The strength of the labor market has been one of the main reasons that Federal Reserve policymakers have felt comfortable waiting to cut interest rates in recent months.
The surprisingly weak jobs report on Friday is likely to change that equation.
Jerome H. Powell, the Fed chair, described the labor market as “solid” as recently as Wednesday, pointing to the low unemployment rate and solid job gains to justify the central bank’s decision to hold interest rates steady for the fifth consecutive meeting.
But the data on Friday called that assessment into question. The unemployment rate ticked up only slightly, to 4.2 percent. But large downward revisions to job growth in May and June suggested that the labor market has not been as strong in recent months as policymakers believed.
Fed officials have said repeatedly that their decision on whether and when to resume lowering interest rates would depend on data on both employment and inflation. On Wednesday, Mr. Powell reiterated that the Fed was prepared to act quickly if the labor market showed signs of weakening.
“Downside risks to the labor market are certainly apparent,” he said.
Not all Fed officials were prepared to wait. Two Fed governors, Christopher J. Waller and Michelle W. Bowman, dissented from the Fed’s decision this week, saying they preferred to lower rates a quarter-point. In statements released Friday, both governors cited concerns about the labor market as reasons for their dissents.
“Private-sector payroll growth is near stall speed, and other data suggest that the downside risks to the labor market have increased,” Mr. Waller wrote. He added that, with inflation still tame, “we should not wait until the labor market deteriorates before we cut the policy rate.”
President Trump also seized on the report to continue browbeating the Fed and Mr. Powell to cut. Using the nickname Mr. Trump has given Mr. Powell, the president said “Too Little, Too Late. Jerome “Too Late” Powell is a disaster. DROP THE RATE!”
Ben Casselman is the chief economics correspondent for The Times. He has reported on the economy for nearly 20 years.
Colby Smith covers the Federal Reserve and the U.S. economy for The Times.
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