Growth overestimated by 800,000? U.S. employment statistics face a major revision for the second consecutive year.

```

Annual employment growth in the U.S. as of March this year may be far less robust than official data currently shows.

Economists from several institutions predict that the benchmark revision soon to be released by the U.S. Bureau of Labor Statistics (BLS) may slash the number of jobs by nearly 800,000, marking the second consecutive year of significant revision for this data.

Although this revised data reflects employment conditions at a certain point in the past, such a large downward adjustment would indicate that the cooling of the U.S. labor market began well before the hiring slowdown observed this summer, providing further support to expectations of a series of Fed rate cuts. Markets have widely expected the Fed to cut rates by 25 basis points at next week’s meeting.

Meanwhile, with employment data facing a large revision for the second straight year, this may also once again draw President Trump’s criticism on the accuracy of BLS data. Previously, Trump has repeatedly expressed dissatisfaction regarding data revisions.

Data may face large revisions for the second consecutive year

According to economists from Wells Fargo, Comerica Bank, and Pantheon Macroeconomics, the preliminary benchmark revision data to be released by the BLS this Tuesday may show that total employment as of this March is about 800,000 lower than current estimates, averaging a monthly reduction of around 67,000 jobs. Forecasts from Nomura Securities, Bank of America, and RBC are even more pessimistic, believing the downward revision could approach 1 million.

Comerica Chief Economist Bill Adams said:

“The sharp downward revision to employment growth through March 2025 likely has a smaller direct effect on monetary policy than revisions to more recent data, but it sets the backdrop for our understanding of the macro economy. All else being equal, revising employment growth lower increases the pressure on the Fed to ease policy.”

Fed Governor Waller also predicts that the benchmark revision will reduce average monthly employment growth by about 60,000. Notably, Waller voted in favor of a rate cut at the Fed’s July meeting, while most officials chose to keep rates unchanged.

Although this revision will not change the market’s understanding of current labor market conditions, he hinted that the hiring slowdown observed in recent months actually began earlier.

This revision may also have a political angle. Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, said:

“This mainly reflects job creation before Trump’s term. So, he can argue that the economy he inherited was actually weaker than we all thought.”

A month ago, an unusually large downward revision in monthly employment data sparked a strong reaction from the White House and led Trump to fire the head of the BLS. He not only expressed dissatisfaction with monthly revisions, but also criticized last year’s preliminary benchmark revision, which was the largest since 2009.

What's the difference between the two statistical methodologies?

The BLS conducts an annual benchmark revision, comparing wage data from its monthly employment report with a more accurate, but less timely, data source—the Quarterly Census of Employment and Wages (QCEW). The QCEW is based on state unemployment insurance tax records and covers nearly all U.S. jobs.

In recent years, the monthly wage data has mostly shown stronger employment growth than QCEW data. Some economists attribute this difference in part to the so-called “birth-death model”—an adjustment the BLS uses to estimate net new firm creation, which has become more challenging since the pandemic. Others believe that immigration issues are another reason for the discrepancy. The monthly wage report doesn’t ask about citizenship, while the QCEW is based on unemployment insurance records that undocumented immigrants cannot access.

Ultimately, economists and policymakers will use this preliminary benchmark data to assess the true pace of the labor market slowdown while awaiting the final revised data for 2025 due out next February. Carrie Freestone, economist at RBC, said:

“If I see a dramatic revision to last year’s data, that will tell me what the new ‘starting point’ is.”

However, she also emphasized that Fed officials are most concerned with current momentum. Freestone said:

“I think what Fed officials worry about most is that we are losing momentum—the labor market likely has already reached a turning point.”

Risk Warning and DisclaimerThe market involves risk; investment needs caution. This article does not constitute personal investment advice and does not consider individual users’ special investment objectives, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article fit their specific circumstances. Investing accordingly is at your own risk. ```