The latest non-farm payrolls data from the U.S. Department of Labor was revised down significantly, indicating that the labor market may not be as strong as previous data showed. But this revision caused a strong reaction from former President Trump, who accused the Biden administration of manipulating data and concealing the economic disaster they had caused to the United States.

The U.S. Bureau of Labor Statistics released the preliminary Q1 Census of Nonfarm Employment and Wages (QCEW) report last night (21), providing preliminary revised data on new nonfarm employment in the year from April 2023 to March 2024 (the final revised version will not be released until February 2025).

The results showed that the initial downward revision of employment was 818,000, equivalent to a downward revision of about 70,000 jobs per month. This is not only the largest downward revision since 2009, but also the second highest on record, suggesting that the US job market may not be as strong as previous data showed.

Note: QCEW data comes from unemployment insurance tax records of various states in the United States, covering almost all jobs, so the accuracy of this data is much higher than the non-agricultural data released monthly, but the disadvantage is that the timeliness will be much worse.

Trump accuses jobless claims

In this regard, former US President Trump seemed to know the result in advance. He accused the employment data of being "fake" in a speech in Michigan on Tuesday:

Reports that the employment data for the past few days was false are a great insult to our economy, because we have seen good but not great data before, and now the adjusted data is catastrophic.

Trump also posted a post on his social platform to curse. This new data shows that the Biden administration falsely reported 818,000 non-existent jobs in the report:

Major Scandal! The Harris-Biden Administration has been revealed to be manipulating employment data to hide the true extent of the economic disaster they have inflicted on the United States.

…The reality is even worse than what is reported. If Harris is re-elected for another four years, millions of jobs will disappear overnight, inflation will completely destroy our country, and your life savings will be at risk of being wiped out.

If Trump wins, we will once again have the greatest economy in history. MAGA2024.

Since the new data may strengthen the Federal Reserve's confidence in a September interest rate cut, which may help the stock market, Trump's move is also an implicit satire on the Biden administration's deliberate attempt to boost stocks before the election.

On the other hand, Trump did not provide any evidence for this accusation, and in fact, during his term, the Department of Labor also lowered the total number of non-farm employment in March 2019 by 514,000.

Influencing the Fed's rate cut decision

The revised data showed that the job market began to cool much earlier than previously expected, but it was not until the July non-farm payrolls report showed weak corporate hiring and the unemployment rate rose for the fourth consecutive month that the alarm bells were sounded.

Some investors said that this revision would support the Federal Reserve to cut interest rates by 50 basis points. Jeffrey Roach, chief economist at LPL Financial, said:

If the labor market starts to deteriorate earlier than 2024, I think the Fed could indeed cut rates by 50 basis points in September.

Charu Chanana, head of FX strategy at Saxo Bank, noted that a sharp downward revision to the data could reignite concerns about a weakening employment situation:

This is an issue that Powell may need to address, and if the August U.S. nonfarm payrolls report, released on September 6, shows clear weakness, I might support a 50 basis point rate cut by the Fed.

Robert Frick, corporate economist at Navy Federal Credit Union, said:

The market had previously predicted a downward revision of up to 1 million (Goldman Sachs estimate), so the results of this report were not surprising and did not challenge the view that the US economy is still in an expansionary phase.

However, the data did point to more modest monthly job growth, putting pressure on the Fed to cut interest rates next month.

Michael Reid, an economist at RBC Capital Markets, said:

The revisions to the non-farm payrolls have fueled debate about a weak labor market, but we continue to view the weakness as part of a normalization process rather than a sign of deterioration.

Jared Bernstein, chairman of Biden’s Council of Economic Advisers, said in a statement:

This initial revision does not change the fact that the jobs recovery has been very strong and continues to be so. This has brought us solid job and wage growth, strong consumer spending, and record small business activity.

But overall, the market still believes that the revised data will not overly affect people's concerns about deepening economic recession, because the direction and overall magnitude of the revision have been expected to be digested for some time. As for the extent of the Fed's interest rate cut, it is expected that there will be clearer guidance after the release of the August non-farm employment data.

The probability of a two-digit drop in September has risen to 34.5%

According to the latest forecast from the Fed Watch tool, the market now believes that the probability of the Fed cutting interest rates by one basis point in September has dropped to 65.5%, while the probability of a two-basis rate cut has risen to 34.5%.