Job revisions are the tip of the iceberg.
Payroll Disaster, Jobs Rise 73,000 but Massive Negative Revisions
On August 1, I commented Payroll Disaster, Jobs Rise 73,000 but Massive Negative Revisions
Monthly Revisions
- The change in total nonfarm payroll employment for May was revised down by 125,000, from +144,000 to +19,000
- The change for June was revised down by 133,000, from +147,000 to +14,000.
- With these revisions, employment in May and June combined is 258,000 lower than previously reported.
Negative Revision Fallout
The negative revision fallout has not yet started.
The nonfarm payroll reports feed Gross Domestic Income, consumer spending, and Industrial production estimates.
How Do Nonfarm Payrolls Impact GDI Estimates?
The nonfarm payroll data directly feeds into the calculation of wages and salaries, which constitutes the largest portion of GDI.
The number of employees, hours worked, and hourly earnings are used to estimate the overall wage and salary income generated in the economy, according to the U.S. Bureau of Economic Analysis (BEA).
Wages and salaries are a significant component of GDI, historically accounting for approximately 50% of national income.
This makes nonfarm payroll data a vital input for understanding the income side of the economy and how it contributes to overall economic activity, says the Federal Reserve Bank of St. Louis.
The above from AI.
Do Nonfarm Payroll Estimates Influence Industrial Production Estimates?
Yes, Nonfarm Payroll (NFP) estimates can influence Industrial Production (IP) estimates, primarily through their influence on overall economic activity and, more specifically, through their impact on labor availability and costs
Nonfarm payroll is a key indicator of the labor market and overall economic health. When nonfarm payroll increases, it suggests businesses are hiring, potentially indicating economic growth and increased production needs.
Industrial production relies on labor as a crucial input. As the workforce expands (indicated by rising nonfarm payroll), industries have more available labor to ramp up production and meet increasing demand.A strong labor market can lead to increased consumer spending, further stimulating demand for goods and services. This increased demand can then translate into higher industrial production to meet those needs.
The Federal Reserve considers NFP data when making monetary policy decisions, such as adjusting interest rates. Higher-than-expected NFP growth may lead the Fed to raise interest rates to curb inflation, potentially impacting investment in industrial production facilities and technologies
Industrial production, particularly in manufacturing and other goods-producing sectors, heavily relies on labor.
The above from AI.
GDI and GDP
Since GDI and GDP are equivalents, if GDI is overstated, then so is GDP. And retail sales estimates are suspect if income is insufficient.
A plethora of negative revisions will cascade from the huge nonfarm payroll revisions.
Delinquency Transition by Age
There are other signs of economic stress.
For example, please note Troubling Trends in Student Loans, Auto Loans, and Credit Card Late Payments
90-day late payment delinquencies are elevated and rising.
Millennials and zoomers are the hardest hit by credit stress.
The chart itself is very reminiscent of the credit stress that preceded the Great Recession.
Birth-Death Model Analysis Suggests 979,000 Overstatement of Jobs
On August 1, I noted Birth-Death Model Analysis Suggests 979,000 Overstatement of Jobs
The BLS released Business Employment Dynamics for 2024 yesterday. Let’s discuss.
Continued Unemployment Claims Jump by 38,000
On August 7, I noted Continued Unemployment Claims Jump by 38,000 to New High Since Nov 6, 2021
Continued claims hit a new high for the move of 1.974 million. That’s not the full story.
Warning Signs Flashing Red Before the Revisions
On June 16, I commented QCEW Report Shows Overstatement of Jobs by the BLS is Increasing
The discrepancy between QCEW and the BLS jobs report is rising.
It is inexcusable for the BLS to not incorporate QCEW data as soon as possible.
The warning signs were there in Business Employment Dynamics, QCEW, Continued Claims, and late payments.
Expect more negative revisions, because they are coming.
