Federal Reserve Chair Jerome Powell delivered an unusually blunt warning Wednesday: America’s job market may be far weaker than the official numbers suggest.

In his post-meeting press conference, Powell said Fed staff believe government data may be overstating monthly job creation by as many as 60,000 jobs. Since published figures show the economy adding roughly 40,000 jobs per month since April, the real number may actually be a loss of around 20,000 jobs each month.

“We think there’s an overstatement in these numbers,” Powell said. “The labor market is under pressure, where job creation may actually be negative.”

The acknowledgment marks one of the clearest signals yet that the Fed distrusts the labor statistics it relies on to set interest-rate policy. It also helps explain why policymakers cut interest rates for a third straight meeting, even with inflation still above target and unemployment officially at a modest 4.4 percent.

At the center of the problem is the Bureau of Labor Statistics’ “birth-death model,” a statistical tool used to estimate jobs gained at newly formed companies and jobs lost when businesses close. Because brand-new firms and shuttered firms can’t be surveyed directly, the government relies on modeling to fill in the gaps. That model has repeatedly overshot in recent years, leading to large downward revisions after the fact.

The BLS has pledged methodological changes starting in February, but Powell suggested that for now, monthly jobs numbers “may have been too good to be true.”

Compounding the problem, BLS has been battered by staff shortages, budget pressures, declining survey response rates, and delays caused by the recent government shutdown. The statistical turbulence has spilled into politics: President Trump ousted BLS Commissioner Erika McEntarfer earlier this year after revisions wiped out much of the spring’s reported job growth.

Next week’s employment reports for October and November could bring further revisions, potentially confirming the Fed’s fear that the job market is already shrinking.

(AP)