Trump's job market is struggling, building the case for steeper Fed rate cuts
The report comes as both elevated interest rates and Trump’s sweeping tariffs weigh on an economy that depends on consumer spending.
The U.S. job market is showing signs of stalling, a troubling trend for the economy that strengthens the case for the Federal Reserve to begin slashing interest rates.
The Labor Department on Friday said businesses added just 22,000 jobs in August, the fourth disappointing monthly report in a row. The June numbers were also revised down to show that the U.S. actually lost 13,000 jobs that month — the first time that has happened since December 2020. Unemployment ticked up to 4.3 percent, the highest in four years.
And in a further blow to President Donald Trump, manufacturers continued to shed jobs, with employment down by 78,000 this year despite the administration’s drive to promote investment and growth in that corner of the economy.
The report comes as both elevated interest rates and Trump’s sweeping tariffs weigh on an economy that depends on consumer spending. For the first time since 2021, there are now more unemployed Americans than there are open jobs — even as the president’s immigration crackdown reduces the supply of workers.
“The impact of tariffs on hiring was undeniable,” said Joseph Brusuelas, chief economist at RSM.
White House economic adviser Kevin Hassett, in an interview on CNBC, called the numbers “a bit of a disappointment” but noted that August is a month that often has large revisions, suggesting that job creation may have been greater. He also cited growth in business investment as “exactly what you want to see.”
The slowing job market has fueled Trump’s relentless attacks on the chair of the Federal Reserve, whom he has dubbed “Jerome ‘Too late’ Powell” for refusing to lower borrowing costs.
But despite the gloomy report, there is some upside for the president. Not only does this increase the odds that the Fed will lower short-term interest rates by a larger amount this year, but longer-term yields — which are a key driver of mortgage rates — also dropped on the news.
The Fed had been holding off on rate moves as it assesses how much tariffs are pushing up prices and how much they are slowing growth. But Powell signaled last month that the central bank is now more worried about deterioration in the labor market than he is about tariffs leading to sustained inflation, suggesting a rate cut is likely in September.
He was cautious about signaling whether further cuts might be on the way. Now, pressure could grow for a jumbo cut this month, or a series of cuts.
The White House sent talking points to Capitol Hill Republicans on Friday afternoon, stressing that “President Trump is implementing the most aggressive pro-growth agenda in our country’s history” and focused instead on yearly job gains without mentioning the disappointing jobs report.
The note did acknowledge “headwinds from tight monetary policy and undoing the harmful policies of the previous Administration” but added that “businesses are investing” and “job growth will follow from this surge in investment.”
The House Financial Services Committee also sent out a message to its GOP member offices Thursday night about upcoming annual revisions to the jobs numbers and suggested the Fed should do a half a percentage point interest rate cut in September, instead of the quarter-point reduction that Fed officials have discussed and that markets expect.
It’s unclear how worrisome August’s number is because demand for employees has been slowing alongside Trump’s immigration crackdown, which has also reduced the supply of available workers, though the effect is difficult to measure with precision.
“We are in the dark here on how healthy 22,000 truly is,” said Daniel Zhao, chief economist at Glassdoor. But, “it gives us less buffer” against any economic slowdown, he said.
“There had been some optimism that the unemployment rate might stay relatively flat as job growth shrinks,” Zhao added. “This does point to a more concerning weakening.”
The Bureau of Labor Statistics itself has been at the center of a firestorm. Trump fired its head, Erika McEntarfer, after last month’s report showed that the labor market was much weaker than previously thought. The Trump administration has since highlighted a deterioration in data quality at the bureau, a situation that experts have attributed to budget cuts and staff shortages.
This week, Trump said the “real numbers” would come a year from now, when job growth would be “absolutely incredible.”
“You’re gonna see job numbers like our country has never seen,” he told reporters Thursday evening.
Democrats seized on the numbers to hammer Trump for his trade policies.
“Today’s jobs report was worse than the already low expectations,” said Senate Minority Leader Chuck Schumer in a statement. “This is a blaring red light warning to the entire country that Donald Trump is squeezing the life out of our economy.”
In Other Words..........Trump's Tariffs Is Proving To Be A DISASTER!!
