• Federal Reserve Governor Michelle Bowman warns the central bank may be slow to recognize a significant slowdown in the labor market.
  • Recent data revisions show nearly 900,000 fewer jobs were created over the past year than initially reported.
  • Bowman signals a readiness to adjust monetary policy more rapidly if economic risks materialize.

Federal Reserve Governor Michelle Bowman expressed concern Tuesday that the central bank may be "behind the curve" in assessing a pronounced weakening in the U.S. labor market, suggesting that interest rate cuts could be accelerated if current risks worsen.

The comments, made during a speech to a banking group, point to a potential pivot in the thinking of one of the Fed's more hawkish members. They come just days after government data revealed substantial downward revisions to job growth figures. The revisions indicate the economy added approximately 900,000 fewer jobs from March 2024 to March 2025 than previously estimated, painting a picture of a much softer employment landscape.

"We are seeing signs that labor market conditions are cooling more rapidly than our models had projected," Bowman said, according to prepared text. "If incoming data continue to suggest that labor market weakness is persisting, we may need to adjust the stance of policy more quickly."

The warning follows a spike in initial unemployment claims in early September and a report showing federal employment decreased by 15,000 in August. Job growth has become increasingly concentrated in a few sectors, such as individual and family services, which added 16,000 positions, while broader measures show a steady deceleration.

Efforts to reach a Fed spokesperson for additional comment on Bowman's remarks were not immediately successful. A person familiar with the matter, however, said that internal discussions at the Fed have grown more focused on the labor market's trajectory in recent weeks.

The U.S. labor market has been a pillar of resilience throughout the Fed's aggressive tightening cycle that began in 2022. That strength, partly attributed by economists to the integration of new technologies and solid corporate fundamentals, is now showing clear fissures. Several market strategists have begun flagging rising recession risks due to the persistent softness.

For Bowman, a key question is whether the Fed is reacting with sufficient speed. Without a more nimble policy response, she suggested, the risk of a more significant economic downturn could increase. The central bank's next meeting is closely watched for any change in tone or direct action.

This article was updated to clarify that the job data revisions cover the period from March 2024 to March 2025.