Revising Your Way to Economic Truth
Welcome to the Real Estate Espresso Podcast, your morning shot of what’s new in the world of real estate investing. I’m your host, Victor Menasce.
On today’s show, we’re looking at the latest economic data. Last week, the Labor Department issued new data, indicating that private sector payroll job creation was overstated by more than one and a quarter million jobs between June 2023 and June 2024. This drastically cuts in half the reported job creation in the private sector.
Each month, the headline job growth is presented as strong and resilient. However, in the following month, these figures are generally revised downwards. For instance, there was a major downward revision in August of this year – 818,000 jobs for the 12-month period ending in March 2024.
In light of these numbers, it feels as though job growth in the private sector is weak. In October, the U.S. economy added only 12,000 jobs – a figure considerably less than the growth of the working-age population for that month. When adjusted for population growth, this figure, unfortunately, represents a net loss in employment.
Over the last two years, monthly revisions have largely been to the downside, with only a few increasing. Despite the changes, the belief in a strong economy prevails – a narrative often associated with political motives.
I’d like to acknowledge Jerome Powell for his role. He makes decisions about the Federal Reserve’s policy based on data from the Department of Labor and the Bureau of Labor and Statistics. Despite the potential for personal gain, he makes independent judgments and isn’t overly influenced by optimistic reports.
Audi, Germany’s Bosch, Daimler, and other companies across sectors have announced significant layoffs. Government employment, however, increased by 40,000 in October, in line with the average monthly gain over the previous year. The data reflects a challenging economy – reminiscent of 2008-2009 – and suggests we might already be in a recession.
Falling revenues and layoffs are typically lagging indicators of a recession. Other leading indicators include the U.S. Manufacturing Purchasing Manager’s Index (PMI), which in October fell to 48.8 – a figure indicating contraction. Across U.S. manufacturing, falling sales and rising inventory are common.
The upcoming weeks and months will likely bring further data and revisions, bringing a clearer picture of the economic reality. Until then, I encourage you to have a successful day and go make some great things happen! We’ll talk to you again tomorrow.
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