Revision Reveals Overstatement of 439,000 Jobs in 2023 US Employment Reports

The U.S. job market, once believed to be robust and recovering, has been thrown into question with the revelation that 439,000 jobs reported in 2023 were quietly erased by the government, according to Fox Business and other sources. This discrepancy has significant implications for economists, investors, and policymakers, as it paints a less optimistic picture of the labor market’s health than initially suggested.

The overstatement of job numbers was largely driven by increased government hiring, which played an outsized role in boosting job growth figures. The December 2023 jobs report highlighted an unusual uptick in government job creation. This trend, however, raises questions about the sustainability of such growth, particularly within government-related sectors.

In addition to government jobs, the health care and social assistance sector, which is heavily dependent on government spending, also showed significant increases in job creation, contributing to the inflated job numbers.

These overstated job numbers have a considerable impact on the markets, U.S. Treasury yields, and the Federal Reserve’s decisions on interest rates. The revelation that initial jobs reports were overstated can sway investor sentiment and influence policy decisions. Therefore, accurate reporting is crucial for informed decision-making in these areas.

David Rosenberg, a well-known economist, criticized the government’s use of the “Birth-Death” model to estimate job numbers, suggesting this could be a factor behind the overstatements.

Furthermore, the president has been accused of taking undue credit for the job numbers, which largely represent jobs regained after pandemic shutdowns rather than new job creation. While the economy has indeed added back all jobs lost during the pandemic and created 4.86 million jobs since February 2020, this is considered an average result, not an extraordinary one.

In light of these recent revisions, there is a growing need for skepticism and careful analysis of employment reports, particularly those that include government job creation data. It’s clear that the initially reported job growth included substantial overstatements, necessitating a reevaluation of both the job market’s true health and the metrics used to gauge it.