Simply put, many middle-class workers have taken on multiple jobs and are struggling to make ends meet.
In June 2023, for instance, instead of adding 209,000 jobs, as originally reported, it turns out the economy added only 105,000.
Those suspicions have increased as, over the last year, the job reports from the Household Survey and the Establishment Survey have moved far apart.
In the Establishment Survey, the opposite is true.
So, in an economy like today’s, where many people are having to take on multiple jobs to make ends meet, job-growth will be exaggerated by the Establishment Survey.
Also, the Establishment Survey uses macroeconomic analyses to estimate the number of jobs created and lost by new businesses being formed and old ones going under.
In addition, 4.4 percent of respondents to a recent New York Fed survey reported they expected soon to become unemployed, up from 3.9 percent in July 2023.
The good news about the overblown jobs reports?
A staggering “goof” by the official bean counters was revealed by the government recently, which claimed that job gains between March 2023 and March 2024 had been overstated by 818,000. The Biden-Harris administration cheered all those reports, but they were as fake as a three-dollar bill.
Though some have suggested that the Biden-Harris White House has been manipulating the numbers, there is another reason for the sharp decline in the jobs figure that is equally distasteful to the administration and its cheerleading about the state of the economy.
To put it plainly, a lot of middle-class workers are having difficulty making ends meet because they have taken on multiple jobs. The Bureau of Labor Statistics counts those additional shifts as multiple jobs, but in actuality, they are just overworked Americans attempting to make their way through the Biden-Harris inflation tsunami.
The BLS typically makes small annual revisions to the monthly jobs data, but this year’s restatement is the biggest since the Great Recession’s chaos 15 years ago.
The revision is extremely concerning and unacceptable, especially considering the weight policymakers place on the BLS tallies.
Critics of the monthly employment reports have been pointing out irregularities for some time. Even Fed Chairman Jay Powell expressed skepticism in June after the government unexpectedly reported that 272,000 jobs had been created in May, stating that it was possible the reports “may be a bit overstated.”. “.
Not a great year for job numbers revisions; they were always downward for ten months last year. For example, in June 2023, the economy added only 105,000 jobs, not the 209,000 that had been initially reported. People become suspicious of repeated errors of that nature.
As the job reports from the Household Survey and the Establishment Survey have diverged significantly over the past year, those doubts have grown.
For example, the government’s Household Survey from July 2023 showed that 161.26 million civilians were employed in the most recent month, down from 161.2 million in July 2023 — indicating essentially no increase year over year. That most definitely does not fit with the nearly 242,000 average monthly job gains that have been reported.
But according to the BLS’s July Establishment Survey, there were 158,77 million employed, up from 156,02 million in the previous year—a gain of 2,05 million.
There are invariably tiny gaps because different sampling techniques are used, so why the disparity? Because it draws from a larger sample than the household survey, the Establishment Survey is thought to provide a more accurate picture of employment trends. It comprises reporting from 119,000 large and small businesses. However, the Household reports take into account information from about 60,000 households and include gig or self-employed workers, unpaid family workers, and other workers who are not included in the establishment survey.
The fact that the Household Survey only counts employees once as employed, even if they hold multiple jobs, is one reason why the employment figures may have been inflated. It is the other way around in the Establishment Survey. Thus, the Establishment Survey will inflate job growth in an economy like the current one where many people need to work multiple jobs to make ends meet.
That must be part of the reason for the size of the most recent revisions.
Furthermore, the Establishment Survey estimates the number of jobs gained and lost as a result of new businesses opening and existing ones closing using macroeconomic analyses. It has long been known that this calculus is very prone to errors. President Biden has been gloating over the quantity of new companies he oversaw being founded. It’s possible that those numbers were inflated as well.
Many Americans might feel that all of this analysis of the job reports is “in the weeds” and unimportant to their day-to-day existence. However, the BLS’s unduly optimistic assessment of the labor market has most likely prevented the Federal Reserve from lowering interest rates. Although the unemployment rate increased from 3.4% in April 2023 to 4.3% last month, the Federal Reserve has chosen to remain silent and maintain high interest rates in an attempt to contain inflation.
Why this matters is evident if you have been trying to purchase a home and find that your mortgage payments are out of control.
The Fed ought to have been more aware. Numerous indicators have suggested a cooling labor market, such as a ZipRecruiter survey that revealed job seekers were less optimistic in their ability to find work in the second quarter than they had been in the previous two years, despite a decline of almost 1 million in the total number of jobs available and, of course, an increase in unemployment.
Additionally, compared to 3 points 9 percent in July 2023, 4 points 4 percent of respondents to a recent New York Fed survey stated they expected to lose their job soon. The current reading, according to the Fed, is the highest since the series began in July 2014. “.
However, the Fed hasn’t cut interest rates.
Powell might be concerned about the Biden-Harris White House’s penchant to spend like inebriated sailors, which is keeping our federal deficits and spending above sustainable levels and raising the possibility of inflation rising above reasonable bounds. Powell guided the Fed to cut rates in the early stages of the COVID crisis in an effort to support the economy. In response to his pleas, Congress and the Trump administration increased fiscal stimulus.
However, Biden and Kamala Harris increased spending above all reasonable bounds. In contrast, revenues (including taxes) are expected to total 17.6 percent of GDP this year, just 0 percentage points above the average of 1984–2023. Federal spending is expected to reach 24 points 2 percent of GDP this year, significantly above the long-term (39 year) average of 21 points 1 percent.
By lowering interest rates, Powell might be hesitant to contribute to the massive ongoing stimulus. Fortunately, he has cover to wait thanks to the exaggerated job reports. The bad news is that low job growth and high rates could still force us into a recession, further undermining public confidence in the government.
