Trump Was Ahead on Rate Cuts, But Powell’s Patience Proved Justified in 2025

• Did the Fed Misread the Jobs Data Earlier This Year?
• How Did August’s Jobs Report Change the Game?
• Why Is the White House Pushing for Faster Action?
• What’s the New "Break-Even" for Job Growth?
• FAQs: Fed Rate Cuts and the 2025 Jobs Debate

The Federal Reserve’s delayed rate cuts in 2025 sparked debates as revised employment data revealed earlier miscalculations. While TRUMP criticized Powell’s timing, the Fed’s cautious approach—rooted in flawed initial reports—now appears vindicated. With August’s weak jobs report and mounting political pressure, the central bank is poised to cut rates, but questions linger about the pace and scale of future adjustments. Here’s why Powell’s wait-and-see strategy might have been the right call.

Did the Fed Misread the Jobs Data Earlier This Year?

Back in early 2025, the U.S. labor market seemed robust. Jerome Powell cited strong employment growth to justify holding rates steady, even as inflation lingered below the Fed’s 2% target. But by mid-year, revisions told a different story: over 300,000 jobs were wiped from the prior four months’ reports. "The numbers Powell relied on were just wrong," noted a BTCC analyst. "What looked like resilience was actually statistical noise." Trump, ever the critic, blasted Powell on Truth Social, calling him "Too Late" for not acting sooner. Yet the Fed chair’s hesitation wasn’t arbitrary—it reflected the data available at the time.

How Did August’s Jobs Report Change the Game?

The August employment report, released just before the Fed’s September 16–17 meeting, delivered a shock: only 22,000 jobs added, far below the 75,000 consensus. Unemployment ticked up to 4.3%, marking three straight months of slowing growth. June’s figures were revised downward by 13,000, and July’s gains also underwhelmed. "The question isn’t whether they’ll cut—it’s by how much," said Leslie Falconio of UBS. Markets now price a 99% chance of a September rate cut, likely 25 basis points (bps). Greg Daco of EY added, "The bigger debate is what happens in late 2025 and 2026."

Why Is the White House Pushing for Faster Action?

Labor Secretary Lori Chavez-DeRemer emerged as Powell’s loudest critic, demanding immediate cuts: "If he doesn’t act, Americans will keep suffering." She argued cheap capital is vital for businesses expanding payrolls. "Is this political? It’s absurd," she fumed. Even within the Fed, voices like Governor Chris Waller backed a 25-bp cut since July, warning of escalating labor-market risks. Yet some economists urge caution. Bradley Saunders of Capital Economics doubts a 50-bp move: "With unemployment still at 4.3%, aggressive cuts aren’t justified."

What’s the New "Break-Even" for Job Growth?

August’s meager job creation fell below the threshold needed to match population growth—a figure recently revised downward. St. Louis Fed President Alberto Musalem now estimates just 30,000–80,000 monthly jobs are required, versus the traditional 100,000+. Slower immigration and fewer open roles drove this shift. "The Fed’s benchmarks need updating," Musalem admitted. This recalibration could shape future policy as Powell balances weak data against lingering inflation risks.

FAQs: Fed Rate Cuts and the 2025 Jobs Debate

Why did Trump criticize Powell’s timing?

Trump argued Powell waited too long to cut rates, claiming earlier action would’ve preempted economic softening. His Truth Social posts framed the delay as a leadership failure.

How reliable are the Fed’s employment metrics?

Initial reports often undergo revisions. The 300,000-job downward adjustment shows real-time data can mislead—a key reason Powell hesitated.

Could the Fed cut rates by 50 bps in September?

Unlikely. Most analysts expect 25 bps, as unemployment remains low (4.3%). A larger cut might signal panic.

What’s the political fallout of Powell’s decisions?

With Chavez-DeRemer’s public pressure, the Fed faces rare WHITE House scrutiny. Independence is tested when policy becomes partisan.