The April Jobs Report issued on Friday from the US Dept. of Labor was a solid report that gave 177,000 non farm jobs, an unexpected jump from the 130,000 predicted, and with an unemployment rate of 4.2 holding steady it seemed to be a surprise to many observers, especially economists, and many US residents, most of whom were expecting a steep decrease with the news, for months, of federal job cuts from the Department of Government Efficiency led by Elon Musk; but, those numbers are not reflected in this report, since those cuts predated the April data collection.
If March’s report was the calm before the storm, then this is a continuation of the same, and most importantly with the “on again, off again” tariffs promulgated by President Trump in his series of economic injunctions by executive order, as his tool, and not through Congress, the future of the US economy remains uncertain.
Indeed economic uncertainty has dominated the country for the last 100 days, and there have been steady predictions of financial doom, and fears of a recession; and, taking them in their entirety, there is just cause to worry, as the effects would be born by American consumers, especially lower income families who, as we noted last month, face increased expenditures of at least $1,200 each month.
Trump, however on Friday, reacting to the report, characteristically, remarked, “Just like I said, and we’re only in a TRANSITION STAGE, just getting started!!! Consumers have been waiting for years to see pricing come down,”
The Hill reported an anomaly cited by Trump when he added that “prices for gasoline and groceries were already far lower than federal and private-sector data shows.”
That aside, April showed consistency across key factors, such as labor force participation, racial and gender employment.
Areas that held strong were health care with an increase of 51,000; transportation and warehousing at 29,000; and, financial activities (a loosely defined category) with an increase of 14,000 job gains.
Especially notable was that there was no significant change in construction and manufacturing, coupled with LFP at 62.6 percent.
“Another stronger than expected jobs report is encouraging, although definitely not top of mind considering the ongoing uncertainty around tariffs and global trade,” Joe Gaffoglio, CEO and President at Mutual Of America Capital Management, wrote in a commentary, and reported by The Hill.
“While the labor market continues to be a bright spot, that could change quickly if the imposition of tariffs leads to disruptions in supply chains and global trade.”
Future tariffs, now, on Monday focusing on “foreign” made films, looming chaos for the American economy continues, but will also roil European markets, as well; and, with holiday retail buyers looking to fill the stores for the Christmas holiday, it is unlikely to be good news, especially since 80 percent of toys sold in America are made in China.
Trump has stated that girls may get two dolls instead of 30, this Christmas, and that they might cost more, scant consolation for parents, who are also facing higher housing costs, despite average wages for April coming in at $36.06, representing a 0.2 wage increase, and for the past year is up 3.8 percent, but, while that has kept up a solid pace overtaking inflation since mid 2023,” most working people do not feel positive about their future.
If perception is three tenths of the law, that wage increase may not mean much, and with many people believing that the American president controls and sets prices on groceries, and gasoline, the president may be in a crunch, and while his base has remained loyal, for the most part, recent polls show that between 52 and 53 percent of Americans believe that his handling of the economy is weakening their support.
Food prices are rising and a trip to even discount grocers show price increases, and the Dept. of Agriculture predicts that “food costs will rise faster than the historical average this year.”
With many food imports coming from Mexico and other foreign markets, tariffs will increase those costs, especially for discount super markets such as Aldi, who rely on foreign imports.
As The New York Times stated, “The vast majority of data analysts say the eventual effect of President Trump's high tarriffs on the labor market will be fully appreciated in the weeks and months to come, Still, the early impact is reverberating through financial markets, global freight patterns and corporate business plans.”
Currently, and this is a qualifier, as Trump has shown in his previous administration, a propensity to change course, they include 145 percent tariffs on China and 25 percent tariffs on Canadian and Mexican products not covered under the North American trade agreement.
There is a conundrum with the emphasis being on goods, yet the US economy is increasingly oriented “around services, which constitute about 70 percent of U.S. commercial activity,” said the Times, while noting that “good purchases still make up a major chunk if household spending, and more than 40 percent of U.S. manufacturers rely on imported parts or finished goods,” and we see this especially in the auto industry that has serious fears that their profits would be greatly diminished by the Trump tariffs.
The Times reported on Monday that, “The Trump administration has levied 25 percent tariffs on imported vehicles and auto parts. It has raised tariffs on imported steel and aluminum, which are used extensively in cars and trucks.”
Retaliatory tariffs are likely, and Ameicans can expect to pay more for a new car, and already there were long lines to buy new cars before the tariffs took effect, especially for foreign made vehicles which are 50 percent of those sold in the country.
The iconic American car maker Ford announced a profit loss, as reported by the Times, when they said, “Ford Motor said on Monday that the Trump administration’s tariff policies were likely to lower its 2025 profit, before interest and taxes, by about $1.5 billion. The company also dropped its forecast for the year, saying that predicting the future had become too hard.
Ford is less affected by President Trump’s 25 percent tariffs on vehicles than other automakers because most of the vehicles it sells in the United States are made in the country. General Motors said last week that the tariffs would increase its costs $4 billion to $5 billion this year.”
“This is a major shift in U.S. trade policy, especially as it affects trade between the United States, Canada and Mexico. For decades, cars and auto parts have been shipped across North America with little or no tariffs”, added the Times.
There is great fear “that consumers will cut back so aggressively that business will be forced to lay off workers, worsening the economic slowdown,” and with the triple digit tariffs on goods coming from China, a boon for lower income individuals and families, those bargain clothes, coming from Chinese companies such as Temu, Shein and AliExpress, increases affordability, as we noted in our March analysis, quoting an earlier news report, from the Times, acknowledging that while cheap Chinese goods do hurt American manufacturers, these lower priced goods, “are in effect a pay increase, leaving consumers with more money to spend on goods and services.”
The American consumer, the established driver of the economy, is already adjusting their buying habits, and a recent poll cited that 49 percent, nearly half of all Americans have “delayed or sped up purchases as a result. Those figures are far higher for Black (70 percent) and Latinor (71 percent) adults.”
While inflation has significantly lowered than in the past, it is slightly above what the Federal Reserve would like to see, at 2 percent, and core inflation for April was the lowest increase in nearly four years; and, as a reminder it strips out the most volatile components like gas, and energy, and is a key predictor for economists to track where inflation is headed.
Of equal concern is the contraction of the GDP last week to an annualized rate of -0.3 percent in the first quarter, according to the Commerce Dept. last Wednesday, the nation’s worst quarter since 2022, after Trump took office.
Trump blamed former President Joe Biden, saying that the US would have to get rid of the Biden “Overhang”, and that the decrease had nothing to do with the threat of tariffs, “only that he left us with bad numbers,” and urging Americans to be patient.
The Fed meets this week on May 7, and is unlikely to lower interest rates in lieu of this solid report, and will hold off any rate changes until there is less economic uncertainty; noting that current rates are holding steady at a range of 4.25 percent to 4.5 percent.
Again, the worst fear is that consumers will cut back “so aggressively that businesses will be forced to lay off workers, worsening the economic slowdown.”