Fed Report Reveals Overstated Job Growth in 25 States, Painting a Grim Employment Picture
Estimates released by the Federal Reserve Bank of Philadelphia reveal troubling discrepancies in reported employment data across the United States.
From March through June 2024, job growth estimates differed sharply in 27 states when compared to earlier figures provided by the Bureau of Labor Statistics’ (BLS) Current Employment Statistics (CES).
The revised findings, based on more comprehensive employment data, show that 25 states posted lower-than-expected job changes, raising concerns over the accuracy of preliminary economic indicators and the pace of national employment recovery.
Employment Overstated in 25 States
According to the Fed’s early benchmarks, 25 states experienced lower job changes than initially reported by CES estimates.
These downward revisions signal slower-than-expected payroll growth in key regions, potentially impacting state-level economic planning and recovery projections.
Delaware Job Growth Significantly Lower
Delaware’s employment outlook took a sharp hit after incorporating QCEW data. Payroll jobs declined by 1.8% from March to June 2024, far below the CES’s earlier projection of 1.2% growth. Over the broader three-quarter period ending in June, job growth in Delaware was adjusted to just 1.0%, indicating a more subdued employment trend.
Pennsylvania Reports Major Revisions
Similarly, Pennsylvania showed a stark downward adjustment in employment growth. The Fed’s data reported a 1.3% decline in payroll jobs from March through June, contradicting the initial CES estimate of a robust 2.1% growth.
Over the same three-quarter period, Pennsylvania’s job growth was downgraded to just 0.7%, signaling weaker labor market conditions than previously believed.
Job Growth Trends in New Jersey
New Jersey’s employment data also saw a downward revision, though less severe than in Delaware and Pennsylvania. While not as drastic, the corrections highlight ongoing challenges in fully capturing state payroll trends through preliminary reporting methods.
Continuing Trend of Downward Revisions
Job openings declined in September, with August figures also revised downward, bringing the three-month moving average to its lowest point since the spring 2021 reopening.
In September, there were fewer than 1.1 job vacancies available for each unemployed worker.
In August, employers added 142,000 jobs on a seasonally adjusted basis, the Bureau of Labor Statistics reported on Friday. This marks a weaker-than-expected result for the second month in a row.
Additionally, job totals for June and July were revised downward by a combined 86,000 positions, dragging the three-month average to just 116,000 jobs—a significant signal that hiring is slowing. This downward revision comes on the heels of another massive revision a few weeks ago.
Massive Jobs Data Revision, Largest Since the Great Financial Crisis
Each year, the BLS revises the data from its monthly payroll survey of businesses and benchmarks the March employment level against figures from the Quarterly Census of Employment and Wages (QCEW) data.
This year’s preliminary data reveals the largest downward revision since 2009, indicating that the labor market wasn’t as robust as initially portrayed.
818,000 Fewer Jobs
The U.S. economy created 818,000 fewer jobs than originally reported in the 12 months leading up to March 2024, the Labor Department revealed on August 21st.
In its preliminary annual benchmark revisions to the nonfarm payroll numbers, the Bureau of Labor Statistics indicated that actual job growth was nearly 30% lower than the initially reported 2.9 million jobs from April 2023 to March 2024.
Focus Shifts to the Federal Reserve
The Federal Reserve cut the interest rates at the last meeting to help the job market. Although the Fed delivered a 50-basis-point cut followed by another 25-basis point cut, the employment numbers still look gloomy.
The focus now shifts to the next Fed meeting. However, with the bond market pushing the 10-year higher; the Fed may have limited options.
Biden-Harris Administration’s Economic Performance
The new data for the second quarter comes after the election where Vice President Kamala Harris tried to reshape voters’ perceptions of the Biden administration’s economic performance.
The White House, along with Harris, has struggled to persuade Americans that, despite widespread public unease about the U.S. economy, things are actually going well and that inflation has been controlled without severely harming the labor market.
Biden’s Job Creation Claim No Longer True
At the Democratic National Convention, Joe Biden proudly claimed to have created 16 million new jobs as president, rounding up from 15.8 million.
However, after the downward revision by BLS, that claim is no longer accurate.
Americans Worried About the Economy
In Gallup polling from July, fewer than 25% of Americans rated the U.S. economy as good or excellent for most of the past year.
