BREAKING: US Job Market Collapses - 1 MILLION Jobs Lost as Fed Is Forced to Cut Rates

Hello and welcome back everyone. Thank you for tuning in. The most recent jobs report was shocking, but let's be honest, it wasn't too surprising. It simply confirmed what many economists, investors, and business leaders have been quietly sensing for months now, that the US economy is caught in a whirlwind of opposing forces and the consequences are starting to show. If you're trying to make sense of where we're headed as 2025 enters its final stretch, this report just became a crucial lens. I've written extensively about it over in my sub stack, by the way, and I will link that article in the video description below. You're welcome to read it and catch up on that. But let's zoom out. We're living in an economy where policy decisions are hitting both supply and demand hard. Tariffs, tax changes, immigration policy changes, and monetary policy are all pushing and pulling in different directions, often at the same time. That creates a fundamental problem. Interpreting economic data becomes murky and forecasting, even the near future, becomes nearly impossible. The volatility is just unprecedented. Before we go into the shocking details of labor market revisions that were released earlier this morning, by the way, I would like to remind you that the most recent August jobs report was very weak. It was bad news. It showed that the US economy added just 22,000 jobs last month, and that's not just weak, it is the worst reading since the depth of the pandemic recovery. Unemployment ticked up to 4.3%, the highest that has been since 2021, as I've written over in my sub stack in detail, and June's numbers, those were revised down, negative adjustments again. Worse still, most of August's job gains were part-time. Those are part-time jobs. Full-time employment is stagnating, and sectors like manufacturing, finance, and even the federal government are now shedding jobs. Only healthcare is still posting somewhat reliable gains. Now, on September the 9th, we got more bad news, and this is what I want to focus on in this video. Newly released revisions from the Bureau of Labor Statistics, BLS, revealed that the US job market has been weakening for longer than we previously revealed, than we previously thought and believed, with 911,000 fewer jobs added between April 2024 and March 2025 than initially reported. Now, if you think about it, that's nearly 1 million jobs that never even existed. This significant downward adjustment, which is the largest on record, by the way, this is the largest downward revision on record, it confirms that a hiring slowdown was already underway. It should raise concerns about the economy's trajectory heading into late 2025. Things are worse than we thought, clearly. Sectors hit hardest by the revisions include information, a negative adjustment of 2.3%, wholesale trade, a 1.8% downward revision, and leisure and hospitality, a negative adjustment of 1.1%. As a result, average monthly job growth during that 12-month period is now estimated at just 71,000 jobs, roughly half of earlier estimates. The revisions come from the BLS quarterly census of employment and wages report, which updates monthly jobs data using more complete unemployment insurance records. While such revisions are quite common, it is the size of the adjustment that sparked political backlash and shock. Labor Secretary Lori Chavez de Ramo, for example, criticized the BLS for significant and consistent errors. And as we know very well, President Trump has accused the agency of politicizing the data, and let's be honest, those claims are made without evidence. Trump recently fired the BLS commissioner over disappointing summer job numbers, I reported about that earlier on my channel. The data confirms what many have already suspected, the cracks in the labor market are now not just new, they've just become impossible to ignore. It's not a stretch to say this, we're likely seeing the early signs of a jobs recession. And not just for one type of worker, by the way, as some economists put it, this is both a white-collar and a blue-collar jobs recession. At the same time, the manufacturing sector contracted for the sixth month in a row, and this is more bad news. Supply chain issues, worse than by tariffs, are now abiding. Long-term unemployment is rising, permanent job losses are up, but here's where the confusion sets in. GDP growth is still tracking at a 3% annual rate for the third quarter. Weekly job loss claims, one of the most real-time indicators that we have, are still relatively low, and consumer spending has been on the decline, but it hasn't really cratered. So, as you can see, it is a deeply mixed bag. But why would that be? Well, it is because the forces that are shaping the economy aren't pulling in one direction, they're colliding. Which brings us to Trump's economic, and more specifically, trade policy. Tariffs have reached levels unseen in most Americans' lifetimes, amounting to roughly $30 billion a month in new taxes. That cost is being shared by U.S. importers, by international suppliers, and of course, by American consumers. It is hitting businesses and households alike. The Federal Reserve has resisted cutting interest rates all year long, tariff-driven inflation, and global uncertainty kept their foot on the brake, but after the most recent jobs report, markets are betting that resistance is breaking down and the Federal Reserve will be cutting rates starting during the next meeting in September. Futures are now fully pricing in a 25-basis point cut at the Fed's upcoming September meeting, and some traders even see a 50-point cut on the table depending on the next CPI report. In other words, as I mentioned in a recent video, it may not be a stretch to say that the Fed is cornered. If inflation shows signs of cooling, the floodgates may open. If it doesn't, the Fed faces a nightmare scenario, a weakening labor market, as we just discussed, and sticky inflation. That is the kind of dilemma that central bankers truly dread, truly fear, especially when they face extreme political pressure, unprecedented amounts of political pressure to implement a certain policy agenda. Inside the Fed, the divide is growing too. Some, like Cleveland's Beth Hammack, worry that cutting too fast could spark another inflation wave. Others see clearer signs that the job market is deteriorating fast enough to warrant immediate action. But needless to say, the latter are very much aligned with Trump's views. Powell himself acknowledged at the Jackson Hole meeting that the balance of risks is now tilting toward employment. Donald Trump will almost certainly apply pressure here publicly and privately to push for aggressive cuts ahead of the midterms. His nominee for the vacant Fed seat, Stephen Myron, could swing that internal dynamic even more dovish, by the way, if confirmed in time. So what does all of this mean for the rest of us? That is the important question. Well, whether you're running a business, whether you're managing a household or planning a major investment, the landscape is shifting very, very quickly. There's no clear signal. There's no clear sign of what you should do. Some say that a recession is coming. Others say that we are already in a stagflation. Others say that the economy is resilient. It is a dangerous moment to be overconfident in any forecast. That's what I would say. The best advice right now is to make short, deliberate decisions. Don't over stir and don't assume that the wind is blowing in the same direction as yesterday or that it won't change course again tomorrow. Heading into the final quarter of 2025, I would say that uncertainty is the only constant. The Fed may want to stay focused on inflation, but the labor market is speaking louder and louder. As you can see, the cracks are no longer deniable. They can't be ignored and they are widening and widening fast. What do you expect the next three, four months to bring? Let us know in the comment section below. I would love to hear from you. Thanks so much for watching. Please show your support. It does go a long way. Give this video a thumbs up, share it and subscribe on YouTube. I would love to have you back for my next one tomorrow. And if you enjoy reading, make sure that you find me on Substack and Patreon and I'll see you back here tomorrow. Take care.