US LABOR MARKET: QCEW Back And Forth On The FOMC - Waller & Powell [2/2]

Fed Governor Waller in his speech on “The Case For Cutting Now” – July 17, 2025:

• “And there is another reason to cite the slowdown in private-sector hiring. A pattern in data revisions in recent years tells us that the private payroll data are being overestimated and will be revised down significantly when the benchmark revision occurs in early 2026. Accounting for the anticipated revision to the level of employment in March 2025 and extrapolating forward, private-sector employment gains last month were much closer to zero4. This is why I say private-sector payroll gains are near stall speed and flashing red.”
• “4 My estimate of the anticipated revision is based on the difference between the currently published level of payroll employment and the count of employment from the Quarterly Census of Employment and Wages (QCEW), which is used to benchmark the payroll employment figures. The QCEW data, which are currently available through 2024:Q4, suggest that the monthly change in payroll employment has been overstated by roughly 60,000 per month since March 2024.”

Fed Chair Powell in Wednesday’s FOMC press conference (from the MNI rough transcript) – July 30, 2025: 

• “So, I'm not going to talk about any individuals, you know, any individual's comments, I wouldn't do that.  But look, I think what we know is that private sector job creation, certainly in the last report, we will see on Friday, but had come down a bit.  And if you take the QCEW adjustment seriously, it may be close to zero, but the unemployment rate is still -- was still low. So, what that is telling you is that, you know, demand for workers is slowing but so is the supply.  So, that's -- it's in balance, oddly enough.  You have got a very low unemployment rate and it's kind of been there for a year as job creation has moved down, but also we know that, you know, because of immigration policy really, the flow into our labor force is just a great deal slower and those two things have slowed more or less in tandem.
• If you look for things, like I mentioned quits, look at wages, wages are gradually cooling.  I look at vacancies to unemployment.  Those things have been pretty stable for -- they haven't really moved a lot in a full year. So, I think if you take the totality of the labor market data, you have got a solid labor market.
• But I think you have to see that there are downside risks.  It's not -- you don't see weakening in the labor market, but I think you have got downside risks in a world where unemployment is being held down because both demand and supply are declining.  I think that's -- it's worth paying close attention to it and we are.”