More than half of Americans (52%) say they and their family are worse off today than they were four years ago.
The negative economic news was one of the factors which provided an advantage to Trump in the upcoming election.
Inflation Top Concern
For the third consecutive year, the proportion of Americans identifying inflation or high living costs as their family’s top financial problem has hit a new peak. This year, 41% cite the issue, a slight increase from 35% last year.
The latest findings come from Gallup’s annual Economy and Personal Finance poll, conducted between April 1 and 22, 2024. Since 2005, Gallup has asked Americans annually to name the top financial problem facing their family without prompting.
Inflation has been the leading concern for the past three years.
Other Financial Problems
This year, the cost of owning or renting a home follows inflation as the second most pressing issue at 14%, a new high for this category.
Other major concerns Americans mention include excessive debt (8%), healthcare expenses (7%), low wages or lack of funds (7%), and energy costs or gas prices (6%).
The increase in cost of owing and renting homes has crushed average Americans.
Zillow’s recent research report sheds light on the reality facing today’s homebuyers, indicating a significant shift in the financial landscape since 2020. To afford a home in the current market, individuals need to earn $47,000 more than they did just a few years ago, pushing the required annual income to over $106,000.
Redfin’s recent research, which delved into housing and income statistics, mirrors these findings, highlighting the widening gap between home affordability and average earnings. Their analysis reveals that the average household’s income falls short by about $30,000 of what is necessary to purchase a median-priced home in the U.S.
To afford such a home today, a buyer must earn $114,000 annually—35% more than what the typical household earns.
Surging Transportation and Food Costs Crushing Americans
Between 2019 and 2023, the all-food Consumer Price Index (CPI) surged by 25 percent, surpassing the growth rate of the all-items CPI, which stood at 19.2 percent during the same period.
While food prices saw a rise lower than the 27.1 percent increase in transportation costs, they outpaced the upticks in housing, medical care, and all other primary categories.
Concerns About Maintaining Standard of Living
Retirement and medical emergencies are additional sources of concern. A separate survey question asks Americans to rate their level of worry about eight specific personal financial issues, not including inflation.
However, inflation’s impact is seen in the increased percentage of those anxious about maintaining their standard of living.
Fifty-five percent express significant or moderate worry about sustaining their lifestyle, marking the third consecutive year where a majority has held this concern.
Social Security and Medicare Insolvency
Concerns about maintaining one’s standard of living rank among the top three economic worries for Americans, alongside fears of insufficient retirement savings and the inability to cover medical expenses in case of a serious illness or accident.
The Trustees of Social Security and Medicare unveiled their yearly financial forecasts for both programs, looking ahead over the next 75 years. The newly released projections for Social Security paint a grim picture of rapid progression towards insolvency in 10 years, underscoring the urgent need for trust fund remedies to avert widespread benefit reductions or sudden adjustments in taxes or benefits.
Perceptions of Personal Finances Stay Low
Forty-six percent of Americans view their personal finances as excellent or good, consistent with the past two years’ figures but worse than the assessments recorded from 2017 to 2021.
California Expected to Have the Largest Downward Revisions
By state, the report from the Federal Reserve Bank of Philadelphia estimates that California will face the largest employment revision for the nine-month period ending in June 2024, with a staggering downward adjustment of 172,700 jobs.
Texas isn’t far behind, with payrolls likely revised down by 112,100 jobs.
While specific revisions won’t be disclosed until February 7, 2025, when final numbers are released, national-level data already reveals a grim picture. No net jobs were created in Q2, and the U.S. labor market experienced a net loss of jobs.
Broader Implications for the Labor Market
Americans crushed by inflation would have a harder time making ends meet if the job market worsened resulting in higher unemployment.
The revisions highlight the importance of cross-referencing data from multiple sources to provide a more accurate picture of job growth trends.
Moving forward, analysts suggest that relying solely on CES estimates may present an incomplete outlook, particularly during periods of economic uncertainty. BLS will release updated revisions for the quarter ending June 2024 only in Feb 2025.
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John Dealbreuin came from a third world country to the US with only $1,000 not knowing anyone; guided by an immigrant dream. In 12 years, he achieved his retirement number.
He started Financial Freedom Countdown to help everyone think differently about their financial challenges and live their best lives. John resides in the San Francisco Bay Area enjoying nature trails and weight training.
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