BREAKING: Job Market Just Revised MASSIVELY! (Payroll Crash)

BLS Admits Massive Payroll Overstatement [0:00]

• The Bureau of Labor Statistics (BLS) has acknowledged significant errors in its establishment survey, admitting to overstating payrolls by over 1.03 million jobs in recent years.
• These inaccuracies have led to the obliteration of several economic myths, including narratives about the strength of the labor market, J. Powell's confidence in the Fed, and the idea that immigration was responsible for last year's perceived weakness.
• The agency's admission stems from benchmark revisions to the establishment survey, which uses a small sample size for monthly estimates but is annually checked against more comprehensive QCEW data.

"We really, really messed up the job status the past couple of years. Got everything completely wrong to the tune of over a million payrolls."

The Establishment Survey's Reliability and Benchmark Revisions [0:14]

• The establishment survey, which provides the widely followed monthly payroll numbers, has been criticized for its unreliability over the past couple of years, consistently overstating job gains.
• The BLS uses state-level unemployment tax data (QCEW) for its annual adjustments, a process that takes six months to compile. This revision corrects for any skew in the monthly establishment survey figures.
• Even before the benchmark revisions, it was evident that the monthly payroll numbers were significantly off, and the BLS was aware of this, leading to statements from J. Powell about a "strong month" that were later revised downward.

"It has become one of the least reliable economic statistics out there. The series had consistently overstated job gains."

Revised Payroll Data and Economic Implications [0:47]

• The new estimates confirm a much weaker economic trajectory than previously reported, with the labor market downturn beginning much earlier and being more severe.
• December 2023 payrolls, initially reported as a 269,000 increase, have been revised down to 154,000.
• January through March 2024, initially showing combined gains of 931,000, have been reduced to 609,000.
• Over the seven months through October 2024, initial reports of nearly 1.2 million payroll gains have been slashed to 479,000, a 60% decrease.
• The new data indicates outright job losses began in January 2025, rather than later in the year as previously thought.

"December employment is now 1.03 million payrolls fewer than what was thought by the BLS yesterday. 1.03 million fewer jobs."

Debunked Economic Myths and Consumer Sentiment [0:51]

• The revised data directly contradicts J. Powell's repeated claims of a "strong and resilient" labor market. The new estimates show the market was never solid and began shifting negatively in late 2023.
• Immigration is no longer a viable explanation for job market weakness, as the downturn began long before any policy changes. Similarly, tariffs are not the primary cause of job market weakness.
• Consumer sentiment, which had been expressing concerns about jobs and income, is now validated by the data, contrasting with the Fed's dismissal of these worries based on the flawed establishment survey.

"It was in the data all along. So what the QCW inspired latest establishment survey now shows is that payrolls began to go astray."

Retail Sales Contraction and Holiday Season Performance [1:26]

• The Census Bureau reported that retail sales for December 2025 experienced a contraction of -0.016%, a significant miss from the expected 0.4% increase.
• This indicates that the Christmas shopping season was one of the worst in the past 20 years, especially when adjusted for inflation, showing a complete bust in real terms.
• The softness in consumer spending aligns with the weaker payroll data, suggesting consumers facing job insecurity and limited prospects are acting on their fears.

"Retail sales, if you remember, began last year on the wrong foot because, as we now see with benchmark payrolls, consumer sentiment was right about jobs."

Market Reaction and Future Outlook [1:51]

• The bond market largely shrugged off the January payroll report, as well as news of Chinese banks potentially selling Treasuries, due to a lack of credibility in the BLS figures.
• The market is waiting for confirmed data and revisions, understanding that the BLS may revert to its old estimation habits, continuing to overstate job gains.
• The economy is becoming more certain, despite the BLS's lag in reporting accurate data, and understanding these monetary systems is crucial for navigating volatility.

"The bond market shrugged at the January payroll lesson because of everything else that was in the payroll reports."