The U.S. Economy Just Flashed a Huge Red Flag With Its Latest Jobs Report
The United States added just 22,000 jobs in August 2025, one of the weakest monthly gains in years, and the unemployment rate climbed to 4.3%, its highest level since 2021. To make matters worse, the government’s earlier estimate for June was updated after more data came in — instead of gaining 14,000 jobs, the country actually lost 13,000, the first monthly decline since late 2020
Since the pandemic, the job market has been the strongest part of the U.S. recovery, but the sudden slowdown has left both economists and workers uneasy.
A Job Market Running Out of Steam
Image via iStockphoto/Gpointstudio
Job growth has practically stalled. The economy added an average of just 74,750 jobs from January through August. Aside from the pandemic years, that’s the weakest streak since 2010, when the economy was still recovering from the Great Recession.
The picture worsens when you realize most of those gains come from just one sector: health care. In August, health care added 46,800 jobs, accounting for nearly all the growth, while manufacturing, federal employment, and other industries either stayed flat or shrank.
The uneven job market has led to a strange reality of more unemployed people than open jobs, and more than a quarter of the unemployed have been out of work for at least six months. At the same time, wage growth is cooling, with average hourly pay rising only 3.7% in August compared to 3.9% in July. That leaves job seekers stuck between fewer openings and smaller pay raises, with companies hesitant to expand until they get more clarity on policy and economic conditions.
Politics and Policy Collide
It’s impossible to talk about the job slowdown without mentioning Washington. President Donald Trump has blamed Federal Reserve Chair Jerome Powell for being too slow to cut interest rates, labeling him “Too Late Powell.”
The White House has also blamed the Bureau of Labor Statistics, with Trump firing its commissioner after revisions showed earlier hiring was much weaker than first reported. Economists, however, note that revisions are routine and simply reflect more accurate data coming in after the initial reports.
Trump’s own policies have added to the uncertainty. Tariffs have pushed consumer prices higher, immigration changes have disrupted the labor supply, and sweeping cuts to the federal workforce have rippled across other industries.
The Fed on the Hot Seat
Image via iStockphoto/Ngampol Thongsai
Wall Street is betting that the weak jobs report will push the Federal Reserve to cut interest rates in September. Stocks even rose after the data was released, with investors hoping that cheaper borrowing costs could boost the economy. Powell has already signaled that a cut is on the table, but he’s warned that the risks of layoffs and rising unemployment could grow quickly if uncertainty continues.
The U.S. job market is now caught in an awkward middle ground. Health care is shouldering the burden, while other industries are stagnant. With job seekers re-entering the labor force in greater numbers, the unemployment rate could keep climbing if hiring doesn’t pick up.