Fed Watch – 11/21/2025

The below transcript is a literal translation of the podcast audio that has been machine generated by Notta.

Hi, I’m Lauren Saidel-Baker and thank you so much for joining me for this November 21st edition of Fed Watch.

Well, we’re back, ladies and gentlemen, with our September employment report. And don’t check your calendar. I did say September. And yes, you’re on the right episode of Fed Watch. This data was originally due to be released on October 3rd. Here we are about a month and a half later, but finally getting these numbers. And it was a headline beat, 119,000 jobs created. The unemployment rate did tick up slightly as we had more folks entering the labor force. But what’s really critical here is that layoffs are still quite low. So as we’re looking at that balance of the labor market, this was a fairly strong result. We did see some areas of job losses. Those were concentrated, especially in the federal government, as well as in the transportation and warehousing segment. Now, the federal government layoffs, you might have set your calendar way back with all of those DOGE cuts with the buyouts that were offered earlier this year. And keep in mind, those were due to essentially hit us at the end of September. So after this data was collected, that is when we will see large numbers of federal workers falling off the rolls. So do expect another negative number, a job loss overall for federal workers going forward.

There were some gains though. A few of the big segments were in healthcare, which as we’ve discussed in the past, that’s not necessarily representative of the macro economy as a whole. Some good news though, food service and drinking places, so bars and restaurants had a pretty good result. That’s a pretty good signal for the US Consumer. And again, a little bit more getting at that key type of barometer for economic activity. Another large gain was made in social assistance, which again, like healthcare, that’s a little bit less where we would be more thrilled to see these gains.

I want to focus in though on the quality of data that we got out of this release. You might be thinking that since the government was shut down, no one was at work to be collecting this data and packaging it. And that is why it took a little longer to get this released. But it turns out that this report actually has unusually quality data in it. The reason for that is that the household survey that went out and the data were collected essentially normally before the government shutdown began. However, we also got during the month of September, during the shutdown, the self-reported data from businesses. So even though the government wasn’t functioning and these data collectors were not at their desks doing their job, businesses did self-report for the establishment survey. What that means is that with this additional time, more results have been able to roll in. So we actually have a much higher collection rate than is usual.

That’s pretty good news, especially when we consider that the BLS also announced today, yesterday, excuse me, that there would be no normal October data release. The household data just was not collected during October, during the shutdown, and it won’t be collected retroactively. So we will still get that establishment survey, again, that self-reported data coming from businesses. However, they’re taking a little extra time. They announced that this release will be delayed until December 16th. So what does that mean for the Fed? Well, first of all, with the, again, higher quality data that we got from the September result and what will necessarily be a little bit lower quality and lacking in some areas coming from October, we also won’t get that October result until after the Fed meets on December 9th and their rate decision on the 10th. So it turns out that this September result is actually very critical for that Fed meeting in December. Right now, this was again a quite strong result showing the labor market holding up quite well. So this is absolutely a vote in favor of holding rates at the current level rather than cutting in December.

We’ll see what other data comes in. We’ll be having our eye on some key inflation data in the weeks to come. But before I sign off today, I really just want to acknowledge something of an unsung group here at ITR. Much like the government shutdown limiting all of the data and causing a lot of consternation, I know you’ve been following us here at Fed Watch throughout this longest ever government shutdown, but it isn’t just us economists or those of us who get to be public facing and talk to you. We have an amazing team on our data side. They have been just working so hard to collect not only the data as it’s released, but to appraise our economist of when to expect this data, to be finding other proxy series from either private sources or just other available information. So I really want to give a shout out to our team. It’s Daniel, Jacqueline, Heather, Scott, and Katherine. You probably will never meet these people, but they are here collecting the data, packaging this up in a way that gives our economists the ability to tell you what’s coming next. So I hope whether you’re engaged with ITR in a consulting program, whether you’re a subscriber to our Trends Report, or whether you’re just following us through Fed Watch and TrendsTalk, that you know there is an amazing team doing quality work to bring you the best possible information and to really translate this in a way that can help you and help your business.

So stick with us as we wade through the aftermaths of this messy data collection period. I know our team is absolutely on it. They are absolutely spectacular. And I hope you’ll stick with us right here on Fed Watch.