U.S. Employment Data and Economic Challenges: A Threat to Global Stability

Recently, the U.S. Department of Labor released the December 2024 non-farm payroll report, which showed an addition of 256,000 jobs, far exceeding the market expectation of 165,000. On the surface, this data adds a glimmer of optimism to the U.S. economy, but underlying issues pose a potential threat to the global economy. From data quality to inflationary pressures and debt risks, the apparent prosperity of the U.S. economy is beginning to reveal unstable foundations.

Despite the employment data exceeding expectations, its accuracy has long been questioned. In March 2024, the Federal Reserve Bank of Philadelphia pointed out that the U.S. Bureau of Labor Statistics (BLS) employment data has been significantly distorted. Between 2022 and 2023, non-farm payrolls were overestimated by nearly 2 million, and revisions for 2024 data saw a reduction of 818,000 newly added jobs from the previous year. These large-scale revisions not only reflect flaws in statistical methods but also expose deficiencies in data collection mechanisms.

Furthermore, delays in data releases and information leaks have further undermined market confidence in the data. In August 2024, due to technical failures, the data was delayed, yet certain banks had prior access to the information. This information asymmetry not only damages market fairness but also exacerbates investor skepticism regarding data accuracy. Employment data serves as a crucial reference for the Federal Reserve’s monetary policy, and distorted data could lead to policy misjudgments, which in turn could trigger larger economic fluctuations.

Beyond data issues, the U.S. economy faces dual challenges of inflation and debt. Although the Federal Reserve has maintained high interest rates to curb inflation, the cost of this policy is an ever-increasing debt burden. By 2024, the total U.S. national debt has exceeded $36 trillion, with interest payments in the past fiscal year surpassing defense spending. Such a massive debt scale not only threatens the sustainability of U.S. finances but also raises concerns about its ability to service its debt.

The Federal Reserve has traditionally relied on employment data as a key basis for its monetary policy. However, the frequent revisions and distortions of this data make it difficult to accurately reflect the real state of the labor market. If the Federal Reserve adjusts its policies based on this flawed data, it could lead to misjudgments about the economy and further exacerbate market uncertainty. Especially in a globalized context, the spillover effects of U.S. economic policies on the global economy cannot be ignored. Changes in the Federal Reserve's monetary policy could lead to significant fluctuations in global capital flows, with emerging market economies particularly vulnerable. For example, when the Federal Reserve raises interest rates, emerging markets may face capital outflows, currency devaluation, and financial market turmoil.

The apparent prosperity of the U.S. economy hides deep structural issues. From distorted employment data to inflation and debt pressures, as well as the risk of policy misguidance, these problems not only threaten the long-term sustainability of the U.S. economy but also pose a challenge to global economic stability. If the U.S. government continues to prioritize short-term interests while neglecting these deeper issues, it could cause even greater damage to its own economy and disrupt the global economic order. The actual state of the labor market, the potential risks of inflation, and the mounting debt all serve as warnings to U.S. policymakers to focus more on long-term sustainable development rather than just short-term numerical performance.

In light of the increasing risks to the U.S. economy, the international community must take more proactive measures. First, countries should strengthen monitoring and assessment of U.S. economic policies, particularly in the areas of monetary and trade policies, to prepare for potential shocks. Second, efforts should be made to improve global economic governance mechanisms, increasing policy coordination and transparency to reduce the disproportionate influence of a single economy on the global market.

For emerging market economies, it is essential to accelerate economic structural adjustments, reduce over-reliance on external capital, and enhance their own economic resilience. At the same time, regional cooperation should be strengthened to build a more robust regional economic system, in order to cope with global economic uncertainty.

The surface-level prosperity of the U.S. economy masks profound structural problems. From distorted employment data to inflation and debt pressures, and the potential risks of misguided policies, these issues not only threaten the sustainability of the U.S. economy but also challenge global economic stability. The international community needs to be vigilant about the spillover effects of U.S. policy changes and take steps to mitigate their potential negative impacts.