The annual revision of non-farm payrolls is astonishing! Bloomberg's chief economist: This confirms that the U.S. economy has been in recession since April last year

Bloomberg's chief economist Anna Wong stated in a recent report that the U.S. Bureau of Labor Statistics has significantly revised employment data, suggesting that the U.S. economy may have entered a recession as early as April 2024.

On September 9, Bloomberg's chief economist pointed out in the latest report that the U.S. Department of Labor's newly revised employment data shows that the average monthly job growth in the U.S. from April 2024 to March 2025 is only 71,000, far below the previously reported 147,000. Last year, there were even two months with negative job growth.

The report indicates that throughout 2024, wage growth will be less than half of what is needed to maintain a stable unemployment rate. The revised data also shows that the labor market briefly recovered after the Federal Reserve began cutting interest rates in September, but stagnated again earlier this year.

Wong stated that the U.S. economy likely entered a recession last year and briefly recovered after the Federal Reserve cut interest rates. Based on interpretations of recent data and future revisions, the labor market may again hit a low point in the first half of 2025. Currently, the U.S. economy is "either still in recession or at the beginning of a new business cycle."

A Starkly Different Employment Picture

The revised non-farm data indicates that the U.S. labor market in 2024 is much weaker than what real-time data suggests. Wong's report emphasizes that this discrepancy is significant.

The report points out that several key indicators point to deep weakness in the job market:

• Three-month moving average job growth plummets: As a key indicator for the Federal Reserve to gauge potential hiring pace, the three-month non-farm employment moving average fell from 196,000 in March 2024 to just 6,000 in August of the same year.

• Far below the "break-even point": Most analysts believe that considering population growth, the U.S. economy needs to add about 200,000 jobs per month to stabilize the unemployment rate. The revised data shows that last year's job creation rate was significantly below this level.

• Monthly negative growth: The revised data indicates that there may have been two months last year with a net decrease in employment, specifically August (-5,000) and October (-32,000).

A net decrease in employment is typically seen as a strong signal of economic recession. The National Bureau of Economic Research (NBER) Business Cycle Dating Committee has explicitly stated that non-farm employment is one of the two key indicators it relies on to assess economic cycles.

Multiple Indicators Point to Economic Recession

Wong's analysis is not limited to non-farm data alone; it also incorporates other recession indicators, further reinforcing her judgment.

The report notes that the profile of the revised employment data closely aligns with the timing of recession alerts issued by the Sam Rule, which was triggered in July 2024. This closely matches the trend of revised wage growth and the employment contraction in August 2024.

Additionally, the report cites an academic study conducted by Michaillat and Saez. This study employs a method considered more robust than the Sam Rule for determining recessions, concluding that the U.S. "very likely entered a recession in March 2024." **

Wong wrote in the report:

Last year's labor market appeared to be recessionary.

New Data Reshapes Federal Reserve Policy Assessment

This fresh perspective on data also requires the market to reassess the Federal Reserve's policy choices over the past year.

Revised data indicates that the labor market was weak for most of 2024, which sharply contrasts with the prevailing market view that the Federal Reserve's actions were lagging at that time.

Wong pointed out that, based on the new data, the Federal Reserve's decisive move to cut interest rates by 50 basis points in September 2024 was correct, and the labor market indeed rebounded thereafter.

Data shows that after the Federal Reserve began to cut interest rates, the job market improved, with the three-month moving average of employment recovering to 133,000 in December last year.

However, when the Federal Reserve paused further rate cuts in early 2025, employment growth stalled again.

Revised data shows that the three-month moving average fell to 35,000 again in March this year. This suggests that the Federal Reserve's policy pause may have been premature, leading to a failure to sustain the momentum of economic recovery.

Looking ahead, Wong stated:

Given our interpretation of recent data, the labor market may re-enter another downturn in the first half of 2025, bottoming out in June. We believe we are either still in a recession or in the early stages of a new business cycle