Donald Trump and the GOP needed good headlines on the economy as early voting starts in the 2026 midterm cycle. Instead, they got a weak jobs report, handing Democrats another talking point in an already difficult midterm cycle.
The Bureau of Labor Statistics reports that the U.S. economy only added 29,000 jobs in September, dashing hopes of momentum from a genuinely robust expansion in August. Unemployment ticked up slightly in the past month, mainly staying in the same range as the past few years, while the Household Survey did its usual Household Survey data dances:
Both nonfarm payroll employment (+29,000) and the unemployment rate (4.2 percent) changed little in September, the U.S. Bureau of Labor Statistics reported today. Employment in all major industries changed little over the month. ...
Both the labor force participation rate, at 61.8 percent, and the employment-population ratio, at 59.2 percent, changed little in September. These measures showed little net change since January. (See table A-1.)
The number of people employed part time for economic reasons changed little at 4.5 million in September. These individuals would have preferred full-time employment but were working part time because their hours had been reduced or they were unable to find full-time jobs. (See table A-8.)
Even August's silver lining came with a new cloud. Revisions deducted 60,000 jobs from the previous two months, which sent July's report into negative territory. August's numbers slid from a fairly robust 162,000 to a still-respectable 133,000, but it still went in the wrong direction, and September went even further flat.
Wages are still a relative bright spot, but only to a point. Hours worked in September were flat in comparison to August, while wages continued to grow on a 3% annualized basis. Inflation remains above 3%, however, which means that wages are still slightly eroding overall. This is not the rapid erosion of buying power seen during the Bidenflation years, but we still have not recovered that buying power, and it's still also going in the wrong direction.
In other words, this is not the kind of report that the party in control of Washington wants to see less than five weeks out from a midterm election. Even worse, it missed expectations – by a lot. There is a silver lining, however:
The U.S. added 29,000 jobs in September, far short of expectations, in a sign that the labor market remains steady but may not be able to deliver consistent and sizable employment gains like it did in the past.
The jobs number missed analysts’ expectations for 84,000 jobs.
Monthly employment numbers can be volatile, so investors and policymakers tend to focus on the unemployment rate, which has remained low all year.
Why has unemployment remained low while job creation has flattened out? Low population growth is almost certainly the answer. Donald Trump's immigration enforcement has eliminated the flow of cheap labor into the country, which means that we need much lower levels of job creation to maintain nearly full employment. Jobs are transitioning to legal residents and citizens as illegal aliens either self-deport or get helped out of the country. That exposes other issues, especially the low fertility rates that plague other Western societies, but it does show that we're essentially maintaining a high-employment environment.
The WSJ also notes another silver lining – employer stability has increased:
Fewer large companies have been telegraphing job cuts. Layoff announcements in August hit the lowest level for that month since 2022, according to outplacement firm Challenger, Gray & Christmas. Because of a sharp drop in immigration, fewer new positions are needed to keep the unemployment rate stable.
Many companies are in “low-hire, low-fire” mode, which means they aren’t eager to dump a bunch of employees, but they aren’t bringing on new workers either.
That's actually good news, but it's not a headline ... and Republicans really needed a headline.
The real problem now is inflation, and the Fed wants desperately to attack it. It got more aggressive in September, thanks to the cushion that the August jobs report provided, but this report may have them hesitant to intercede again for a while.
"It's a bit of a disappointment," CNBC's Rick Santelli comments. Especially at the White House.
Editor’s Note: Thanks to President Trump’s leadership and bold policies, America’s economy is back on track.
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