The Fed Has No Choice But to Assume the Worst
Highly imperfect payrolls data include the prospect that the US is generating almost no jobs. It’s time for policymakers to get moving.
Economic statistics have been hard to pin down.
Photographer: Dean Mouhtaropoulos/Getty Images EuropeEarlier this year, the Federal Reserve seemed to have time on its side. Payrolls were growing at a healthy clip and the unemployment rate hovered near a five-decade low. Even though there were signs that inflation was licked, there didn’t appear to be much harm in keeping interest rates elevated for a while longer — just in case. Unfortunately, policymakers can no longer take the resilience of the labor market for granted.
Perhaps the most salient detail in the August payrolls report was the net negative revision of 86,000 jobs in the previous two months’ data. The Bureau of Labor Statistics does the best job it can to deliver timely labor market data to the public, but the first drafts often end up being imperfect. Numbers are revised a couple of times as additional survey responses roll in, and there are further — sometimes larger — revisions during an annual benchmarking process. This means that the monthly data is often foggy, with large margins of error.