Is the US 2023 employment growth fake? California has already exploded a big thunder!

Since last year, the U.S. labor market has been thriving under the highest interest rates in over twenty years, causing many market analysts to start doubting the accuracy of the data. Despite official reports showing an improving employment situation, more and more evidence suggests that the actual situation may not be as optimistic.

The latest revision of California's employment data reveals that the U.S. government has inflated employment figures, dispelling conspiracy theories.

The largest employment market in the U.S. saw virtually no job growth throughout last year

A non-partisan California Legislative Analyst's Office (LAO) report released in June titled "Latest Early Employment Revisions Show No Net Job Growth in 2023" reveals concerning facts. The LAO is a non-partisan entity under the California government responsible for analyzing the state budget and providing financial and policy advice to the California legislature.

According to the report, early data revisions indicate that California actually lost 32,000 jobs in the fourth quarter of 2023. This starkly contrasts with the monthly employment report for December of last year, which showed strong job growth during the same period (adding 117,000 jobs). This revision implies that California saw virtually no net job growth throughout 2023 (only adding 9,000 jobs for the whole year).

This significant data disparity highlights the limitations of employment statistics methods. Monthly state employment data is derived from sampling surveys of a small number of businesses, while annual benchmark revisions are based on more reliable administrative data from unemployment insurance programs.

As the largest labor market in the U.S., the significant downward revision of California's employment data undoubtedly raises concerns about the national employment situation. If this trend is confirmed in other states, it may indicate that the overall U.S. employment growth is far less robust than depicted by official data.

It is worth noting that data after January 2024 has not undergone re-benchmarking adjustments, indicating that future revisions may further reveal the actual state of the U.S. job market.

Surge in illegal immigrants also distorts the authenticity of U.S. economic data

Wall Street News has previously mentioned that the surge in illegal immigrants has also led to significant deception in the most crucial non-farm data of the U.S. job market, as many newly employed individuals may be undocumented immigrants engaged in low-skilled jobs.

Standard Chartered Bank believes that the influx of illegal immigrants into the U.S. may alter employment trends and GDP growth, making it difficult to determine whether strong non-farm or GDP data reflects true supply or demand.

Firstly, the substantial influx of illegal immigrants increases the supply in the U.S. job market, growing faster than the rate of labor demand, thereby suppressing overall wage growth. On the other hand, illegal immigrants often only engage in low-skilled, low-wage jobs, thus from a compositional perspective, they also suppress the growth of indicators such as average hourly wages However, the impact of illegal immigration on data may be gradual, and the impact of low wages may not immediately manifest. Additionally, as long as the wages of these workers reflect relatively low productivity, the compositional effect of wages may be offset by the compositional effect of productivity - unit labor cost growth may remain unchanged.

The Congressional Budget Office (CBO) estimates that in fiscal year 2023, 860,000 people crossed the border without contacting US immigration authorities. Even without Employment Authorization Documents (EAD), these illegal immigrants may still stay in the US to work using forged or borrowed documents, becoming part of economic and employment data statistics