Labor Market Update: August + Benchmark Revisions

What Happened 📉

• Big Revision: The Labor Department cut -911K jobs from past reports (March ‘24–March ‘25). That means job growth was much weaker than we originally thought.

• Recent Trend: Over the summer, new jobs averaged only +29K per month — not enough to keep unemployment steady.

• Unemployment: Now at 4.3%, the highest since 2020. Underemployment (people stuck in part-time or low-paying work) jumped to 8.1%.

• Full-Time vs Part-Time: We lost 357K full-time jobs, while part-time work rose +597K. More people are piecing together income instead of landing stable jobs.

• Multiple Jobholders: Up by +443K to 8.8 million — the biggest monthly jump since COVID. Many are working 2+ jobs to get by.

• Sector Revisions: Cuts were largest in:

  • Leisure & Hospitality: -176K
  • Professional/Business Services: -158K
  • Retail: -126K
  • Almost every private sector saw job counts marked lower.

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Why It Matters 💡

• Fed & Rate Cuts: Weak jobs data gives the Fed more reason to cut interest rates. Markets already expect at least a 0.25% cut, and possibly 0.50%.
• CPI is Key: If inflation (CPI) cools off, the Fed has the green light for bigger cuts → cheaper money, more liquidity, and fuel for stocks.
• The Tug-of-War: If CPI stays hot, the Fed can’t cut too much, even with weak jobs. That’s the battle: Inflation vs Labor Market.

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The Big Picture 🌐

This is the weakest jobs market we’ve seen since COVID. With the benchmark revisions, it’s clear the labor market has quietly been weaker for over a year. The Fed is now cornered into cutting rates — but CPI will decide how aggressive they can be.

Is the Fed Chair really - "too late Powell"? No - it's just market cycles.

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