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A construction worker is shown on the job site at a multi-unit residential housing project in Encinitas, California, U.S., July 28, 2025. <\/p>\n
Mike Blake | Reuters<\/p>\n<\/div>\n<\/div>\n<\/div>\n
With job growth tanking and the economy wobbling, pressure is on for the Federal Reserve to start lowering interest rates, with markets now expecting a cut at each of the three remaining meetings this year.<\/p>\n
The Bureau of Labor Statistics reported Tuesday that the economy added 911,000 fewer jobs<\/a> than previously reported for the year preceding March 2025. Downward revisions since the cutoff date in that report suggest that the reduction in payroll growth has been actually around 1.2 million for the past 16 months. <\/p>\n That\u2019s a number sure to get the Federal Open Market Committee\u2019s attention when it meets next week and could add fire to President Donald Trump\u2019s repeated assertions that the central bank has been \u201ctoo late\u201d in making policy adjustments.<\/p>\n \u201cHad Fed officials had that data available in real time, policy rates would be lower today,\u201d wrote Citigroup economist Andrew Hollenhorst, referencing the BLS \u201cbenchmark\u201d payrolls revisions.<\/p>\n Hollenhorst said the data actually \u201ccould justify\u201d a jumbo half percentage point cut when the FOMC releases its decision Sept. 17. However, he expects Chair Jerome Powell<\/a> \u201cwill have an easier time building consensus around a [quarter-point] rate cut next week, with signals that rate cuts will continue at upcoming meetings, including potentially in October.\u201d<\/p>\n<\/div>\n Market expectations have shifted notably as trouble signs have built around employment.<\/p>\n Traders now are not only pricing in a 100% chance that the Fed lowers by a quarter point next week, they also are allowing for a slight chance of a half-point reduction. They now firmly see cuts at each of the three remaining meetings, according to the CME Group\u2019s FedWatch<\/a> tool. The gauge uses prices on 30-day fed funds futures contracts to determine market-implied odds for rate moves. Just a week ago, markets were assigning only a modest chance for three cuts this year.<\/p>\n<\/div>\n While the Fed is not bound by the market, it closely monitors rate expectations as part of its data dashboard.<\/p>\n \u201cThe U.S. economy barely has any jobs right now and it\u2019s been that way for a long time,\u201d said Heather Long, now the chief economist at Navy Federal Credit Union and prior to that a Fed reporter for the Washington Post. \u201cThe Federal Reserve needs to cut interest rates in September, October and December, and the White House needs to quickly finalize a trade deal with China. Businesses aren\u2019t going to invest and hire more people again until there is more certainty.\u201d<\/p>\n To be sure, Fed officials may feel they can be deliberate in their actions as the economic data are still muddy and subject to the changing winds from Trump\u2019s tariffs.<\/p>\n Moreover, there\u2019s a chance that current data overstate the labor market\u2019s troubles.<\/p>\n For instance, Goldman Sachs disputed the benchmark payroll revisions, saying the total reduction based on the firm\u2019s proprietary model and high-frequency data is more like 550,000, or a bit lower than the year before. The firm further said that the BLS revisions \u201cprovide limited information about the current state of the labor market\u201d thought it acknowledged that conditions have \u201csoftened materially.\u201d<\/p>\n However, the report follows news that nonfarm payrolls rose just 22,000<\/a> in August. Moreover, a New York Fed survey<\/a> found a record low in sentiment among workers who believe they could find another job if they lost their current position. Other surveys also have showed heightened worries.<\/p>\n From the White House, the data reignited calls for rate cuts.<\/p>\n \u201cMuch like the BLS has failed the American people, so has Jerome \u2018Too Late\u2019 Powell \u2014 who has officially run out of excuses and must cut the rates now,\u201d White House press secretary Karoline Leavitt said in a statement.<\/p>\n<\/div>\nWatching the numbers<\/h2>\n