News that the Bureau of Labor Statistics has significantly revised its employment estimates down by close to a million jobs over the past year has caused renewed speculation about whether the economy is weakening or even headed into a recession.
JPMorgan Chase CEO Jamie Dimon, widely regarded as an expert on the economy, said that the implications of the revisions are unclear. He acknowledged the revision is substantial and suggests weakening of the economy but that it “confirms what we already thought.”
The revision exceeded analyst expectations, including Deutsche Bank, which had predicted a downward revision of up to 720,000 jobs.
The revision called into question the reliability of BLS data. Dimon said JPMorgan Chase considers a wide range of data, including government and nongovernment sources, delinquency data, worldwide data and trade data, but trying to use all of the data to predict the direction of the economy is difficult.
“There’s a lot of different factors in the economy right now,” Dimon told CNBC. “We just have to wait and see.”
The most recent jobs data showed the U.S. economy added 22,000 jobs in August, which some experts say is not enough to change recession forecasts.
“Recession odds have not increased, and we do not expect a recession in the near term,” said RSM chief economist Joe Brusuelas in a client note. “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.”
Macquarie’s chief U.S. economist David Doyle told Fortune prior to the jobs report that the economy is 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. This ‘sluggish’ environment insulates the economy from significant swings that can lead to recession.
Goldman Sachs economist David Mericle, meanwhile, said the revisions provide limited information about the current state of the labor market but that the labor market has softened materially.
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