Despite a downward revision to U.S. labor data of near a million jobs over the past year, markets aren’t panicking this morning. It’s not like there’s going to be a recession … right?
Jamie Dimon isn’t entirely convinced. Of course, the JPMorgan Chase CEO is known for his “prepared-for-anything” approach, running America’s biggest bank on the basis of constant stress testing and risk assessments.
Confronted with the news that the Bureau of Labor Statistics (BLS) recalibrated its reporting for the year ending March 25 downwards by some 911,000 roles, Dimon said the “economy is weakening.”
Asked moments after the data dropped, the billionaire CEO said to CNBC: “Whether that is on the way to recession or just weakening I don’t know—that just confirms what we already thought kind of. That’s a big revision.”
The magnitude of the alteration exceeded analysts’ expectations. Deutsche Bank, for example, wrote in a note to clients on Monday that it expected the downward revision to be around 50,000 to 60,000 jobs a month, which would have resulted in a 600,000 to 720,000 downgrade as opposed to the near-1 million figure.
Debate is also rife about whether or not criticism can be leveled at the BLS given the size of these revisions. Many economists argue the institution can only report based on the breadth of the evidence it receives—and responses to its surveys are falling. Likewise, experts point out that even a change of a fraction of a percentage can lead to huge swings in numbers, given the size of the U.S. labor force. In the case of this week’s data, the revision was just 0.6%.
Even then, organizations will be eyeing data out of government agencies with increased caution, particularly since the White House is also intervening more forcefully into the matter.
Dimon said his team has always taken into account federal data as well as reporting from within his own bank and other non-government bodies: “We get data like you wouldn’t believe. The government data is important, we get data from non-government sources and you can look at delinquency data, worldwide data, trade data, we get all of that. But trying to fit out what the economy is going to do is still hard to do with all that data. Maybe one day AI will fix that problem.
“Hopefully things will be OK, but you do see that kind of weakening.”
What recession?
Last week’s jobs data, which revealed the U.S. economy added just 22,000 jobs in August, wasn’t enough to shift the needle on recession odds.
As Joe Brusuelas, chief economist at RSM, wrote to clients in a note Friday: “Recession odds have not increased, and we do not expect one in the near term. But the labor market is losing momentum. The Fed will need to respond with a September rate cut to mitigate growing risks from a weakening jobs picture.”
Likewise, Macquarie’s chief U.S. economist David Doyle told Fortune last week that a lower “breakeven” jobs balance will help mitigate the American economy entering negative growth. Doyle was speaking ahead of this week’s 911,000 revision in relation to more recent data and how it charts the path ahead.
Doyle described the economy as a low-hire, low-fire environment, where new job roles aren’t being created in droves but massive layoffs aren’t occurring either. Slower hiring is also being offset by lower immigration and retirement, he added, maintaining an employment rate of 4.3%.
And while the sluggish environment isn’t much fun for jobseekers, it does “insulate” the economy from significant swings which might be seen in periods of greater activity he said. A lower breakeven means changes to the unemployment level are more “gradual,” adding: “So that acts as a bit of a ballast against a sharp rise in unemployment. Often … when we see recessions it’s that sharp, dramatic rise in unemployment and that creates negative cycle effects, reinforcing cycle effects, where unemployment hurts consumption, which in turn hurts unemployment.”
Adding further support to the notion that economic contraction can be avoided is Goldman Sachs’s David Mericle, who highlighted the “revisions provide limited information about the current state of the labor market because it applies to the year ending in March 2025, though we continue to believe that the labor market has softened materially.”
He also told clients the bank believes the revisions are “likely too large,” explaining: “The … source data itself has persistently been revised upward and it likely excludes many unauthorized immigrants who were initially accurately captured in payrolls. Our model of net job gains from firm births and deaths suggests a downward revision of 550k or 45k per month via that channel, which would imply that monthly job growth over this period was closer to 100k than the initially reported 147k.”
Mericle added the data will change the Fed’s thinking however, reinforcing confidence in Goldman’s call for three cuts of 25bps in September, October and November, with two more quarterly cuts in 2026 to bring the base rate to 3 to 3.25%.
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