According to federal data released Friday, the US economy added 258,000 jobs in May and June.
The Bureau of Labor Statistics (BLS) made a notable revision to its employment growth report for those months, which shifts the overall picture of the US economy quite significantly.
The BLS noted that only 14,000 jobs were added in June, a stark contrast to the previous estimates of 144,000 and 147,000. When combining this with a 73,000-job increase in July, it indicates that the US has added only 106,000 jobs over the past three months.
Mark Hamrick, a senior economic analyst at Bankrate, remarked that the downward revision of payroll figures means that private sector job growth averaged just over 50,000 in the last quarter.
While BLS revisions are common, the magnitude of this one has left experts and investors surprised, especially after recent positive economic indicators.
The July employment report illustrated a stagnation in the labor market, with most non-healthcare sectors showing minimal or no job gains. This report was published shortly after the Federal Reserve decided to stabilize interest rates, yet there are calls from two Fed Committee members for lower rates.
President Trump expressed frustration with the Fed and its chair, Jerome Powell, shortly before the release of the report. He urged the committee to reconsider future decisions, hinting at possible pushback from board members.
However, the combination of slower job growth and rising inflation presents a complex challenge for the Fed. Lowering interest rates could bolster economic activity and support job growth, but it also risks fueling inflation. Conversely, keeping rates relatively high might help control inflation but could also stifle the job market.
As Hamrick pointed out, issues like policy uncertainty, tariffs, and a decline in immigration are currently hampering employers, revealing a labor market that appears weaker than many Fed officials previously thought.
This situation leaves the Fed a bit “behind the curve,” as he noted.
