A Federal Reserve official on Wednesday called last week’s tepid jobs report “concerning,” and said its significant downward revisions could signal an economic shift in the U.S.
Federal Reserve Governor Lisa Cook highlighted the report’s sizable downward revisions to jobs created in May and June, saying that they are “typical of turning points” in the economy.
Friday’s report showed that employers added a weaker-than-expected 73,000 jobs in July. The Bureau of Labor Statistics, or BLS, also sharply revised its job estimates for May and June, saying that the U.S. added 258,000 fewer jobs than previously reported.
After Friday’s report, President Trump fired the BLS commissioner of labor statistics, claiming that the revisions undermined the data’s accuracy. He added that “Economy is BOOMING under ‘TRUMP’.”
Revisions are a common feature of the monthly jobs reports from the BLS, which updates its data after receiving new information from businesses and other sources. Some economists said the July jobs report reflected that some companies are scaling back hiring plans amid a slowing U.S. economy and uncertainty surrounding the Trump administration’s tariffs.
“There were two major revisions to May and June, and these revisions are somewhat typical of turning points, which again speak to uncertainty,” Cook said during a Wednesday discussion with other Fed officials on the global economic outlook.
She later added, “When we get the GDP numbers later this year, we’re going to see, I can imagine, lower activity.”
Crafting effective economic policies is dependent on understanding where the economy is heading, said Cook, who prior to her appointment in 2022 as a Fed governor was an economics professor at Michigan State University. She has also served on the faculty of Harvard University’s Kennedy School of Government and worked as a senior economist on the Council of Economic Advisers under President Obama, according to her biography.
“We want to know not just where we’ve been, but where we’re going. So if we’re at an inflection point, we want to look at data that speak to inflection points,” she added.
Other Fed officials said the July jobs report may not necessarily reflect a long-term direction. On Friday, Atlanta Fed president Raphael Bostic said he had questions about whether the report was a one-time issue or a trend, and added that he believes the labor market still has “a lot of strength.”
The downward revision to May and June’s hiring data marked the largest two-month downward revision outside of a recession since 1968, according to an analysis from Goldman Sachs.
Cook also discussed what she referred to as an “uncertainty tax” that she said is weighing on businesses across industries. She said that executives at “all kinds of organizations” are spending more time on preparing for and responding to macroeconomic uncertainty. That includes discussions about pricing based on anticipated cost increases from the new tariffs.
When executives spend their time this way, it’s a “deadweight loss, we’re not going to see that in GDP,” she explained.
“So there’s just uncertainty across the board, but I think it’s really interesting that no matter what the sector, no matter what kind of businesses they’re in, they’re talking about the uncertainty tax,” Cook said.
