It looks like former advisors to President Donald Trump are still coming out to bat for him. Gary Cohn, IBM vice chair and former National Economic Council director in Trump’s first term, said Sunday that “we’ve seen the job market degrade,” though he noted that it may be “temporary.”
“The Federal Reserve itself and the board of governors admitted that we are having a declining job market. And we see that,” Cohn said on “Face the Nation with Margaret Brennan.”
Last week, the Federal Reserve lowered its benchmark interest rate by 0.25 percentage points, in the first rate cut since December, amid slower economic growth and a stalling labor market.
“We came out of a tough situation in COVID where companies were actually afraid about being able to attract and retain people, so they were hoarding labor,” Cohn said. “So we went from a hoarding labor situation to a situation today where companies are being very aggressive about managing their expenses, and the one expense they can manage is the cost of labor.”
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In August, the U.S. unemployment rate rose slightly to 4.3%, reflecting a slowdown in job growth compared to earlier in the year. This increase signals a modest cooling in the labor market as employers become more cautious with hiring. While the job market remains relatively stable, the pace of new job creation has eased, indicating a shift away from the rapid growth seen in previous years.
In response to these labor market trends and persistent inflation, the Federal Reserve cut its benchmark interest rate by 25 basis points in mid-September 2025, lowering the target range to 4.00%-4.25%. This marked the first rate cut since December 2024 and reflects the Fed’s cautious approach to supporting economic growth while keeping inflation, which was around 2.9%, above its 2% target. The move signals a potential shift toward more accommodative monetary policy as the Fed monitors economic conditions closely.
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Cohn said companies are now “letting their labor force decline naturally as people retire out of the labor system.” He said in the data, “I think it’s clearly showing up, and the Federal Reserve recognized that in this week’s action.”
Cohn said he didn’t think this change is specific to tech, but “across the board.” He noted that he’s “heard it directly from corporate CEOs in every business line that they have gone out of their way to cut their human capital overhead.”
After a period of labor hoarding during the pandemic, companies are now focusing on managing costs, especially labor expenses, leading to a natural decline in workforce numbers as employees retire or leave. This slowdown in job growth and rising unemployment to 4.3% signals a cooling job market, prompting the Federal Reserve to respond cautiously with its first interest rate cut since December 2024.
The Fed’s decision to lower rates by 25 basis points aims to support economic growth amid persistent inflation near 2.9%.