Big revision in job numbers spells bad news for the economy: CEI analysis

The economy added 818,000 fewer jobs between March 2023 and March 2024 than previously reported, according to preliminary Bureau of Labor Statistics data. CEI experts explain why this is bad news for inflation, employment, and the accuracy of important data.

CEI Senior Economist Ryan Young:

“This is bad news for inflation, as well as for employment. The Federal Reserve was already shifting its focus away from inflation, and towards the labor market. That means it is now more likely to try to stimulate the economy at its next meeting on September 18. The tradeoff of stimulus is that even if improves unemployment, it makes inflation worse.

“Monetary policy is a poor tool for job creation. Entrepreneurs have a much better track record. Policymakers can do a lot more good by easing unnecessary occupational licensing requirements; shortening permits and environmental reviews that hold up construction, energy, and manufacturing projects; and by lightening regulations that stop people from starting new businesses. They should let the Fed stay focused on fighting inflation.

“Since anything the Fed does has at least a six-month lag time, nothing it does now will affect the Election Day economy. This will likely not ease the significant political pressure on the Fed to go back into stimulus mode. Hopefully Fed Chair Jerome Powell will stay as committed to fighting inflation as he has claimed in his speeches.”

CEI Research Fellow Sean Higgins:

“The fact that the Labor Department can issue such a major correction in the jobs data this long after the initial reporting should give us all pause. Major policy decisions are made based on this data and it does no one any good for those actions to be based on inaccurate information. The economy is changing rapidly as new technologies and new concepts of work and leisure develop and are taken up by the broader public. Federal institutions are struggling to keep up with these changes, as the correction shows. Anyone using this jobs data for planning purposes should remember that the people providing it are not infallible.”