Powell’s Remark On “Overstated” Payroll Numbers Questions Accuracy of U.S. Employment Figures

Federal Reserve Chair Jerome Powell has raised eyebrows with his recent comments suggesting that U.S. employment figures might be overstated, a rare and striking critique that has drawn responses from various quarters, including whistleblower Edward Snowden and financial news outlet ZeroHedge.

During a post-meeting press conference, Powell acknowledged discrepancies in employment data, stating, “There is an argument that payrolls may be a bit overstated.” This remark was highlighted by Edward Snowden in a tweet: “Not sure I’ve ever seen the chairman of the Federal Reserve publicly accuse the White House of cooking the books on employment numbers, but here we are.”

Powell’s comments come amid a backdrop of significant economic adjustments and policy measures by the Fed. The central bank decided to leave the federal-funds rate unchanged at 5.25% to 5.50% while continuing to reduce its securities holdings. Powell emphasized that while inflation has significantly decreased from its peak of 7% to 2.7%, it remains above the Fed’s 2% target, necessitating a continued restrictive monetary policy stance.

The Fed chair elaborated on the state of the labor market during his press conference, addressing questions from journalists. When asked about the current balance in the labor market, Powell noted, “By so many measures, the labor market was kind of overheated two years ago. And we’ve seen it gradually move back into much better balance between supply and demand.” He highlighted several key indicators showing this rebalancing, including increased labor force participation driven by immigration, a reduction in job openings and quits, and a moderation in wage growth.

Despite these adjustments, Powell acknowledged that the unemployment rate remains historically low at 4%, although it has edged up slightly over the past year. He stated, “You’ve got strong job creation. You have payroll jobs still coming in strong, even though there’s an argument that they may be a bit overstated. But still, they’re very strong.”

Potential for rate cuts

When pressed on what would prompt the Fed to cut rates sooner than anticipated, specifically in the context of an unexpectedly weakening labor market, Powell responded, “When I say unexpectedly, the first thing is more than kind of is in our forecast or in common forecasts, so something more than that. But we’ll be looking at everything. The labor market has the ability, has the tendency sometimes to move – to weaken quickly. So waiting for that to happen is not what we’re doing. We’re watching very carefully.”

Powell underscored that the Fed monitors a wide array of labor market data and would respond to significant, unforeseen weakening. However, he declined to specify exact indicators that would trigger such a response, suggesting that many factors could play a role in the decision-making process.

Despite the controversy, Powell reiterated the Fed’s commitment to its dual mandate of maximum employment and price stability. He underscored the importance of sustained vigilance against inflation, indicating that any rate cuts would depend on clear, sustained progress toward the 2% inflation target.

In the broader economic landscape, Powell highlighted moderate GDP growth, a resilient consumer spending pattern, and an uptick in investment in equipment and intangibles. However, he acknowledged uncertainties ahead, particularly regarding potential economic shocks and their impact on the Fed’s policy direction.

Market reactions have been mixed. The stock market showed minor fluctuations following Powell’s press conference, reflecting investor uncertainty about future monetary policy moves. The yield on the 10-year Treasury note rose slightly, indicating a cautious response from bond markets.


Information for this briefing was found via The Wall Street Journal and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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