Oxford Economics Warns US Jobs Data Is Overstated, Sees Two Fed Cuts This Year

U.S. nonfarm payroll data are a key gauge the Federal Reserve uses to assess the labor market and set interest-rate policy. Oxford Economics said seasonal adjustments and one-off factors may be distorting job-growth figures. The effects of the war on household spending and corporate hiring have also yet to emerge fully, meaning current data understate the risk of an economic downturn.

In its latest report, Oxford Economics warned that U.S. nonfarm payroll growth in March was significantly overstated and failed to reflect a potential cooling in employment after the war hit consumer spending. The firm expects the Fed to treat the rise in energy prices as a temporary inflationary factor and cut rates twice this year to support a gradually weakening labor market.