It was a fairly quiet, but positive week for the markets. Goldman Sachs cut its probability forecast for a U.S. recession in the next 12 months to 20% from 25%.
There was one interesting economic data point published this week that might deserve a little clarification.
There are a lot of checks and balances when it comes to economic data published by government agencies. As an example, each year the Bureau of Labor Statistics (BLS) will review the past 12 months of jobs data to more accurately count the number of jobs created in the prior year. The total will typically be higher or lower than the cumulative monthly jobs reports previously published, so there is a preliminary revision made. Note I said “preliminary.” There will be another review of the data and the final count won’t be complete until February of 2025. Like I said before, there are A LOT of checks and balances in the reporting of economic data.
This week the BLS completed their preliminary annual review of the jobs data and they determined that there were 818,000 fewer jobs created in the past 12 months than initially reported. This means that the average monthly job gains were 173,000 per month versus a previously reported average of 242,000. That’s still a good number, but considerably lower than previously reported.
Some are now accusing the Biden administration of manipulating previous jobs reports. I’m not going to jump into that political discussion, other than to refer you to this article from the conservative publication, National Review.
https://www.nationalreview.com/corner/no-the-biden-administration-is-not-manipulating-jobs-data/
This number was a big miss, but not the biggest as the 2008 jobs number was revised 900,000 lower. More recently during the Biden administration, the August 2022 report showed that the BLS undercounted by 462,000 and had to make a revision higher. And in 2019, during the Trump administration, the BLS found that they had overcounted job growth by 501,000.
The real takeaway from this week’s revision is that the job’s market hasn’t been quite as red hot as originally thought. As such, this will give the Fed more freedom to cut interest rates in September.
Have a great weekend.
Jack C. Harmon II, CFP®, CIMA
Principal, Harmon Financial Advisors
Registered Principal, Raymond James Financial Services
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