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The Trumpers are harping over the benchmark revision showing job growth was slower than previously reported. While they absurdly claim this to be a surprise, we already had most of these data in the Quarterly Census on Employment and Wages, which the Bureau of Labor Statistics releases quarterly. 

That’s why careful observers were able to roughly predict the size of the revisions. The list of careful observers would include the Fed, so the idea that the Federal Reserve Board was in any way misled by the monthly jobs data is Trumpian nonsense.

Also, as far as the state of the labor market we have the monthly data on unemployment from the Current Population Survey. That tells us the share of the population that is employed and unemployed, and by specific demographic characteristics. 

It’s not surprising that the rate of labor force growth has slowed. We had a policy of sharply curtailing immigration, beginning last June under the Biden administration and picking up speed with the Trump administration. Fewer immigrants means fewer workers, but at least until recently that has not been associated with a notable rise in the unemployment rate.

What is perhaps most interesting when considering the downward revision is that productivity growth has been somewhat faster than the data currently show. When the revised data on jobs is incorporated into the productivity data, it will mean that productivity at the end of last year was approximately 0.7 percent higher than previously reported. 

This would mean that the average rate of productivity growth over the five years from the fourth quarter of 2019 (before the pandemic) to the fourth quarter of 2024 was just 2.1 percent, instead of the 1.9 percent currently reported. That compares to a 1.5 percent rate in the prior business cycle from 2007 to 2019.

The tariffs, mass deportations, and large-scale cuts to research funding and other government programs are creating major disruptions to the economy, so it is hard to know if the recent uptick in productivity growth will be sustained. But a 0.6 percentage point uptick in productivity growth is a big deal. In the short term, more rapid productivity growth means lower inflation. 

Over the long term, it creates a basis for higher wages and living standards. After a decade, a 0.6 percentage point rise in productivity would mean that wages could be on average 6.0 percent higher. For example, $31.80 an hour rather than $30.00 an hour, assuming gains from growth are evenly shared (a huge “if” in the current economy). Anyhow, the prospect of stronger productivity growth indicated by this revision to the employment data is a far bigger deal than the slower rate of job growth, which some of us already knew. (Yeah, we knew about productivity growth too.)

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