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

• How Did Revised Jobs Data Change the Fed’s Calculus?
• Why Did Powell Resist Early Rate Cut Demands?
• What’s the Market Expecting at September’s FOMC Meeting?
• How Are Political and Market Forces Colliding?
• What Does This Mean for Future Fed Policy?
• FAQ Section

In a twist of economic irony, former President Trump’s early calls for Federal Reserve rate cuts in 2025 initially seemed prescient—until revised jobs data revealed Chair Jerome Powell’s cautious approach was the right move after all. This week’s labor market revisions wiped out over 300,000 previously reported jobs, exposing the Fed’s data flaws and validating Powell’s "wait-and-see" stance. With September’s pivotal Fed meeting looming, markets now price a 99% chance of cuts despite political pressure from the WHITE House. Here’s how the drama unfolded.

How Did Revised Jobs Data Change the Fed’s Calculus?

The Bureau of Labor Statistics’ bombshell revisions erased 300,000 jobs from June-August 2025 reports, exposing what analysts now call "statistical mirages" that misled policymakers. August’s anemic 22,000-job growth—far below the 75,000 forecast—combined with unemployment rising to 4.3% confirmed weakening trends. "The case for cuts is airtight now," admitted UBS strategist Leslie Falconio. Notably, June’s figures flipped negative (-13,000 jobs), undermining Trump’s July criticism that Powell was "too late" acting on what appeared then as a robust labor market.

Why Did Powell Resist Early Rate Cut Demands?

Fed insiders reveal Powell relied on real-time data showing 2025’s Q2 job growth averaging 188,000/month—above the Fed’s revised "equilibrium range" of 30,000-80,000 needed to match population growth. "We’re not data-blind, but we’re not data-slaves either," a Fed governor anonymously told Bloomberg. This explains Powell’s Jackson Hole speech emphasizing "risk balance" over political pressure from Labor Secretary Chavez-DeRemer, who publicly demanded immediate cuts to "stop American suffering."

What’s the Market Expecting at September’s FOMC Meeting?

Futures markets overwhelmingly predict a 25-basis-point cut on September 17, with EY’s Greg Daco noting "the debate shifted from ‘if’ to ‘how much’." However, Capital Economics’ Bradley Saunders cautions against expecting dramatic 50-point cuts: "While August’s numbers lock in September action, the modest unemployment rise likely prevents more aggressive moves." Interestingly, San Francisco Fed research suggests today’s lower immigration rates have reduced monthly job growth requirements—a structural change influencing future policy.

How Are Political and Market Forces Colliding?

Trump’s Truth Social posts ("Fire Powell!") contrast with Wall Street’s relief at the Fed’s deliberative process. BTCC analysts observe that "the Fed’s credibility hinges on ignoring political noise—something markets reward long-term." This tension peaked when Fed Governor Waller broke ranks in August, advocating preemptive cuts to avoid "labor market scarring," while others warned against overreacting to volatile data.

What Does This Mean for Future Fed Policy?

The episode highlights the Fed’s evolving challenges: interpreting imperfect data amid political crossfire while maintaining flexibility. As Powell prepares for September’s decision, economists warn that 2026’s policy path remains uncertain—especially if job growth stabilizes NEAR the new equilibrium. "This isn’t about being early or late," muses a BTCC strategist. "It’s about being right when it counts."

FAQ Section

Why did the Fed wait so long to consider rate cuts?

Initial 2025 data showed healthy job growth above 100,000/month—only later revisions revealed the weakness Powell now addresses.

How reliable are monthly jobs reports?

As this episode shows, preliminary figures often get revised significantly. The Fed cross-checks multiple indicators before deciding.

Could the Fed still surprise markets in September?

While a 25-point cut seems certain, the language about future 2026 policy could MOVE markets more than the action itself.