Cairo: Hani Kamal El-Din
In a startling revelation, recent data from the Bureau of Labor Statistics (BLS) has exposed a massive failure in previously reported job figures, causing significant concern and surprise within economic and media circles. Recent revisions indicate that the number of jobs created through March 2024 was overstated by 820,000 compared to earlier reports.
The recent data adjustment included a reduction of 358,000 jobs in the services sector, 150,000 in leisure and hospitality, and 115,000 in manufacturing. This significant revision underscores a widening gap between reported figures and economic reality, highlighting the extent to which official data might be influenced by political agendas and inaccurate reporting.
According to a report from Zerohedge, “New data shows that labor market growth began slowing much earlier than previously thought. We now know, as reported in March, that the labor market was much weaker than believed. In fact, at least 800,000 payrolls will ultimately be ‘missing in action’ if we use more accurate data from the Quarterly Census of Employment and Wages, rather than the disappointingly inaccurate and politically motivated BLS payroll data.” The report further explains that the previous figures indicated an average monthly job growth of 218,000 throughout most of 2023, while the new data suggests a much lower figure of 150,000, representing a 31% decrease.
The official unemployment rate in the United States has already risen above 4%, reaching its highest level since the 2021 pandemic era. With the revised figures, this rate is expected to exceed 6%, signaling an effective onset of recession in the US economy.
Nicole Shanahan, Vice Presidential candidate and partner in Robert F. Kennedy Jr.’s campaign, commented, “The Bureau of Labor Statistics (BLS) has long been used by the executive branch as a propaganda tool. They distort definitions, manipulate data, exclude disillusioned workers, and revise past reports to create narratives that align with the agenda of the current administration. This distorts the real economic picture and misleads citizens about the true state of our economy.”
In light of these revelations, many are recalling the Sahm Rule indicator, which suggests that such a rapid rise in unemployment signals the beginning of a recession. This macroeconomic rule, named after economist Claudia Sahm, used by the Federal Reserve to gauge when the economy has entered a recession, relies on monthly unemployment data from the BLS. According to the Sahm Rule, if the three-month moving average of the national unemployment rate exceeds the minimum of the previous twelve months by 0.5 percentage points or more, it indicates that we are in the early stages of a recession. This is exactly what has occurred, with the unemployment rate rising by 0.6% from the annual low.
The corporate market is feeling the strain the most, with the CBOE Volatility Index (VIX), known as Wall Street’s “fear gauge,” soaring by a record 178.2% to 65.07 points—its highest level since the market crash triggered by the coronavirus pandemic in 2020. Michael Farr from Farr, Miller and Washington noted, “The fear stems from weak employment data indicating a recession and from the Fed’s key rate remaining too high for too long.”
Amid these developments, shares of the “Magnificent Seven,” including Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia, and Tesla, have fallen by 6.5%, reducing their combined market capitalization by nearly $900 billion. Overall, the US stock market has lost approximately two trillion dollars.
Antonio Cavarero, head of investment at Generali Asset Management, described the situation: “The market has suddenly shifted from a warm summer day straight into fall.” Markets that had been rising for most of the year have fallen amid concerns that the Federal Reserve is responding too slowly to signs of economic weakening and may need to catch up with a series of rapid rate cuts.
One of the catalysts for the large-scale asset sell-off was the pessimistic news from the US. In early August, the Labor Department reported that the unemployment rate had risen to 4.3% in July, up from 4.1% the previous month. Additionally, the Fed had decided to keep its key interest rate in the 5.25-5.5% range. The Federal Open Market Committee’s release assured that economic activity continues to grow at a steady pace.
These developments suggest that the economic challenges facing the United States may be deeper than previously thought, requiring careful analysis and attention from policymakers and investors alike.
However, the jobless data has left market participants questioning the Fed’s outlook.
“Analysts say the volatility is a reaction to worsening employment conditions and concerns that the Federal Reserve has missed a crucial window by delaying rate cuts until at least September. The Labor Department reported Friday that just 114,000 jobs were added in July, pushing the unemployment rate to 4.3 percent, the highest since 2021. Stocks fell sharply, sending the Nasdaq into correction territory. A day earlier, the number of Americans filing for first-time unemployment benefits, a widely followed indicator of layoffs, rose more than expected, while a key measure of manufacturing activity signaled a contraction,” The Washington Post notes.
“The Fed needs to ease monetary policy more actively than previously expected,” says Nigel Green, head of the Swiss consulting and investment company DeVere Group. “This is necessary in order to avoid a recession in the world’s largest economy.” Green points out that the American regulator needs to start cutting the rate from a more than 20-year high, otherwise the current risks could lead to a hard landing.
According to Bloomberg analysts, the largest contribution to the fall of the American stock market was made by the largest American technology companies that lead the index – Apple, Amazon, Microsoft, Alphabet (Google), Meta* and Tesla. The shares of all, with the exception of the latter, have already fallen in price by almost 10%, Tesla has fallen by 7.5%.
Large businesses and banks in the United States are massively cutting business plans and laying off staff, even in the service sector. Intel, which recently received $20 billion in subsidies from the White House to build chip factories in the United States, is laying off 15% of its employees, as we wrote. The American chip import substitution program has stalled.
The debt crisis is getting worse – with the national debt growing uncontrollably by a trillion dollars every 100 days. Interest payments are already costing 1.2 trillion. The economic situation could cause Harris’s rating to collapse more than any attacks from the Republicans, who are already savoring the economic “Kamala Crash.” If it happens before November, it will destroy the Democrats’ chances.
Donald Trump led the attack on Kamala Harris.
“Of course, there is a massive downturn in the market,” Trump said in his post on the Truth Social social network. “Kamala is even worse than Crooked Joe. The markets will NEVER accept a radical leftist lunatic who DESTROYED San Francisco and California as a whole. Next step is the GREAT DEPRESSION of 2024! You can’t play games with the MARKETS. KAMALA Crash!!!”
“The Harris-Biden Administration and House Democrats have made life unaffordable. The economy is now heading for a recession. #KamalaCrash,” the House GOP campaign team wrote on X*.
Whoever wins the November presidential election, Bidenomics has been proven to be a phony, a black hole that can’t be patched with trillions of tons of green shredded paper. The propaganda hoax about America’s economic prosperity has burst, but we’re not the least bit sad.