Trump was ahead on rate cuts but Powell’s patience proved justified

President Trump told the Federal Reserve to cut interest rates five months ago. He said the job market was weaker than it looked and warned that keeping interest rates high would hurt businesses and workers.

This week, the labor data proved him right. More than 300,000 jobs were erased from the last four months of reports, exposing just how broken the Fed’s data really was. The numbers that Jerome Powell used to hold rates steady were simply wrong.

The labor market appeared healthy earlier in 2025. Inflation still wasn’t at the Fed’s 2% target, but the job growth seemed strong enough to stay the course. Then came the revisions.

Hundreds of thousands of jobs disappeared from the books, and it became obvious that something was off. Trump had seen it coming. Powell didn’t. But Powell’s decision to hold wasn’t random; it was based on what the faulty data showed at the time.

According to a report from Yahoo Finance, Labor Secretary Lori Chavez-DeRemer said, “Jerome Powell needs to do his job and cut those interest rates now.” She asked, “What is he waiting for?” Trump followed up on Truth Social, calling him “Jerome ‘Too Late’ Powell” and slamming him for not acting sooner.

Fed prepares to cut after weak August jobs report

The jobs report released Friday was the last one before the Fed’s September 16–17 meeting. The U.S. economy added just 22,000 jobs in August. Analysts had expected 75,000. The unemployment rate rose to 4.3%, up from 4.2%.

That was the third straight month of slower job growth. June was revised down to -13,000, and July also came in weak. On August 28, Powell gave a speech at Jackson Hole, where he said the “balance of risks” was changing, and the Fed may need to adjust its policy stance.

By the time Friday’s numbers hit, most analysts and investors already saw what was coming. Leslie Falconio, head of taxable fixed income strategy at UBS Global Wealth Management, told Yahoo Finance, “The question of a cut is no question. There is going to be a cut.”

Greg Daco, chief economist at EY, still expects a small cut this month. But he says the bigger question is what the Fed will do at the final two meetings of 2025 and into 2026. Right now, the market puts the chance of a cut this month at 99%.

White House turns up pressure, Fed officials respond

Chavez-DeRemer has been one of the loudest voices pushing Powell to ease policy. She said, “If he doesn’t cut rates, the American people will continue to suffer.” She pointed out that companies are investing trillions into the economy and need cheaper money to grow their workforces.

“Why he’s waiting boggles my mind,” she said. “He knows the data, he knows how important this is, and if it’s a political move, it’s nonsense. He needs to go ahead and move forward and cut those rates.”

Inside the Fed, not everyone is silent. Chris Waller, a Fed Governor, supported a 25-basis-point cut as early as July. On August 28, before the latest report dropped, Waller said risks to the labor market were growing and that a cut this month could help stop further damage.

He said the Fed still wasn’t behind the curve but needed to act before it got worse. Even though the jobs data was disappointing, some economists still see limits. Bradley Saunders from Capital Economics said a bigger 50-basis-point cut was unlikely.

“While the weak 22,000 gain in non-farm payrolls in August confirms what already looked like a nailed-on rate cut at this month’s FOMC meeting, the limited rise in the unemployment rate to 4.3% will curb calls for a larger 50bp move,” Saunders said.

The 22,000 job gain is now below what economists call the break-even rate, the amount of jobs needed each month just to keep up with population growth. That number used to be above 100,000, but has dropped recently. Lower immigration and fewer available jobs have pulled that number down.

Earlier this week, St. Louis Fed President Alberto Musalem said the economy may now only need 30,000 to 80,000 jobs each month to support population growth, not the old 100,000+. That changes how the Fed might judge job gains going forward.