New government data released Friday revealed that the U.S. economy added 258,000 fewer jobs in May and June than originally reported, painting a much bleaker picture of the labor market than previously believed.
In a dramatic revision, the Bureau of Labor Statistics (BLS) slashed its earlier estimates for those two months. May’s job gains were revised down from 144,000 to just 19,000, while June’s numbers were cut from 147,000 to 14,000. Combined with July’s modest addition of 73,000 jobs, the U.S. economy has added only 106,000 jobs over the last three months—a sharp slowdown from earlier expectations.
“This is a clear signal that hiring has hit a wall,” said Bankrate’s senior economic analyst Mark Hamrick. “When you factor in these revisions, private sector hiring has averaged just over 50,000 jobs a month recently, far below healthy levels.”
Although the BLS regularly revises jobs figures, the magnitude of these changes caught experts and Wall Street off guard—especially after a week of what had looked like decent economic signals.
The July report showed a stagnating labor market, with job growth largely limited to the health care sector while other industries reported minimal gains or outright losses. The weak report was released just two days after the Federal Reserve opted to hold interest rates steady. Still, two Fed board members have publicly called for rate cuts to stimulate growth.
President Trump, anticipating bad news, criticized Fed Chair Jerome Powell in a series of posts before the data went public. He urged the rest of the Federal Reserve Board to override Powell on monetary policy decisions and warned of increased internal opposition.
The Federal Reserve now finds itself in a bind. Reducing interest rates could encourage hiring and boost economic activity, but doing so risks stoking inflation, which remains a concern. On the other hand, keeping rates elevated to contain inflation could further suppress job growth.
Gregory Daco, chief economist at EY-Parthenon, wrote that a combination of policy uncertainty, ongoing tariffs, and limited immigration has left many employers paralyzed. “The U.S. labor market is now showing signs of strain, and this weakness appears to have caught the Fed off guard,” Daco noted. “They may now be behind the curve.”