The report comes as both elevated interest rates and Trump’s sweeping tariffs weigh on an economy that depends on consumer spending.
The U.S. job market is showing signs of stalling, a troubling trend for the economy that strengthens the case for the Federal Reserve to begin slashing interest rates.
The Labor Department on Friday said businesses added just 22,000 jobs in August, the fourth disappointing monthly report in a row. The June numbers were also revised down to show that the U.S. actually lost 13,000 jobs that month — the first time that has happened since December 2020. Unemployment ticked up to 4.3 percent, the highest in four years.
And in a further blow to President Donald Trump, manufacturers continued to shed jobs, with employment down by 78,000 this year despite the administration’s drive to promote investment and growth in that corner of the economy.
The report comes as both elevated interest rates and Trump’s sweeping tariffs weigh on an economy that depends on consumer spending. For the first time since 2021, there are now more unemployed Americans than there are open jobs — even as the president’s immigration crackdown reduces the supply of workers.
“The impact of tariffs on hiring was undeniable,” said Joseph Brusuelas, chief economist at RSM.
White House economic adviser Kevin Hassett, in an interview on CNBC, called the numbers “a bit of a disappointment” but noted that August is a month that often has large revisions, suggesting that job creation may have been greater. He also cited growth in business investment as “exactly what you want to see.”
The slowing job market has fueled Trump’s relentless attacks on the chair of the Federal Reserve, whom he has dubbed “Jerome ‘Too late’ Powell” for refusing to lower borrowing costs.
But despite the gloomy report, there is some upside for the president. Not only does this increase the odds that the Fed will lower short-term interest rates by a larger amount this year, but longer-term yields — which are a key driver of mortgage rates — also dropped on the news.
The Fed had been holding off on rate moves as it assesses how much tariffs are pushing up prices and how much they are slowing growth. But Powell signaled last month that the central bank is now more worried about deterioration in the labor market than he is about tariffs leading to sustained inflation, suggesting a rate cut is likely in September.
He was cautious about signaling whether further cuts might be on the way. Now, pressure could grow for a jumbo cut this month, or a series of cuts.
The White House sent talking points to Capitol Hill Republicans on Friday afternoon, stressing that “President Trump is implementing the most aggressive pro-growth agenda in our country’s history” and focused instead on yearly job gains without mentioning the disappointing jobs report.
The note did acknowledge “headwinds from tight monetary policy and undoing the harmful policies of the previous Administration” but added that “businesses are investing” and “job growth will follow from this surge in investment.”
The House Financial Services Committee also sent out a message to its GOP member offices Thursday night about upcoming annual revisions to the jobs numbers and suggested the Fed should do a half a percentage point interest rate cut in September, instead of the quarter-point reduction that Fed officials have discussed and that markets expect.
It’s unclear how worrisome August’s number is because demand for employees has been slowing alongside Trump’s immigration crackdown, which has also reduced the supply of available workers, though the effect is difficult to measure with precision.
“We are in the dark here on how healthy 22,000 truly is,” said Daniel Zhao, chief economist at Glassdoor. But, “it gives us less buffer” against any economic slowdown, he said.
“There had been some optimism that the unemployment rate might stay relatively flat as job growth shrinks,” Zhao added. “This does point to a more concerning weakening.”
The Bureau of Labor Statistics itself has been at the center of a firestorm. Trump fired its head, Erika McEntarfer, after last month’s report showed that the labor market was much weaker than previously thought. The Trump administration has since highlighted a deterioration in data quality at the bureau, a situation that experts have attributed to budget cuts and staff shortages.
This week, Trump said the “real numbers” would come a year from now, when job growth would be “absolutely incredible.”
“You’re gonna see job numbers like our country has never seen,” he told reporters Thursday evening.
Democrats seized on the numbers to hammer Trump for his trade policies.
“Today’s jobs report was worse than the already low expectations,” said Senate Minority Leader Chuck Schumer in a statement. “This is a blaring red light warning to the entire country that Donald Trump is squeezing the life out of our economy.”
In Other Words..........Trump's Tariffs Is Proving To Be A DISASTER!!
