Exciting stuff, those monthly jobs reports.  A real page-turner it is.  The top-line story–186,000 new jobs created in August, beating pundits’ expectations–is important enough to provide evidence of economic stability after the Trump turmoil and an ensuing recession risk.  But the real picture of the economic forecast may lie in the release’s last paragraph.

Starting in July, the Bureau of Labor Statistics started revising downward the jobs reports going back to April.  Revisions happen every month:  because the reports are based on mid-month reporting from household surveys, the full month’s picture is only available after the completion of the month.  And even then, only two months after the report month are the figures deemed accurate.  So each month’s report includes a revision of the previous two months’ reports.

All that is a necessary prelude to say this:  It’s a good thing for the economy that the revisions have consistently gone downward over the last five months.  Yeah, it sounds weird to say BLS economists overestimating the jobs is a good thing:  you’d think we’d demand accuracy.  But nay, nay.  First, you’ve got to be realistic about how the data are collected; it ain’t never going to be dead-on with the first estimate.  Second, the fact that the economists are overestimating shows that the economy has been slowing down longer than we previously understood and that–again, somewhat perversely–is a good thing.

Here’s why:  the models BLS and other economists use are pretty much set in stone.  They’re based on data culled from decades, if not centuries, of economic performance. And economics is not the most nimble of sciences.  In a time when every economic model failed to account for the weirdness that was the pandemic and the recession that wasn’t, the BLS jobs calculation suffered the same fate.

Using those old models, BLS’s monthly reports overestimated job growth, reflecting a much hotter job market than there actually was.  While I’m sure the analysts at the Fed have better sources than a monthly jobs report, most commoners like us don’t, so our impressions of the worker demand remained high.  The impression was reinforced by strong wage gains, another indicator of high demand.

What does this tell us?  In this new economy we’re facing, job growth is slower than expected, reflecting a cooler economy, and perhaps easing inflationary fears.  Slowing job growth then indicates an economy coming back into conventional guidelines–another sign of stability after the pandemic.  And hopefully, it allows traditional economic tools to reign once more.