WASHINGTON — The Bureau of Labor Statistics reported that the economy added 22,000 jobs in August, an anemic growth rate that could pave the way for the Federal Reserve to lower interest rates during their next meeting later this month.
BLS reported that the unemployment rate ticked up slightly to 4.3%, while the number of new entrants to the labor market — those who are unemployed and have never had a job before — decreased by nearly 200,000, offsetting a similarly-sized increase in July. The number of long-term unemployed remained unchanged in August but has increased by 385,000 since the beginning of the year, the bureau said.
The report’s findings mark the latest in a string of lackluster employment figures in recent months. The bureau found that the economy
Payroll firm ADP reported earlier in the week that private companies had added only 54,000 jobs in August, in line with the June and July employment statistics but a marked decline from the first few months of the year, when the economy was adding more than 100,000 jobs per month.
The data is the most recent indicator that the economy is beginning to cool, potentially
Members of the FOMC, including Federal Reserve Gov. Christopher Waller and Fed Vice Chair for Supervision
Administration critics pounced on the report’s findings as evidence of the economic damage being caused by President Trump’s economic policies. Reacting to the jobs report, Senator Elizabeth Warren, D-Mass., said she has “long been calling for the Fed to cut interest rates” but that the “chaos” of Trump’s policies makes it imperative that the central bank lower interest rates.
“There are now more unemployed people than job openings in the United States for the first time since the pandemic, Trump’s immigration policies are shrinking the workforce, and his chaotic tariffs are slowing down hiring,” Warren wrote in a statement Friday. “If Trump won’t reverse his harmful policies, the Fed should act to protect American jobs.”
Mike Fratantoni, chief economist at the Mortgage Bankers Association, said in a statement that sluggish hiring in August has resulted in difficulty for those laid off and for new entrants into the job market, which further solidifies an interest rate reduction.
“The slowdown in the job market should be more than enough for the FOMC to cut its short-term rate target at its September meeting, as this is not a picture of an economy at ‘maximum employment,’ and the greater risk now appears to be that the job market will slip further in the months ahead,” Fratantoni said. “The pace of any additional cuts will certainly be tempered by the ongoing risk of a pickup in tariff-induced inflation.”
Ryan Sweet, chief U.S. economist at Oxford Economics, said the employment numbers make a rate cut in September the safe play given the heightened scrutiny it is facing and Fed chair Jerome Powell’s determination not to allow unemployment to spiral out of control.
“By cutting in September, the Fed will be deviating slightly from past communication about the central bank focusing on the part of its mandate furthest from its objective, which is currently inflation,” Sweet said in a statement. “The goalposts have changed as the risks to the labor market have gained the Fed’s attention — recall, Fed Chair Jerome Powell pledged the Fed wouldn’t fall behind the labor market. Recent revisions to job growth have dialed up the heat on the Fed and it knows there will be additional downward revisions when the BLS releases its annual benchmark revisions. Discretion is taking on greater importance for the Fed and prudent risk management is for them to cut in September.”