00:00Well, and I'll say the benchmark revision that goes to last March was almost 900,000 down.
00:06There are other revisions from the birth-death model that come in the months after that.
00:11By December of last year, the downward revision was over a million jobs.
00:16Yeah.
00:16So now we got the best possible outcome today.
00:20We knew these revisions were coming, and again, we can talk about what's behind them.
00:24But to see the most recent readings, we've got some lift in the payrolls in January.
00:30It's just one month, but we got some lift, and the unemployment rate ticked down.
00:34So we want to see a labor market that's stabilizing and coming out of this, but these are huge revisions.
00:43Dr. Somm, I'm sitting in the back of the class at Michigan hiding.
00:46You and the smart people are up front.
00:48Okay.
00:49Say, my fancy math is one million jobs lost for whatever Claudia Somm, Diane Swank reason, divided by 12 is
00:5783,333 jobs evaporated every 30 days out of our belief, our fabric of the American labor economy.
01:08Do I have that right?
01:10So the revisions actually go back further.
01:13The first month, it will be revised down because the benchmark was April of 2024, right?
01:19They take the annual benchmark revision is wedged in over the prior 12 months.
01:23So we're that million down.
01:25That's happening over a span of time.
01:27But if you look at the monthly changes last year, the new estimates, there's a lot of red.
01:34I mean, there's a lot of months where we were dipping, you know, into the not, you know, destroying jobs.
01:39So these are big numbers.
01:40It is spread out over a period of time.
01:44But there's something here for us to understand about what exactly is happening with job creation and how comforted should
01:51we be by the latest numbers?
01:53Are we have we turned the corner or is that just an aberration and we're going to get back into
01:57these really low, low numbers?
02:00How do you think the Fed is going to react to these numbers, Claudia?
02:04Again, the change in nonfarm payrolls coming in for the month of January, much, much better than expected.
02:09Yeah.
02:09So the Fed knew about this.
02:10Like we, you know, the Bureau of Labor Statistics published its preliminary estimate of the benchmark revision back in September.
02:16It was for a negative 900,000.
02:19My goodness, it was almost, you know, right on the money.
02:21And this is certainly you've heard Fed Governor Waller mention this in his dissent, but also Fed Chair Powell talked
02:28about, you know, revision.
02:30So these numbers aren't surprising.
02:32I mean, really, the news today, maybe the most recent months, this, you know, the January, again, not to overplay
02:39it,
02:40but, you know, it's good news to see that kind of number and the unemployment rate ticking down.
02:44So this is not a surprise to the Fed.
02:46We knew this was going to be in the data.
02:48But you published a chart last night, folks.
02:50It was in English, unlike anything I would do.
02:52And Claudia Sam, I mean, you said within the dynamics of the labor economy that the dearth of immigration plays
03:01into this.
03:02I mean, your chart's a little spike up, a little line up.
03:05Are we at 4.3 percent because of immigration dynamics where we ought to be at, say, 5.3 percent?
03:13So I think the immigration dynamics, and we've seen a big swing, a lot more immigration than had been typical,
03:21and then a big slowdown in immigration.
03:23That certainly is important in understanding what is up with these jobs numbers that just really hit a wall.
03:29So that's – but it is not the only factor behind it.
03:32Like, we have still seen the unemployment rate drift up.
03:35We are not – like, labor – demand for workers is not keeping up with the supply of workers, right?
03:42But so the unemployment rate is giving us a much better picture of this kind of gradual problem that's building.
03:48The payrolls, because it has – the supply of workers has just shifted so abruptly.
03:54The message from the payrolls looks a lot scarier than it is, but I don't want to write it off,
04:00right?
04:00Like, we still see wage growth slowing, unemployment rate drifting up, and certainly for groups like, you know, people new
04:06to the labor market, this is a very tough job market.
04:10Tough job market.
04:11Just real quickly, that $862,000 final benchmark revision, just put that into context for us.
04:18It's big.
04:21No, it should be about six-tenths of total payroll employment, something like that, five-six-tenths.
04:28And a typical – before last year, a typical had been more like a tenth of the level.
04:33Last year's was pretty big, too.
04:34So, you know, the average over the last ten years has been about two-tenths.
04:38So this is like three times larger, and we've had two of these in a row.
04:42And again, I want to stress, this is not a sign the Bureau of Labor Statistics is asleep at the
04:46wheel.
04:46This is just – we have some major dynamics happening in the economy, and it's really tough to measure them
04:52in real time.
04:52And so we're kind of catching up, and it should help, then, with, you know, people trying to understand the
04:58labor market.
04:59Still a lot of puzzles, but we've got better data today, and that is a really good starting point for
05:03understanding where we're going and what policymakers might want to do.
05:07So, Claudia, help me here.
05:08Folks, Diane Swann coming up, and Eric Winograd here in a moment with Alliance Bernstein.
05:12So, Eric Winograd's up in Dartmouth, freezing, unlike the cushy Ann Arbor weather.
05:17Claudia Somme, he's taking the sevens, he's taking labor economics.
05:22Is this – your brilliance, Claudia, out on Twitter last night, the academics right now of our labor economics, is
05:30this in the textbooks Eric Winograd studied?
05:36I mean, every recession has its own dynamics, but ever since the pandemic showed up, the labor market has been
05:43doing things that are just unusual.
05:45If nothing else, in their magnitudes, we've just had some really abrupt swings.
05:52And so, like, I think this cycle, this business cycle really does stand out.
05:58Right.
05:58And it may stand out in good ways.
06:00Maybe that gradual rise in the unemployment rate without a recession, maybe that's what a soft landing actually looks like.
06:06Like, we don't ever get those.
06:08So, this doesn't have to be a bad news story, but there's certainly tensions.
06:12And I just want people to remember, just because we avoid a recession doesn't mean it's good enough.
06:16Shit.
06:16Shit.
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