BLS BS

The Real Estate Espresso Podcast

BLS BS

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Welcome to the Real Estate Espresso podcast, your morning shot of what’s new in the world of real estate investing. I’m your host, Victor Menasce.

On yesterday’s show, we talked about the employment numbers from US payroll processing company ADP. The ADP numbers were weak, but, in my view, an accurate reflection of the state of the US labor market.

Today the Bureau of Labor Statistics published their employment report for January. I’m here to tell you to skip the headline, and in particular, pay attention to the part that most people skip—that’s the revisions. Because right now, the revisions are the story.

The headline for January 2026 says that total non-farm payroll employment rose by 130,000 jobs and that the unemployment rate held at 4.3%. Now if you stop there, you might conclude the labor market is re-accelerating.

But here’s the problem. In the same release, the Bureau of Labor Statistics tells us that the entire year of 2025, after benchmark revisions, amounted to only 181,000 jobs. Think about that. One month, January 26, prints 130,000 jobs which is roughly in the same order of magnitude as the entire net job growth for all of 2025. That should make you pretty skeptical, not euphoric.

So, let’s start with what changed. The benchmark revision. Each year, the Bureau of Labor Statistics benchmarks the payroll survey to a more complete count of jobs, largely from the Quarterly Census of Employment and Wages, which comes from employment insurance records and tax records.

In this January 2026 release, the BLS benchmarked to 2025, and they revised the level of seasonally adjusted payroll employment for March 2025 down by 898,000 jobs, or on a non-seasonally adjusted basis, down 862,000 jobs.

So the US produced only one and a half million jobs in 2024 with the revisions versus the previously estimated two million. The labor market slowed even more to add just 181,000 jobs last year versus the previously estimated 584,000. That is not a rounding error. That’s a material restatement of the job count.

And by the way, this is not the first downward revision in the past two years. The Congressional Research Service documented that in February 2025 benchmark revisions also adjusted prior data, including a downward adjustment to March 2024 employment levels.

So if you’ve been living with the mental model of “jobs were strong in 2024 and then cooled a little bit in 2025,” the official record is moving in the direction of “2024 was weaker than reported and 2025 was much weaker.”

But it wasn’t just the aggregate numbers. The monthly history got rewritten as well. Benchmarking doesn’t just change one month; it forces revisions to the non-seasonally adjusted data from April 2024 and forward. And it also updates seasonal adjustment factors, which means seasonally adjusted data from 2021 forward is also subject to revision.

So the month-to-month story that you thought you knew, at least for the last couple of years, has been completely rewritten. And the Bureau of Labor Statistics provides a table showing how far off they previously were, month by month.

For example, January 2025 was previously reported as a positive 111,000 jobs. It’s now been revised to minus 48,000 jobs, a swing of 159,000 jobs just for that one month alone. That’s a big deal because it means that for long stretches the economy may have been creating fewer jobs than widely believed, and the slowdown was masked by initial estimates that were later corrected.

There are some key methodology changes, specifically the birth-death model. The BLS says the survey changed the model to incorporate current sample information each month. Now, if you’re not a labor economist, here’s what that means. When the survey cannot directly observe every new business that starts or every small business that disappears in real time, it uses a model to estimate net job creation from business births and deaths.

At the same time, any time you change that model, especially in an environment where small business formation and failures are shifting, you should expect the noise level in the month-to-month data to rise significantly. It doesn’t mean the number is wrong; it means the confidence interval around any single month is much, much wider than people want to admit.

So why does January 26 look suspect? Let’s talk about why I think 130,000 jobs in January is suspect.

First of all, January is always a seasonally noisy month. There’s a pattern of people getting hired for the holiday season in retail, in leisure, in logistics—a lot of temporary help—that swing around the holidays. The adjustments can affect the numbers quite a bit.

Secondly, the report explicitly flags data disruption around the federal government shutdown, noting that the October 2025 data was not even collected. So when you’ve got missing data, it increases the odds of distortions as the series gets patched and reseasonalized.

Third, we had a major benchmark revision that flattened 2025 into essentially zero growth—about 15,000 jobs per month on average. So we have a picture of a labor market that, by the revised record, was barely growing at all. And then suddenly January comes in at a month that’s almost the same as the entire preceding year.

Now that could happen. But if it’s real, you would see it echoed in other indicators. You would see it in falling continuous claims in unemployment insurance, you’d see greater hiring intentions, you’d see small business surveys showing greater degrees of confidence. We’re not seeing that.

So what does that mean for you as a real estate investor? In real estate, you don’t trade on the jobs report. But you do need to understand what it’s telling you about demand risk, rent growth risk, and default risk.

If there’s a silver lining in any of this, weak jobs numbers mean that interest rates are likely to fall going forward. But here’s the sober read: the economy’s likely softer than the initial 2024 and 2025 payroll numbers led many people to believe because the benchmark process is pulling the job count down. A single strong January number in the middle of big revisions and methodology changes is not enough to declare re-acceleration.

And for underwriting, assume modest demand growth, not a rebound. Protect your downside, build reserves, and be realistic about what rent growth and exit cap rates are going to give. The discipline is the same as always: don’t underwrite your deal on a single optimistic data point, especially when official statisticians are telling you that they just rewrote the last two years of history.

As you think about that, have an awesome rest of your day. Go make some great things happen. And we’ll talk to you again tomorrow.

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