Job Growth Stats Slashed by 21%
These revisions are a part of a routine process in which estimates based on surveys are brought in line with more concrete data from state unemployment-insurance records. The report published on Wednesday covers the 12 months ending March 2019. Final updates that include the rest of 2019 will be released in February 2020.
The labor market seemed particularly robust in 2018, generating more than 200,000 jobs a month despite historically low unemployment, but the Labor Department’s revisions cut job gains from April 2018 to March 2019 by 501,000. This is the largest downward revision in more than a decade.
The update shows that the economy got a much smaller boost from President Trump’s tax cuts than initially thought. The revisions had the biggest impact on consumer-oriented industries, especially retailing, which cut nearly 150,000 more jobs than initially reported plus less hiring in the leisure and hospitality sectors. Hotels, restaurants, and entertainment hiring was significantly weaker than believed, but the transportation and warehousing sector added nearly 80,000 more jobs than previously reported.
Professional and business services employment gains fell by 163,000 compared to previous reports, and health and education fell by 69,000. Information services, including movies, broadcasting, publishing, and telecommunications, saw a 33,000 gain. Financial activities experienced a 20,000 gain.
While the revision was large, it didn’t come as a complete surprise. Economists had expected job growth to level off as the unemployment rate fell because employers started struggling to find workers.
“The pace of job growth in 2018 was a significant upside surprise,” said Stephen Stanley, chief economist at Amherst Pierpont Securities. “The revision kind of brings things back into line with what the original thought process had been.”
With growing fears of recession and the Federal Reserve cutting interest rates last month, these latest statistics could be yet another signal that the country’s economy is headed for a downturn. Guy Berger, chief economist at LinkedIn, said official statistics often struggle to pick up turning points in the economy until it’s too late to make a change.
He added that economic growth is not grinding down to a halt, but merely cooling for now. “I don’t look at any of these things and say, ‘Wow, we’re on the tip of a recession,’” he said.
The new figures could also have political implications. President Trump praised last year’s strong economic and job growth, attributing growth to federal tax cuts and spending increases. While the yearly GDP did grow by 2.9%, growth has slowed this year. The Labor Department’s revised figures indicate that the economy might be losing its momentum.
"It's a moderate economy," says Joe Naroff, chief economist at Naroff Economic Advisors. "It's not a strong economy."
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