The U.S. job market might be about to take a massive hit, with economists predicting that the country could lose up to one million jobs when the government revises its employment data. 

If these estimates hold true, it would mean that the job growth reported over the last year was wildly overstated. That’s a potential wake-up call for the Federal Reserve, which might be even further behind on adjusting interest rates than anyone thought.

Goldman Sachs and Wells Fargo aren’t playing around with their numbers. Both are expecting a massive downward revision in the job growth data for the year ending in March. 

Goldman Sachs is throwing out the possibility that the actual number could be as much as one million jobs lower than previously reported. Wells Fargo is a bit more conservative but still expects the revision to show about 600,000 fewer jobs, or roughly 50,000 jobs per month. 

JPMorgan Chase isn’t as pessimistic, projecting a decrease of around 360,000 jobs. But no matter how you slice it, that’s a hell of a lot of jobs potentially wiped off the books.

All eyes on Powell

If the labor market has been cooling off longer and more intensely than originally thought, it might change the entire narrative for Fed Chair Jerome Powell’s upcoming speech at Jackson Hole, Wyoming. 

Jerome Powell

Investors will be hanging on his every word, trying to figure out when and by how much the Fed will start cutting interest rates. A major job loss revision could push the Fed to act sooner rather than later.

The Bureau of Labor Statistics (BLS) is behind these revisions, and they do this every year. They compare their initial payroll estimates to the Quarterly Census of Employment and Wages (QCEW), which is a more accurate but slower way of counting jobs since it relies on state unemployment insurance records. 

The latest QCEW data, released in June, already hinted that the job market might not be as strong as previously thought. The BLS currently claims that 2.9 million jobs were added between March 2023 and March 2024, averaging 242,000 jobs per month. 

But if this revision comes in as high as some are predicting, those monthly gains could drop to just 158,000. That’s still decent but nothing to write home about compared to the post-pandemic hiring spree.

Not everyone is convinced that the revision will be that severe. Some economists think the revision might end up on the lower side of estimates, thanks to the usual lag in reporting.