OPINION:
Even though 63% of Americans believe the economy is on the wrong track, media apologists for the Biden-Harris administration have hung their hat on a supposedly robust labor market propped up by deceptive statistics. Now, even that mirage is collapsing, and the economy may be going with it.
The latest data show job openings, a proxy for labor demand, crashed by half a million in a single month, falling to the lowest level since January 2021 and down 4.5 million in little more than two years.
Simultaneously, layoffs soared to 1.8 million, dominated by the leisure and hospitality industry. Americans are forced to cut back on eating out, vacationing, and even Dollar Store toys amid the current cost-of-living crisis.
The drop in job openings was worse than even the most pessimistic projection on Wall Street, and this massive decline is atop the previous month’s data being revised down by roughly 200,000.
The constant downward revisions are just the latest example of unreliable data from the Biden-Harris Labor Department. Downward revisions to job openings and job growth have become so predictable, following overly optimistic initial estimates the media widely reports, that you could set your watch by them.
On Aug. 21, the Labor Department revised away over 800,000 jobs that were supposedly created in the previous year, on top of the earlier downward revisions to the monthly reports. After flashy headlines declaring strong labor market conditions, one-third of last year’s job growth has quietly been erased.
Adding them up, monthly job growth is now under 90,000, meaning the labor market isn’t even keeping up with population growth. Both the number of jobs and the demand for labor are evaporating—or were just never there to begin with.
The unraveling of these government statistics helps explain why polling on the economy is so bad when the “official” numbers look so good. How to square the circle? It turns out people’s financial pain isn’t just in their heads, and the government estimates have been wildly inaccurate.
For example, housing construction has collapsed, with housing starts down by one-third in just two years amid a frozen housing market and record homeownership unaffordability. Despite this, the Labor Department has been estimating historically strong job growth and job openings in construction—or at least they were—now both are in freefall.
Job openings in the construction industry have plunged by half in the last half year. At this rate, there’ll be no openings and only layoffs by early next year.
And it’s not just construction that’s seeing labor market conditions soften. According to the latest revisions, manufacturing jobs have fallen by 130,000 since the start of 2023. This is particularly troubling since the manufacturing sector often falls before the broader economy.
The rapid deterioration of these labor market statistics raises the specter that America might already be in recession. In fact, commodity markets are now pricing in that possibility to the greatest extent since the Global Financial Crisis.
More and more market participants are waking up to the reality that the economy is not nearly as strong as the Biden-Harris statisticians claim. Instead, years of multi-trillion-dollar deficits causing 40-year-high inflation is pushing this train off the rails.
Inflation has been the government’s way of confiscating your earnings and savings to pay for those runaway federal deficits, and it’s starting to bite—hard.
Consumers cannot afford the same standard of living as just four years ago, and so they’re having to cut back. As businesses sell less, they also hire less and eventually turn to layoffs.
This is a painful lesson that the private sector must pay for every dime of government spending. This time, the bill is steep and likely includes recession and inflation.
• E.J. Antoni is a public finance economist, and Peter St. Onge is a visiting fellow at the Heritage Foundation.
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