U.S. economy is worse than thought with 1.2 million fewer jobs — what that means for the Fed

With job growth tanking and the economy wobbling, pressure is on for the Federal Reserve to start lowering interest rates, with markets now expecting a cut at each of the three remaining meetings this year.

The Bureau of Labor Statistics reported Tuesday that the economy added 911,000 fewer jobs than previously reported for the year preceding March 2025. Downward revisions since the cutoff date in that report suggest that the reduction in payroll growth has been actually around 1.2 million for the past 16 months.

That's a number sure to get the Federal Open Market Committee's attention when it meets next week and could add fire to President Donald Trump's repeated assertions that the central bank has been “too late” in making policy adjustments.

“Had Fed officials had that data available in real time, policy rates would be lower today,” wrote Citigroup economist Andrew Hollenhorst, referencing the BLS “benchmark” payrolls revisions.

Hollenhorst said the data actually “could justify” a jumbo half percentage point cut when the FOMC releases its decision Sept. 17. However, he expects Chair Jerome Powell “will have an easier time building consensus around a [quarter-point] rate cut next week, with signals that rate cuts will continue at upcoming meetings, including potentially in October.”