The "big shrinkage" of US employment data: The truth behind the evaporation of 910,000 jobs

In the United States, the labor market has long been regarded as a barometer of economic health. Whether it is the Federal Reserve's interest rate decisions or investors' judgments on the outlook, they often revolve around employment data. However, the latest revision by the Labor Department has made people realize that this "mirror" is not bright.

According to the latest released results, in the 12 months ending in March 2025, the actual number of new jobs created by US employers was a full 911,000 less than the previous figure, marking the largest correction on record. Such a huge margin of error is tantamount to directly telling the public that most of our confidence in the job market over the past year may have been built on illusions.

To understand the impact of this revision, it is necessary to return to the employment statistics themselves. The non-farm payroll report has always been a barometer of the global financial market. It is released once a month and almost instantly influences the fluctuations of the stock market, foreign exchange market and bond market. The problem lies in that this seemingly authoritative data actually relies on sample surveys and model estimations, which leads to lag and bias.

When the economic environment is stable, errors may still be tolerated. However, after experiencing the impact of the epidemic, fiscal stimulus, fluctuations in the supply chain and the popularization of remote working, the labor force structure has undergone profound changes, and the original statistical methods naturally find it difficult to accurately reflect the real situation. Thus, the originally inspiring "job boom" eventually revealed its true colors in the annual benchmark revision.

As for the triggering causes, they are worth a detailed investigation. The first issue is insufficient sample coverage. The data from the Department of Labor is highly dependent on business surveys, but small and medium-sized enterprises, start-ups, and the gig economy are often not within the main sample range, and these groups are precisely the ones that best reflect market fluctuations. The second is the challenge from emerging industries. The large-scale expansion of artificial intelligence, platform economy and flexible employment models has made jobs more temporary and mobile, which traditional statistical tools find difficult to capture in a timely manner. Finally, policy factors cannot be ignored either. Over the past two years, the Federal Reserve has been wavering between inflation and employment. The high employment figures have, to some extent, provided a guarantee for maintaining high interest rates.

In other words, the "strength" of the data not only affects market sentiment but also imperceptibly shapes the policy narrative. Now that the revision has been revealed, this narrative inevitably seems pale.

Economic risks bear the brunt. Overestimated employment data implies that wage growth, consumption capacity and corporate profits may be far less solid than expected. If the real situation has already weakened, then the potential turmoil in the financial market and the risk of credit default are being systematically underestimated. Policy risks are equally serious. If the Federal Reserve insists on high interest rates supported by distorted data, it may artificially magnify the probability of a recession. However, if a hasty shift towards easing is made, it may trigger a secondary shock before inflation has completely subsided.

Ironically, the United States has long boasted of having the world's most complete statistical system and prides itself on data transparency. But now, a revision report that has reduced 910,000 jobs makes this confidence seem particularly ironic. What the market can least tolerate is never bad news but false news. What is truly worrying is not the slowdown of the job market, but the possibility that policies and the market may make wrong judgments based on incorrect data.

In summary, this record-breaking revision is not merely a patch at the numerical level, but a test of the system and trust. It reminds people that the job market is not impregnable and the US economy is far from being worry-free. Only by acknowledging uncertainty and reducing embellishment and packaging can data once again become a reliable foundation. If even the most crucial employment data frequently "contradicts", then whether it is the interest rate path of the Federal Reserve or the risk pricing of investors, it will eventually turn into a game of the blind men touching the elephant. The next time the non-farm payroll data is released, perhaps what the market should ask most is not how many new jobs have been added, but: Is this data really reliable?