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Cleveland Fed's Hammack: 'Disappointing' Jobs Report
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August 1, 2025
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10:08Now PlayingFederal Reserve Bank of Cleveland President Beth Hammack said the US labor market still appears healthy, though fresh jobs numbers released Friday constituted a “disappointing report to be sure.”
“We could see some weakening on the labor side,” Hammack said Friday during an interview on Bloomberg Radio & TV. “And if we see that, it would be something that we might want to respond to,” she said, while adding that she wouldn’t want to overreact to one data release.
Data published earlier Friday pointed to a sharp cooling in the labor market over the last few months. Employers added a lower-than-expected 73,000 jobs in July, and gains in the prior two months were revised down by nearly 260,000, according to the Bureau of Labor Statistics. The unemployment rate ticked up to 4.2% from 4.1% in June.
Following the news, the probability of a rate cut in September, based on federal funds futures contracts, surged to almost 90%, from 40% the day before.
Fed officials left interest rates unchanged this week for a fifth consecutive meeting. Fed Chair Jerome Powell reiterated his view that the central bank needs to guard against inflation risk, given the unknowns about how President Donald Trump’s tariffs will affect inflation and the economy. While acknowledging downside risks to employment, Powell characterized the jobs market as solid and brushed off pressure from the White House to lower borrowing costs.
With the new data in hand, Hammack said she still had confidence in the central bank’s decision, arguing officials have to balance both their employment and inflation mandates and that she believes the bigger miss is still on the inflation side.
In separate statements released Friday before the jobs report, Fed Governors Christopher Waller and Michelle Bowman both cited labor-market worries as their reasoning for dissenting against the decision in favor of a rate cut.
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