ALFREDO ORTIZ: Lower Interest Rates And Tax Cuts Will Boost Job Creation In Months To Come

The stagnant American jobs market reflects the pressure American small businesses are facing from high interest rates that are around two percentage points above those of other industrialized nations.

Friday’s jobs report shows job creation has been essentially flat over the summer. The U6 unemployment rate, a broader measure that many economists consider the real unemployment rate, exceeded 8% for the first time since the Obama administration and its immediate aftermath (not counting the Covid period).

When small businesses, which create nearly two-thirds of new jobs, can’t access credit, they can’t invest back into their businesses. As a result, job creation suffers. The outplacement firm Challenger, Gray & Christmas reported significant layoffs so far in 2025. And Wednesday’s JOLTS report revealed there are now more unemployed Americans than available jobs for the first time since (again) the Obama administration and its immediate aftermath (not counting the Covid period).

The Federal Reserve should respond by cutting rates by a minimum of half a point at its meeting this month, as President Trump has long said. If the Fed had listened to Trump, summer job creation would have been much stronger. Yet instead of being data-dependent, Fed Chairman Jerome Powell has been a data denier. A rate cut this month is almost a certainty, but “Too Late” Powell was indeed too late.

That said, the labor market is stronger than the topline numbers suggest. Wages are growing faster than inflation, allowing workers to finally get ahead, a stark change from the Biden administration. The household survey showed solid seasonally adjusted job creation. And unproductive federal government jobs continue to decline. The Trump administration has now shed 100,000 federal government jobs (not including those receiving severance or long-term leave).