Looks like the U.S. job market took a hit recently! New figures out on Friday show a sharp slowdown in hiring over the last three months, which has many people worried about how President Trump’s tariff tactics are affecting the economy.
In July, employers managed to add only 73,000 jobs, a stark contrast to the anticipated 109,000. Even past months weren’t spared; revisions for May and June showed a combined total of 258,000 fewer jobs than we originally thought.
As a result of these numbers, the unemployment rate ticked up to 4.2 percent from 4.1 percent in June. Not the best news for President Trump and his commitment to boosting employment!
Why This Report is Important
The U.S. economy has demonstrated resilience in recovering from the pandemic, typically supported by robust consumer spending. However, this latest jobs report raises doubts about its stability, especially as Trump intensifies his global tariff agenda.
Some experts fear that these disappointing job numbers are a warning sign of tougher times ahead for the economy. A weak labor report could push the Federal Reserve—to this point hesitant about changing interest rates—to consider rate cuts, possibly as soon as September.
Insights from the July Jobs Report
Looking closer at the data, the health care and social assistance sectors did quite well, contributing 73,300 new jobs. Unfortunately, this was overshadowed by government layoffs, including about 12,000 lost federal positions last month. We’re now looking at 84,000 fewer federal jobs compared to January’s peak.
Alex Jacquez, who used to work as special assistant to the president for economic development and industrial strategy, shared his thoughts with Newsweek. He believes that this jobs report clearly shows that Trump’s policies are holding back the economy.
“The big downward revisions for May and June confirm that the chaos in trade policies has negatively impacted the labor market more than we first realized, and it’s stopped a robust jobs market in its tracks,” he explained. Excluding health care, the U.S. has actually seen job losses for the last three months.
“On top of that, we haven’t seen any exciting resurgence in U.S. manufacturing jobs, which have been decreasing for three months in a row, not to mention stagnant construction jobs,” Jacquez added.
Michael Negron from the Center for American Progress, and also a former advisor on economic policy to the president, remarked to Newsweek that these disappointing job statistics come amidst worries about spiraling inflation, dwindling business investments, and sluggish consumer spending, indicating that the economy could start to buckle under the pressure of Trump’s tariff strategies.
Despite these not-so-great signs, Danielle Hale, chief economist at Realtor.com, believes there’s a silver lining: “the relative stability” of the unemployment rate shows resilience. Even as hiring slows, labor supply has also dropped, helping to balance the market.” She mentioned that earnings have climbed by 3.9 percent, which is a positive note amid the uncertainty.
The Fed’s Dilemma
Recently, the Fed, led by Chair Jerome Powell, decided to keep interest rates unchanged, despite ongoing criticism from Trump about the Fed’s hesitance to act.
After hearing the news from the jobs report, Trump took to his social media platform Truth Social to double down on his criticism: “Too Little, Too Late. Jerome ‘Too Late’ Powell is a disaster. DROP THE RATE! Good news is that Tariffs are bringing Billions into the USA!”
Interestingly, it’s not just Trump questioning the Fed; during the recent meeting, two of the Governors—Bowman and Waller—voiced their disagreement, wanting to lower rates.
Melissa Cohn, a seasoned figure in the mortgage industry, noted in an interview with Newsweek that the economy still looks like it’s “chugging along,” so the Fed might have no pressing reason to drop rates yet, although this new jobs report could complicate matters going forward.
