Last week, the U.Sstock and bond markets experienced significant turbulence following unexpectedly robust employment data, raising concerns among financial institutions that the Federal Reserve might interpret this as a sign to hold off on interest rate cutsHowever, the authenticity of U.Semployment statistics has faced growing skepticism over the past two years, making it difficult to sustain upwards economic projections.

On January 10, the U.SDepartment of Labor announced a remarkable addition of 256,000 non-farm jobs in December 2024, far exceeding the anticipated 165,000. During the most recent monetary policy meeting, senior officials from the Fed suggested they were at or near a suitable point to slow the pace of rate cuts, and this unexpected data now provides additional justification for that stanceAnalysts predict a greater than 97% likelihood that the Fed will maintain interest rates at its January meeting

Consequently, all three major U.Sstock indices fell, while yields on 10-year and 30-year U.STreasury bonds soared to their highest levels in 14 monthsAdditionally, there is speculation that the incoming administration may declare a national economic emergency to implement tariff policies, further exacerbating inflation concernsThus, some experts argue that this employment data indicates continued strength in the U.Seconomy, prompting the Fed to shift its immediate focus entirely to inflation.

However, frequent revisions to U.Semployment data over the past two years, alongside incidents of leaks, call into question the credibility of these numbers as evidence of robust economic growth.

As early as March 2024, the Philadelphia Federal Reserve Bank had issued a report asserting significant distortions in the employment data reported by the Bureau of Labor Statistics (BLS), claiming that actual job growth had been grossly overestimated

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The report suggested that between March and June 2022, non-farm employment statistics were overstated by a staggering 1.1 million jobs, with an overestimation of 800,000 jobs in 2023. By August 2024, the BLS had released preliminary estimates of benchmark revisions for non-farm employment data, indicating that the number of new jobs from April 2023 to March 2024 was reduced by 818,000 from prior estimatesThis revision dropped the total employment growth during that twelve-month period (excluding farm employment) from an earlier estimate of 2.9 million down to approximately 2.1 million, effectively lowering the average monthly net job additions by about 68,000. Additionally, data from the BLS showed that from April to November 2024, there were five months where the adjusted non-farm job figures were lower than the initial estimates, totaling more than 110,000 jobs in downward revisions.

If such frequent and significant revisions could be attributed to technical errors, the instances of delayed releases and data leaks raise even deeper suspicions

In August 2024, the BLS reported technical difficulties that delayed the release of revised non-farm employment data, and during this suspenseful wait, at least three banks managed to directly acquire the data before its public release, igniting market questions regarding the transparency and integrity of the data dissemination processFurthermore, the methods used by the BLS to compile non-farm employment reports—specifically the Current Employment Statistics (CES) survey and the Current Population Survey (CPS)—often yield inconsistent results due to significant differences in their statistical frameworks and methodologies, further compounding issues of public trust.

The Federal Reserve places great importance on employment data, frequently using it as a key reference in policy guidanceThe recurrent revisions make it exceedingly difficult to timely and accurately reflect the actual state of the labor market

If the Fed bases its decisions on such flawed statistics, it risks pursuing policies that could lead to counterproductive outcomes.

The inflation issue, which the Fed is now spotlighting, has escalated to a chronic challenge within the American economy—facing both treatment and non-treatment dilemmasHigh interest rates have been the norm for years, with interest expenses surpassing U.Snational defense spending in the last fiscal yearThe Fed’s commitment to refraining from lowering interest rates is only becoming more complex, as debt risks closely shadow the U.Seconomy and continue to tightenAdditionally, by 2024, the total U.Snational debt has eclipsed $36 trillion, with no signs of abatingThe new administration’s planned policies, once enacted, may further exacerbate inflationary pressuresIf unchecked, the increase in the money supply will inevitably drive inflation levels higher again.

In light of these concerns, the unexpectedly strong employment data seems to have temporarily preserved the dignity of the U.S