The U.S. Labor Department released a report in mid-August saying their original employment numbers were off by more than 800,000.
But what exactly does that mean? And what are the implications?
The report said that its original reporting of 2.9 million jobs from April 2023 to March was off – in fact, there were only 2.1 million new jobs. A difference of 818,000.
Experts say revisions and changes are normal as the original data is typically preliminary, but what is a little bit different in this case, is how much of a difference there was.
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“The last time we saw a revision this large was in 2009. So, it pretty much tells us the labor market may not be as strong as we think,” said Bryan Gorrita, a commercial real estate broker in South Florida.
Gorrita says that when you see the unemployment rate going up as it has been, it’s an indicator of policies from months or years ago being put into action.
“For example, the Federal Reserve has increased the interest rates, and they have held it for a very long time because of inflation, and they have really been targeting the inflation for the last year or two years," he said. "Now you are starting to see the effects of it showing up in the employment numbers, which is the lagging indicator."
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From a housing market perspective, if the Federal Reserve ends up dropping interest rates too much, the market could re-heat again. Demand for housing would spike and houses would become even more expensive.
Hakan Yilmazkuday explains that if we continue to have high interest rates, consumers will start spending less money and buying fewer houses.
He believes the Federal Reserve will consider this report's revised data in their upcoming September meeting.
“If they think this is problematic as far as getting involved into a higher unemployment rate, potentially they are going to cost in the rate using federal funds rate," he said. "Which means we may have lower interest rates in the coming months, which is going to increase the employment back to normal levels, and as we have more employment, people are going to make more money, and it may even increase the prices we see for groceries instead of reducing them.”
The report is the blueprint with which the federal government will decide how best to move forward. And what they will choose? Only time will tell.
