The Jobs Report Is Coming
Friday’s Employment Situation report arrives at a pivotal moment for Federal Reserve policy and market expectations. Wall Street is forecasting a gain of 75,000, in line with July’s figure of 73,000. Unemployment is expected to hold steady at 4.2 percent, though it could round up to 4.3 percent.
Numbers significantly better than expectations—say, a decline in the unemployment rate or a surge in payrolls above 100,000—could derail the Fed’s plan to cut interest rates by a quarter of a point when it meets in two weeks. Significantly worse figures might prompt the Fed to repeat last September’s 50 basis point cut.
But interpreting Friday’s numbers requires understanding a fundamental shift in how the labor market works.
The Immigration Game-Changer
The most important development for reading employment data isn’t coming from the Bureau of Labor Statistics—it’s coming from immigration policy. An economist at the St. Louis Fed recently highlighted how dramatically lower immigration projections have changed the employment landscape.
In January 2025, the Congressional Budget Office projected net immigration of 168,000 people monthly. Under those assumptions, the economy needed to add around 155,000 jobs per month just to keep unemployment stable, according to St. Louis Fed economist Alexander Bick. But recent projections tell a very different story.
The American Enterprise Institute thinks net immigration could subtract as many as 44,000 people from the U.S. population monthly or add 10,000, depending on how aggressively and effectively the Trump administration implements its immigration policies (and how much sand activist judges throw into the gears of reform). Goldman Sachs recently estimated net immigration adding around 41,000 to the U.S. population per month.
This isn’t a minor adjustment. According to Bick, lower immigration projections translate into a breakeven employment rate between just 32,000 and 82,000 jobs per month—a stunning 50-75 percent reduction from Bick’s earlier 155,000 estimate.
From this perspective, August’s expected 75,000 job gain represents meaningfully strong performance, not the tepid growth it would have been under the old framework. Even the weak May-June average of 33,000 jobs (after revisions) might not be as ominous as it appears. It’s still forward movement, just at a pace more aligned with slower population growth.
The Revision Problem
Recent history demands caution about initial employment prints. Every single month of 2025 has seen its payroll number revised downward. May and June combined suffered a 258,000 downward revision. July’s survey response rate was just 57.6 percent—well below May (68.4 percent) and June (59.5 percent)—increasing the odds of another downward correction and raising the possibility that we may have actually lost jobs in July.
This isn’t just statistical noise. Analysts at Bank of America note that while these revisions aren’t historically unprecedented when adjusted for labor market size (just 0.2 percent of total employment), the consistent negative bias raises questions about the data quality in real-time.
More consequential may be September 9’s release of preliminary QCEW benchmark revisions—a wonky but crucial data release that could rewrite the entire 2025 employment story. The Quarterly Census of Employment and Wages (QCEW) is based on unemployment insurance records from nearly all U.S. employers, making it far more comprehensive than the monthly jobs report, which surveys only about 120,000 businesses. The catch: QCEW data comes with a five-month lag. Each February, the Bureau of Labor Statistics uses this more complete dataset to benchmark—or revise—the previous year’s monthly employment figures.
Last year’s benchmark was a doozy. The preliminary estimate suggested payrolls would be revised down by 818,000 jobs, though the final revision was smaller at 598,000. That meant the labor market in early 2024 was significantly weaker than initially reported, but the revisions were concentrated in earlier months and didn’t dramatically alter the Fed’s real-time policy decisions.
This year could be different. Bank of America estimates the preliminary benchmark will show a 500,000 to one million downward revision to payrolls from April 2024 through March 2025. The firm’s analysis suggests the revisions will likely hit service sectors hardest—particularly information, leisure and hospitality, and trade and transportation.
If the revision lands at the high end of that range, it would mean the U.S. economy was adding jobs at a 30,000 monthly pace in the first quarter of 2025. That’s the kind of revelation that could prompt the Fed to take a more dovish stance and potentially accelerate the pace of rate cuts.
The timing adds drama: the benchmark data drops just four days after Friday’s jobs report, potentially reshaping how markets interpret whatever employment figures they receive on September 6.
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