The final jobs report before Election Day came in far below expectations, and both parties noticed

Economy hands Republicans a last-minute headache: September job growth collapses to 29,000

WASHINGTON. The last employment report the country will see before Election Day arrived Friday morning with the force of a cold front. The Bureau of Labor Statistics said U.S. employers added just 29,000 jobs in September, a number that landed well below every major forecast and left both parties scrambling to spin the wreckage before November 3.

The unemployment rate ticked up to 4.2%, according to Labor Department data released Friday. Economists surveyed by Bloomberg had expected a gain of 85,000 jobs and expected the unemployment rate to hold at 4.1%. The miss was not close.

The report, the final official employment snapshot before the midterm elections, also showed that recent months' hiring was weaker than previously thought and that wage growth slowed, putting Americans' paychecks further behind the 8-ball at a time when inflation has accelerated.

How bad, and where

Total nonfarm payroll employment increased by 29,000 in September, following a downwardly revised gain of 133,000 in August. Revisions to prior months were broadly negative, reversing upward revisions reported last month, and combined they subtracted 60,000 jobs from previously reported totals.

July was revised down by 31,000, from a gain of 21,000 to a loss of 10,000, while August was revised down by 29,000 from a gain of 162,000. In short, the summer hiring surge that the White House was touting on the trail never quite happened.

Sector-by-sector, there was little to cheer. Most of the new jobs were in healthcare, a consistently high-performing sector, and in construction and manufacturing, likely due to the data-center boom. Healthcare rose 17,000 in September, but the BLS noted that was "a slower pace" than the average monthly gain of 33,000 over the past 12 months. Government payrolls shrank by 17,000.

Average hourly earnings rose an anemic 0.1% from August and are up 3% year over year, a level that's likely below the current rate of inflation. Economist Heather Long noted that means Americans' wage gains have been "wiped out entirely."

The Fed calculation

The report's implications for monetary policy were immediate. A weaker-than-expected September jobs report altered traders' outlook for a rate hike by the Federal Reserve in October, which is now seen as extremely unlikely. CME's FedWatch tool showed only a 17% chance that the Fed increases rates by a quarter percentage point, down from close to 36% a week ago. On prediction market platform Kalshi, chances for a hike in October stood at just 18%, down from almost 70% a week prior.

"For the Fed, this number should be the nail in the coffin for an October hike," Thomas Simons, chief U.S. economist at Jefferies, said in a note. The Fed raised rates at its September meeting to bring inflation, which is running above 3% annually, closer to its 2% target. Investors are still pricing in that the Fed will hike interest rates in December.

That timing creates a politically uncomfortable calendar. The Fed's next two meetings fall on October 27 to 28 and in December. A hold in late October would spare Republicans a rate-hike headline days before the vote. A December hike, however, would arrive after the ballots are counted, with fewer political consequences for the central bank's already strained relationship with the White House.

"This data won't shift the broader decision-making calculus for the Fed as inflation remains the supreme concern," said Chris Hodge, chief economist for Natixis.

Political fallout lands fast

Hiring slowed in September, revealing economic strains from the Iran war and immigration enforcement and adding to the challenges for Republicans as they fight to keep control of Congress in the November 3 midterm elections, according to The Washington Post.

Sen. Elizabeth Warren said job growth under President Donald Trump has averaged about 33,000 a month since January 2025 and that real wages have fallen since the Iran war began. Senate Minority Leader Chuck Schumer said families are being squeezed on all sides.

Trump is on a 32-day campaign tour ahead of the midterms. In a TIME interview this week, he dismissed his low approval ratings and insisted the economy is the strongest ever. That claim is harder to square with a September number that trailed forecasts by more than 55,000 jobs.

The report is a disappointing downward turn for President Trump, who is touting an economic renaissance before the midterms, the Washington Times noted Friday.

Some economists pushed back on the gloom. RSM chief economist Joseph Brusuelas wrote on X that "the economy only needs to generate roughly 35K to keep the labor market stable," and that the soft September print is "indicative of the type of monthly job gains that are going to occur from time to time due to demographics and tight immigration policy which puts a constraint on labor market growth."

The argument has traction in some corners. The small rise in unemployment came from people entering the labor force, not from people losing jobs. Many economists now estimate the so-called "break-even" rate of job growth may be as low as zero, while others estimate it may be between 10,000 and 55,000 jobs. Still, explaining labor-market theory to voters whose grocery bills have outpaced their paychecks for the better part of two years is a different challenge altogether.

Wage squeeze and the broader trend

Job growth in 2026 has slowed again. Through September, monthly payroll gains have averaged 68,000, down from the 80,000 pace reported through August, reflecting both September's modest print and the downward revisions to July and August.

That compares with an average of just 10,000 per month in 2025 and 122,000 per month in 2024. The 2025 trough was partly explained by the federal workforce reductions and post-DOGE disruption. The 2024 number, by contrast, was logged during a period of heavy immigration-driven labor-force growth that most economists say is no longer replicable under current policy.

An alternative measure of unemployment, which includes discouraged workers and those holding part-time jobs for economic reasons, edged down to 7.6%, its lowest since January 2025. The labor force participation rate rose 0.2 percentage points to 61.8% in September, marking its third consecutive monthly increase. However, the rate remains well below its pre-pandemic level of 63.3% recorded at the start of 2020.

"Today's report points to greater caution among employers," Ger Doyle, regional president for North America at ManpowerGroup, said in a note shared with Newsweek.

Friday's jobs numbers came a day after the Commerce Department reported the economy grew 2.2% in the second quarter of this year, more than previously reported, but slower than the 2.5% growth in the first part of the year. GDP is holding. The labor market is not exactly following.

A broader measure that includes discouraged and underemployed workers fell to 7.6%, its lowest since January 2025. The Atlanta Fed is also tracking strong economic growth for the third quarter. Those numbers will likely feature in White House talking points. Whether voters weight GDP against a $4-a-gallon gas price and a 3.4% inflation rate is the question Republicans are sitting with this weekend.

What to Watch

• Federal Reserve meeting, October 27 to 28. With rate-hike odds now below 20%, the statement and press conference from Chair Jerome Powell will be parsed for any signal about December. A softer labor market could recalibrate the Fed's thinking in how it balances its dual mandate to ensure full employment and steady prices, after it raised interest rates at its September meeting to combat inflation that's remained above target for five years.
• Congressional midterm dynamics. Job growth in the United States fell short of economists' expectations in the final jobs report before the consequential midterm elections. Watch for whether Senate Republican incumbents in toss-up states distance themselves from White House economic framing or lean into the "break-even" argument.
• October inflation data. The cool jobs report follows a softer-than-expected inflation report released Wednesday. The next CPI reading lands before the Fed meeting. A second consecutive cool print would reinforce the case for a hold and sharpen the debate over whether to cut rates before year-end.
• October jobs report (November release). That number will arrive after Election Day and cover a full month of any hurricane or geopolitical disruption. It won't change November 3 ballots, but it will define the posture of a new Congress from January forward.

Sources: Bureau of Labor Statistics, Employment Situation Summary, October 2, 2026; The Washington Post; Yahoo Finance / Labor Department data; CNBC; CNBC / CME FedWatch; Eye on Housing / BLS; Newsweek; The Washington Times; Rolling Out; Al Jazeera; NPR.