Preliminary data released by the US Labor Department on Tuesday indicates that the economy created 911,000 fewer jobs than initially estimated over the 12-month period ending in March. The annual revision to payroll figures suggests employment growth was weaker than previously believed during the final phase of the Biden administration and the early months of the Trump presidency.
Although economists anticipated a downward adjustment, the extent of the shortfall intensified concerns about the stability of the world’s largest economy. The Federal Reserve is closely monitoring labor market trends ahead of its upcoming policy meeting.
The central bank is widely expected to reduce its key interest rate after maintaining steady rates throughout the year, balancing signs of a cooling job market against potential inflationary pressures from President Donald Trump’s tariff policies.
Earlier last week, the Labor Department reported only 22,000 new jobs added in August—below forecasts—while the unemployment rate edged up from 4.2% to 4.3%. Tuesday’s revised figures reinforce the narrative of a decelerating labor sector, increasing the likelihood of a rate reduction next week.
The timing of these revisions is politically sensitive. Weeks prior, President Trump dismissed the head of the Bureau of Labor Statistics, Erika McEntarfer, accusing her without proof of manipulating data to damage his administration’s image.
Analysts attribute recent labor market challenges in part to sweeping changes in trade and immigration policies under Trump, which many economists have warned could undermine economic performance. However, because the revised data includes a period under Biden’s leadership, it may be used politically to argue that economic difficulties predated the current administration.
White House press secretary Karoline Leavitt stated, “President Trump was right: Biden’s economy was a disaster and the BLS is broken,” echoing previous administration claims and urging Federal Reserve Chair Jerome Powell to lower borrowing costs immediately.
Financial markets showed limited reaction, with the S&P 500 holding steady in early trading. Still, investor caution persists. Upcoming inflation data, due Thursday, could heighten fears of stagflation—a scenario marked by sluggish growth and rising prices—according to Chris Zaccarelli, chief investment officer at Northlight Asset Management.
He noted that while a weakening employment landscape may support the case for monetary easing, it could also dampen recent market optimism.
The revisions spanned multiple sectors, with significant downward adjustments in service industries such as leisure and hospitality.
Bradley Saunders, North America economist at Capital Economics, commented, “With services being the last stronghold of job creation, this outcome raises serious questions about the broader labor market’s resilience.”
— news from BBC
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US job growth revisions signal economic weakness
The US economy added 911,000 fewer jobs than initial estimates had suggested in the year through March, according to preliminary data from the Labor Department released on Tuesday.
The routine annual report – a revision to payrolls data – showed that the jobs market had been growing at a slower pace than previously thought at the end of the Biden administration and in the first months of the Trump administration.
Economists had anticipated a large downward revision, but the weaker-then-expected figure bolstered concerns about the health of the world ‘s largest economy.
The Federal Reserve is closely watching for signs of softness in the jobs market ahead of its meeting next week.
The US central bank is expected to lower its benchmark interest rate after holding rates steady so far this year, as it weighs signs of a slowdown in the jobs market against fears that US President Donald Trump ‘s tariffs might reignite inflation.
Last week, the Labor Department reported that employers added just 22,000 jobs in August, fewer than expected, while the unemployment rate ticked up from 4.2% to 4.3%. Tuesday ‘s data added to this picture of a slowing jobs market, reinforcing expectations that the US central bank will cut interest rates next week.
The job growth revisions come at a politically fraught time for the Bureau of Labor Statistics. Just weeks ago, President Trump responded to the signs of a slowdown by firing the head of the agency, accusing Erika McEntarfer, without evidence, of rigging the numbers to make him look bad.
Analysts say the more recent troubles in the job market are partly due to the president ‘s sweeping changes to tariff and immigration policy, which economists have consistently warned would hurt the economy.
But the Labor Department revisions, which encompass part of the Biden administration, could serve as a boost for President Trump, who has pushed back against claims that his policies are fuelling weakness in the jobs market.
“President Trump was right: Biden ‘s economy was a disaster and the BLS is broken,” White House press secretary Karoline Leavitt said in a statement on Tuesday.
She reiterated longstanding calls from the Trump administration for Jerome Powell, the chair of the Fed, to “cut the rates now”.
Wall Street largely looked past the jobs growth revisions, with the S&P 500 index holding steady in early trading on Tuesday. But investors remain on edge.
Fresh inflation data is set to be released on Thursday. That could bring fears of stagflation – a situation in which economic growth slows while consumer prices rise – to the forefront, said Chris Zaccarelli, chief investment officer at Northlight Asset Management.
Zaccarelli added that while a deteriorating jobs market “should make it easier for the Fed to cut rates this fall, it could also throw some cold water on the recent rally.”
The Labor Department ‘s revisions were broad-based, with particularly large adjustments in services sectors including leisure and hospitality.
“With services being the last bastion of employment growth, this does not bode well for the overall health of the labour market,” Bradley Saunders, North America economist at Capital Economics, said in a research note.