818,000 jobs correction may not worry economists. It’s a problem for Kamala Harris
Analysis by Zachary B. Wolf, CNN
(CNN) — The federal government routinely revises economic data, but it rarely makes a correction as large as it did on Wednesday, when the Bureau of Labor Statistics reported America’s economy created 818,000 fewer jobs than it initially thought over the past year.
The new data comes at a politically consequential moment, as Vice President Kamala Harris tries to ride momentum as Democrats’ new presidential nominee and rewire voters’ perceptions of the Biden administration’s economy.
The White House, and Harris along with it, has struggled to figure out how to convince Americans that despite a widespread and consistent public unease about the US economy, things are actually going quite well and that inflation has been tamed without substantially ruining the labor market.
Joe Biden boasted at the Democratic National Convention Monday night that he had helped create 16 million new jobs as president, rounding up from 15.8 million. He could no longer say that after Wednesday’s BLS report.
Still, creating 15 million new jobs is not nothing – far more than the nearly 7 million jobs created during Donald Trump’s administration after stripping out pandemic-related job losses.
Democrats have found momentum in the presidential race with Harris stepping in for Biden. In an ABC News/Washington Post/Ipsos poll released on Sunday, she led Trump nationwide among registered voters.
But Trump has a 9-point advantage on the two issues most cited by Americans in that poll as the most important – the economy and inflation.
In Gallup polling from July, less than a quarter of Americans had rated the US economy as good or excellent for most of the last year.
Any bad economic news in the coming months would seem to be an advantage for Trump in the election.
Political fight over jobs touches on race
Trump has argued that most of the jobs created during the Biden administration have been taken by undocumented immigrants, an incorrect claim that CNN has fact-checked, although the number of foreign-born workers has grown more than the number of native-born workers in recent months, as CNN’s Tami Luhby wrote in June.
Trump has sought to drive a wedge between Democrats by arguing that undocumented and foreign-born workers are taking “Black jobs” and “Hispanic jobs,” as he claimed during the CNN presidential debate in June, when Biden was still in the race.
That claim was at the crux of Michelle Obama’s comeback during her DNC speech Tuesday night, when she said Trump was threatened by her and her husband: “Two hard-working, highly educated, successful people – who happen to be Black.”
“Who’s going to tell him that the job he’s currently seeking might just be one of those ‘Black jobs’?” she asked.
Expecting a rate cut
There is one piece of anticipated good news that most economy watchers expect before the election: The Federal Reserve has signaled that it could cut interest rates in September.
Anticipation of that rate cut has already driven down mortgage rates. The rate cut itself could further lower borrowing costs and boost the job market and the overall economy.
Very different economic plans
If elected in November, Trump would impose tariffs on a large swath of imported goods, likely driving up costs, but perhaps forcing more domestic production. He also proposes making expiring tax cuts permanent and further cutting taxes. Read more about Trump’s tariffs plan.
Harris, on the other hand, would extend the tax cuts for most Americans but seek to raise taxes on the wealthiest Americans. She would also push for tax credits to help people with children and first-time homebuyers – generous but expensive proposals. Read more about Harris’ economic plan.
Neither Harris nor Trump has a serious plan to deal with the spiraling national debt.
Why is this jobs revision happening now?
Alicia Wallace explained the reason for the new data in CNN’s report:
Every year, the BLS conducts a revision to the data from its monthly survey of businesses’ payrolls, then benchmarks the March employment level to those measured by the Quarterly Census of Employment and Wages program.
The preliminary data marks the largest downward revision since 2009 and shows that the labor market wasn’t quite as red hot as initially thought. However, job growth was still historically strong.
The data will be revised again and finalized in February.
Trump on Wednesday accused the administration of “manipulating job statistics,” although there’s no evidence for that – and it seems like a conspiracy to cook the numbers would revise them up, not down. And it’s certainly not a leak, as Trump suggested.
This is an annual revision – it is decidedly not an attempt from the Biden administration to mask any bad news about the economy, according to Wallace.
Is this revision a big deal for the economy?
The reality is that it’s very difficult to compare job growth under Trump to job growth under Biden because the Covid-19 pandemic shocked the US economy in ways that economists still don’t understand.
“When you go through large shocks, the period after has a lot of noise in the data. This is not new,” RSM chief economist Joe Brusuelas told CNN’s Matt Egan.
In fact, the last time there was such a large adjustment in BLS data came in 2009, at the end of the Great Recession.
“This doesn’t materially change the outlook or the risks around the outlook,” Brusuelas said. The jobs market is “still pretty strong, just slightly less strong” – “a little less hot.”
That doesn’t mean a large-sounding jobs revision won’t contribute to the larger American unease about the economy.
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