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Not good news on the jobs front | Tatiana Bailey

Tatiana Bailey

You might have seen recently that we again had a disappointing monthly employment report and then this past week we had a large downward revision in the jobs added from March 2024 to March of this year. Let’s look at the details.

Starting with the monthly jobs report, there were only 22,000 jobs added in August. This follows only 79,000 new jobs in July and an outright reduction in employment in June of 13,000 fewer jobs.

By way of reference, from 2012 to 2019, there were almost 200,000 new jobs per month. Our three-month moving average for employment from June to August of this year is now at its lowest level since the pandemic.

The sector that grew the most was health care and social assistance, driven primarily by our aging demographic. Because this large industry is tied to demographics and is considered essential, it tends to be less cyclical and perceived as a staple that doesn’t imply innovation or true economic growth.

Meanwhile, federal government employment continued to fall as adjustments in that sector persist. Since January, there are almost 100,000 fewer people employed in government.

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Our unemployment rate stayed almost the same at 4.3% and that is precisely due to the high number of retirees exiting the workforce while we have relatively fewer working-age people who are working or looking for work. In other words, the pool of possible workers is shrinking as those older workers leave the workforce. And since new retirees are not considered “unemployed,” there is little or no impact on the unemployment rate.

The other somewhat bad news this past week was the revisions to the number of jobs added from March 2024 to March 2025. Those revisions showed the U.S. economy added 911,000 fewer jobs during those 12 months. That’s almost half of what we originally thought. While I do see material slowing in the labor market, there will be one final revision in February with survey and business data combined that is typically the most accurate.

All in all, there is no question the labor market is slowing. This is mostly due to policy uncertainty that impacts businesses, especially around tariffs as well as the disruption caused by AI.

These weaknesses will be enough to prompt two rate cuts this year, by the Fed but we are in the pickle of slowing employment alongside persistent inflationary pressures. That’s not a good mix.

Tatiana Bailey is executive director of the nonprofit Data-Driven Economic Strategies. Other Gazette articles, TV segments, DDES monthly economic dashboards with technical explanations, and how to sponsor its work can be found at ddestrategies.org.

Tatiana Bailey is executive director of the nonprofit Data-Driven Economic Strategies. Other Gazette articles, TV segments, DDES monthly economic dashboards with technical explanations, and how to sponsor its work can be found at ddestrategies.org.

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