Jobs Report — Biggest Job Loss in Years, Fed Forced to Cut Rates

We are witnessing the biggest job loss in years, which is going to force the Federal Reserve to continue cutting interest rates. The official jobs report by the government was supposed to be released on Friday, October 3rd. However, because the politicians could not agree on a government funding bill on time, the federal government has shut down. And consequently, the Bureau of Labor Statistics did not release the report. Therefore, people have been relying on the ADP jobs reports, which at least gives us insights into the labor market situation in the private sector. And for the month of September, the ADP report shows that the private sector lost 32,000 jobs. This was the biggest decline in two and a half years. Another report that we'd like to look at, regardless of whether the BLS jobs report is released or not, is the challenger reports. This is on page one of the report, and in the chart, I've highlighted the months of 2025. It says, so far this year, companies have announced 946,426 job cuts, the highest year to date since 2020. That is 55% higher compared to the same time period in 2024. And on page two of the report, it says, it's very likely job cut plans are going to surpass a million for the first time since 2020. Again, we're currently at 946,000, so I would say that surpassing that amount is very likely. And it says that previous periods with this many job cuts occurred either during recessions or during periods of transformative technology. So for here, I mean, of course they're referring to AI, but I'm going to show you that AI is not responsible for this weakening labor markets. And then it proceeds to say that we're dealing with a stagnating labor markets. Okay, so what does all this mean? It means that the Federal Reserve will be obligated to continue cutting interest rates. So they cut interest rates in September, and they're most likely going to cut interest rates this month as well. So I want to show you the odds of that happening. Now, if you're an investor in the stock markets or precious metals or crypto, then you're going to like these odds, because rate cuts means that an easier monetary policy is coming, and that's going to boost asset prices. So take a look at this. This is according to the CME FedWatch tool. The next Federal Reserve meeting is going to be on October 29th. Right now, there's a 96.2% chance that the Federal Reserve will cut interest rates at this upcoming meeting. And there's a 3.8% chance that they're not going to cut rates. Okay, right now the Federal Fund's interest rates at 4.25%. They're expected to cut the interest rates this month by 0.25%, which would bring the Fed Fund's rate down to 4.0%. Before the release of this ADP jobs report, the odds of a rate cut were at 90%. And because the ADP jobs report showed job losses for September, it boosted the odds of a rate cut to where we are today, from 90% to 96.2%. Now, the meeting after October 29th is going to take place on December 10th. And there's an 86.3% chance that the Federal Reserve is going to cut interest rates at that December meeting as well. So if the Federal Reserve cuts interest rates in October and in December, then the Fed Fund's interest rate is going to fall from the current 4.25% to 3.75%. And I just want you to know that's a big deal because it is widely expected that the Federal Reserve is just going to continue to cut interest rates in 2026. So I just want you to think about that because Jay Powell, who's the chair of the Federal Reserve, is going to end this term in May, right? And most likely what's going to happen? President Trump's most likely going to replace him with someone that's going to cut rates aggressively. Now, shifting back to the labor markets, I want to show you this from page 8 of the challenger report. So this is going to give you more clarity on the labor market situation, and I found this very interesting. As I mentioned, there have been 946,426 job cuts announced so far this year, right? And here are the reasons that were cited for those cuts. The biggest reason was DOGE, directly responsible for 293,000 job cuts, and the downstream impact was 20,000 more. Although DOGE was the number one reason, if you look at these, what I've outlined, in aggregates, then in my opinion, it's the weaker economy that's responsible for more of the job cuts. Economic conditions are cited for 208,000 cuts, and they have closings, restructuring, bankruptcy, and cost cutting responsible for a little over 300,000 job cuts. Now, I just want to point out these two categories in specific, because they're talked about a lot, and I want to give you the facts and share with you my opinion. The first one is artificial intelligence. AI was directly cited as the cause for 17,375 job cuts. So honestly, and if you compare the numbers, AI has not been responsible for that many job cuts, relatively speaking. However, I'm going to say this again. This is just my opinion. A lot of people are debating whether AI is going to eliminate a massive quantity of jobs in the future. Okay, so I'll tell you this. This number may seem low right now, but I believe that yes, AI is going to eliminate a large quantity of jobs in the years ahead. So the reason why I'm saying that is because apart from YouTube, I have a lending business, so I help small businesses get funding. And I'm telling you, I am witnessing firsthand how AI can effectively eliminate so many back office and administrative employee roles. So I'm just telling you this very sincerely, like it is blowing my mind away. It's quite scary, to be honest. So my opinion is that this whole concern of AI eliminating many jobs in the future is not overblown. In my opinion, rather, it's understated. That's just my two cents. And another one that I want to point out is the tariffs. Tariffs have been cited as the reason for 5,847 job cuts. I understand that certain sectors and industries have been severely impacted, especially certain farmers. So I'm not going to turn a blind eye to that, but relatively speaking, comparing the numbers, it remains low, at least for now. And I also thought that this was very important to show you as well. According to the most recent JOLTS report, which was released by the government right before the shutdown, it shows that job openings continue to decline. Back in 2022, there were two job openings for every unemployed worker. So it was a job seekers markets. I mean, this is when employers were competing for workers, when they were trying to attract people with larger pay raises and even hiring bonuses, like good hiring bonuses. It's when people are job hopping around like crazy trying to secure a better deal. But as you can see, and as you probably know, those days are long gone and the situation is getting worse. But now look at how the situation has changed. There is now less than one job opening for every unemployed worker. It's clearly an employer's market and the situation is worse than right before the pandemic. Now, I want to help you understand and interpret the situation better. 1 to 1.5 is considered a normal and balanced labor market. For the past 25 years, we've actually been below that range for a while. Because I mean, think about what happened. We had the dot-com bubble that burst and the labor market was recovering and then bam, the GFC happened with the housing market crash. And we're recovering from that and getting back up there to normal. And then the pandemic happened. So 1 to 1.5 is considered normal. Above 1.5 is considered a tight labor market where it's hard to get workers. And then when you're below 1, that's considered to have a lot of slack in a recessionary environment. And as you can see, we are now below 1. And take a look at the chart. We're trending downward. And this is why the Federal Reserve is cutting interest rates. They're looking at this and they're trying to revive the economy. They're trying to revive the labor market with an easier monetary policy. And this is the last one that I want to show you. Because we have a slowing labor markets, fewer people are quitting. You know, many people are staying put because there's less job security and there's fewer opportunities, as you saw in the decreasing amount of job openings. But listen, none of this, I mean, everything I've been saying, none of this should be a shocker to anyone. However, now you see the data and you better understand how bad the situation is. Okay, when the government reopens and they release their official jobs report, I'm going to cover that. I'll share that with you. Until then, please subscribe. Thank you for the support and I wish you a very nice day. Take care.