re getting may be artificially high and they’re going to be revised down,” Powell said.
“So we took all of these and we went into the blackout and we thought about what we had to do, and we concluded that this was the right thing for the economy, for the people we serve. And that’s how we made the decision,” he said of the plan that led to the reduction.
FED CUT RATE POINTS: WHAT YOU NEED TO KNOW
Fed Chairman Jerome Powell noted that policymakers took into account job report updates in making their decision to cut interest rates for the first time in four years. (Photo by Anna Moneymaker/Getty Images/Getty Images)
The Ministry of Labor released the QCEW last month which covered the 12-month period from April 2023 to March 2024 and showed review down of 818,000 jobs in the payroll figures for that period.
It was the largest payrolls update in a report since 2009 and translated into 68,000 fewer jobs added per month over that period. The QCEW is preliminary and may have other changes when the annual update is posted in February.
US ECONOMY CREATES 818,000 MORE JOBS THAN PREVIOUSLY REPORTED
The Department of Labor said last month that 818,000 jobs were created from April 2023 to March 2024. (Yuki Iwamura/Bloomberg via Getty Images/Getty Images)
The most recent monthly activity reports and has had downward revisions to previous months’ earnings in the period following the release of the QCEW:
Estimated job gains for April stood at 108,000 after a downward revision of 10,000 in May and 57,000 in June.
May payrolls were estimated at 216,000 after lower revisions of 54,000 in June and 2,000 in July.
US ECONOMY CREATED 142,000 JOBS IN AUGUST, MISSING EXPECTATIONS
Monthly jobs reports are regularly revised up or down as more data comes in, although recent months have had notable downward revisions. (Photo by Joe Raedle/Getty Images / Getty Images)
An estimated 118,000 jobs were added in June after accounting for 27,000 deferred changes in July and 61,000 in August.
July saw an estimated 89,000 jobs added following a downward revision of 25,000 jobs in August.
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I Department of Labor Review activity reports were made to include additional information that was not available at the time of the original release to improve the accuracy of the revised estimate.
The revised estimates account for data from businesses in the sample that did not report payroll data during the first release of the Bureau of Labor Statistics. The agency notes on its website that in 2012, for example, the average collection rate during the first release was 73.1% of businesses.