The labor market is showing big cracks that were invisible just weeks ago

Note: The Labor Department estimates monthly jobs gains three times. The chart above shows the government's first and last estimates. Only two estimates are available for June, while one estimate has been released for July. Data: Bureau of Labor Statistics; Chart: Axios VisualsAmerica's remarkably resilient labor market was a mirage. Hiring came to a screeching halt in the last few months, suggesting more underlying economic weakness than it seemed.Why it matters: It's rare that a single report drastically shifts our understanding of the economy's health, but that's what happened Friday at 8:30am ET.As of 8:29am, the official data pointed to a steady-as-can-be job creation through June, and analyst forecasts had it continuing in July.Now, the largest two-month negative revisions on record — second only to May 2020 — point to a virtual flatlining of job creation in May and June. The July number also came in softer than expected.The result: An average of only 35,000 jobs were added per month from May through July. That's the weakest non-pandemic three-month job creations since 2010.Between the lines: Policymakers who have been assuming that the economy is chugging along fine will suddenly need to rethink their assumptions.By the numbers: The economy added just 73,000 jobs in July. But the real shocker is the massive downward revision to prior months' data that shows employment has barely budged since April.There were 19,000 jobs added in May, not the 144,000 gains that were initially reported. In June, the economy added 14,000 jobs, well below the initial estimate of 147,000 jobs.The unemployment rate ticked up as well, to 4.2% from 4.1%, though that keeps it in the low, narrow range where it has been all year.What they're saying: "Today's report, coupled with sharp downward revisions to the prior two months, makes it clear: job growth has stalled," Olu Sonola, head of U.S. economic research at Fitch Ratings, wrote in a note Friday."The labor market has now shifted from a low-hiring, low-firing environment to one characterized by virtually no hiring."The intrigue: The economy is in the midst of population shifts as the Trump administration cracks down on immigration. That might help explain the huge revisions; people who are deported, or who stay away from their workplace to avoid raids, do not show up on payrolls.It also might explain why hiring is stalling but the jobless rate didn't deteriorate nearly as much; companies can't hire workers who are not available. The labor force participation rate, the share of adults with a job or looking for one, is 62.2% as of July — a half-percentage point lower than the same period a year ago.Flashback: In response to a question from Neil earlier this week, Federal Reserve chair Jerome Powell said that the unemployment rate might be a more reliable indicator of the labor market's health."The main number you have to look at now is the unemployment rate," Powell said on Wednesday, and added that demand for workers has slowed but so has the number of workers the economy needs to add to keep the unemployment rate steady.For the record: "This jobs report isn't ideal," Council of Economic Advisors chair Stephen Miran told CNN on Friday morning. But, Miran said, "it's all going to get much, much better from here," pointing to more certainty on fiscal and trade policy.The bottom line: The labor market is showing big cracks that were all but invisible just weeks ago.

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