911,000 jobs cut in latest revisions. Is the Fed already too late?

The annual job revisions data was released today, which showed that 911,000 jobs that were supposedly created from March 2024 to March 2025 were removed from the books. The estimates were for 818,000 jobs to be lost in this report, so it came in worse than expected. Lower job growth has been a theme recently, but revisions at a whopping 911,000 continues the trend of the Federal Reserve being behind the curve on their supposed solid labor market — not only for this year but for 2024, too.

When the Fed said they wanted to attack the labor supply, people didn’t take them seriously, but now we can see they’re getting the softer labor market they always wanted to fight inflation. The Fed doesn’t like to see wage growth above 3% because they feel the best way to get 2% inflation growth is to keep wages at 3% or below. Wage growth was simply too high for the Federal Reserve for years and still is today. We talked about this in the Saturday episode of the HousingWire Daily podcast.

This report shows ‘job revisions,’ which is the process of adjusting previously reported job numbers to reflect more accurate data. The result is that there were more job losses in manufacturing and construction, two vital sectors to consider when examining economic cycles. Let’s examine the data.

From BLS: Each year, CES employment estimates are benchmarked to comprehensive counts of employment from the Quarterly Census of Employment and Wages (QCEW). These counts are derived primarily from state unemployment insurance (UI) tax records that nearly all employers are required to file with state workforce agencies.

As we can see in the chart below, 880,000 jobs were lost in the private sector. I’m hoping the next new Fed Chairman will be Chris Waller, who has previously stated that the labor data is not as strong as Powell and some Fed members believe. He believed the job revisions would come in negative, and he was right again. Jerome Powell and other members of the Fed, such as Cleveland Fed President Beth Hammack, have a lot of explaining to do regarding why they both missed a clear trend that has been evident in the data for some time.

The 10-year yield rose a few basis points early Tuesday morning after the news, as a lot of labor data softness has been priced into the markets already. Remember, the bond market gets ahead of the Fed always and the Fed plays catch-up if the economic data is getting softer on them. Now that the 10-year yield has approached the bottom end of my 2025 forecast, we will need to see the weaker economic data continue — or have the Fed become more dovish — to warrant lower moves in bond yields (and mortgage rates) for a longer duration.

If the economic and labor data improve without the Fed getting more dovish, we can easily head back toward 4.35% on the 10-year yield.

Conclusion

The most concerning aspect of today’s report is that the Fed has used slowing population growth as the main excuse for the labor market softening this year. After seeing these revisions, we have to ask: what was the reason for softening labor the past year?

It should be a fascinating Fed meeting next week, as Jerome Powell must justify his assessment of a solid labor market, given that he is now at odds with his own Fed members who have been trying to tell him and others that the labor market isn’t as strong as he believed.