MICHEL MARTIN, HOST:
The nation's job market has been weaker than we thought. On Tuesday, the Bureau of Labor Statistics said its previous hiring estimates for the 12 months ending in March were off by 911,000 jobs. President Trump fired the head of the agency last month after claiming without evidence that the July jobs report was rigged to make him look bad. That report also had downward revisions to previous hiring estimates. Let's try to figure out what the numbers are telling us. We're going to go to David Wessel for this. He's a former editor at The Wall Street Journal. Now he's a senior fellow in economic studies at Brookings, which is the center-left think tank. Good morning, David.
DAVID WESSEL: Good morning, Michel.
MARTIN: So this was the bureau's biggest revision in jobs numbers since 2000. So what's going on here? I mean, it seems like they got it pretty wrong.
WESSEL: Yeah, well, it was an unusually large revision, although economists at Goldman Sachs predict that the final numbers, which we get in February, will actually reduce the size of the era. But here's how it works - the Bureau of Labor Statistics surveys a sample of 120,000 employers each month to produce the jobs report. But they don't all respond on time, so it revises the numbers as more of them do respond. Then, once a year, it compares those monthly tallies to the unemployment insurance records, which cover nearly all employers, not just a sample. And that's the data we got yesterday.
The BLS says that some businesses actually employed fewer people, at least on the books, than they reported in the monthly survey. Some of that may have to do with how we measure undocumented immigrants, and also that its sample turned out to be unrepresentative. And another problem is that it's really hard for the BLS to keep track of new businesses and dying businesses. That's always hard to get right, and that probably played a role here, too.
MARTIN: So they can't really force people to tell them things?
WESSEL: No, no, it's voluntary. It's all voluntary.
MARTIN: It's voluntary reporting. OK. So what, if anything, does this tell us about the state of the economy?
WESSEL: Well, not a lot. This is about - what they say is there are 911,000 fewer jobs in March 2025. That's history. But more troubling is last Friday's report on the job market in August that shows some cracks in the labor market, a slowdown in hiring that could, if it continues, lead to an unwelcome increase in the still historically low unemployment rate. There is a pattern, though. When you get a lot of downward revisions, that's often a sign that the economy is beginning to weaken. And, you know, there's a chance - I don't know how big a chance - that we'll discover that we're in the early innings of a recession now.
MARTIN: So President Trump is using this correction to justify his decision to fire the head of the Bureau of Labor Statistics. Does it suggest that new leadership is needed there?
WESSEL: It doesn't. Look, it's unfortunate that the revisions are so large. It'd be better if they got it right the first time. But revisions are a sign of honesty. As they get new data, it refines its estimates. Isn't that we want? Secondly, firing the guy who runs the scoreboard because your team is losing the game doesn't change the outcome of the game. And three, the BLS can and should do better, but that takes resources. The agency has lost 20% of its staff, a third of its leadership since February, and its budget has not kept up with inflation over the last several years.
MARTIN: David, before we let you go, President Trump has been pressuring the Federal Reserve for months to lower interest rates. Do these revised numbers show that maybe he's right, that interest rates have been too high?
WESSEL: Look, the incoming data on the job market, especially last Friday's numbers, bolsters the president's case that it's time to cut rates, even though inflation remains above the Fed's 2% target, and the inflation outlook is clouded by Trump's tariffs. The Fed is probably going to cut rates a quarter point next week. Markets expect another two rate cuts this year. One interesting thing is last night, a federal judge ruled that President Trump cannot fire Fed governor Lisa Cook, and so she'll be at the meeting, and she'll probably vote to cut rates.
MARTIN: That's David Wessel, senior fellow in economic studies at the Brookings Institution. David, thank you.
WESSEL: You're welcome. Transcript provided by NPR, Copyright NPR.
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