Still on the scenario is economic uncertainty, with the tariffs, on over 90 countries, that Trump has put in place, and once again, the effect on the domestic market is that employers are not going to increase hiring with the prospect of having to increase prices on goods purchased in whole, or in part from foreign markets; and also places the global economy in jeopardy as we have seen since that April announcement in the White House Rose Garden and now India, an important trading partner, faces an eye watering 50 percent tariff on its goods.
Earlier this year American companies relying on imported goods, or parts, stockpiled them to delay passing the cost of tariffs onto customers, but that stockpile may be running out and some American manufacturers reliant on everything from foreign made zippers are becoming increasingly nervous on how and when they have to increase customer prices.
Meanwhile higher income earners and households are managing, due to higher wages that increased by 0.3 percent, or $36.53, that are keeping pace with inflation, while the threat to lower income households is dire as they face those still high grocery prices; and, with the increased tariffs on Brazil of 40 percent, that morning cup of coffee, whether made at home, or bought at a coffee shop is going to cost a good 30 percent more.
This week an appeals court found that some of the Trump tariffs are illegal and while the case is going to the Supreme Court, on appeal by the White House, it’s no sure bet; and, in such a high stakes area, that the Court, filled with many Trump loyalists, will rule against him; but,Trump has until October 15 for that appeal process to begin.
If he loses there are still workarounds that he can effect tariffs but with Congressional oversight, and not the free hand that he wants. But, it’s also important to keep in mind that in nearly all areas since his second term has begun, the president has ignored the courts and with the help of other GOP stalwarts has placed many loyalists on the courts, not just the Supreme Court, and he will undoubtedly try to wrangle a victory somehow to keep these tariffs in place.
Globally the United States has taken a hit on its once international dominance gained after World War II, (an 80 year period) and is now over, opined the Financial Times in May, where the author noted, “President Donald Trump is tearing down what remains of the edifice with unparalleled speed and recklessness. Even in the unlikely event that American democracy emerges unscathed from four years of Trumpian revolution, so far as relations between the US and its allies are concerned it will be “never glad confident morning again” (to quote Robert Browning's The Lost Leader).
Domestically, the heavy hitters are health care that logged in at 31,00 but also well below the national average gain of 42,000 over the previous 12 months and significantly there were increases of 13,000 in ambulatory health care services burying, care services and facilities at 9,000 and at the same rate for hospitals, perhaps a reflection of the aging of America, a fact that will only increase with many people living much longer lives than their predecessors.
Notably with the drastic cuts in federal employment there has been a continued decline, at a loss of 15,000 and down by 97,000 since its peak in January and, as noted in prior months, manufacturing declined at 12,000 down by 78,000 over the year.
An important demographic for these firings are Black professional women many of them with decades of experience and the requisite degrees to support their work, and as a recent New York Times piece noted:
“While tens of thousands of employees have lost their jobs in Mr. Trump’s slash-and-burn approach to shrinking the federal work force, experts say the cuts disproportionately affect Black employees — and Black women in particular. Black women make up 12 percent of the federal work force, nearly double their share of the labor force overall.”
“The most recent labor statistics show that nationwide, Black women lost 319,000 jobs in the public and private sectors between February and July of this year, the only major female demographic to experience significant job losses during this five-month period, according to an analysis by Katica Roy, a gender economist.
While on the surface, the administration has said these hirings were reflective of DEI hires, in reality, “The department, [Education] more than a quarter of whose work force was Black women, suspended dozens of people whose job titles and official duties had no connection to D.E.I. Their only apparent exposure to D.E.I. initiatives came in the form of trainings encouraged by their managers — including Mr. Trump’s former education secretary, Betsy DeVos.”
“The A.C.L.U. and a group of employment attorneys alleged that among other things, the dismissals “disproportionately singled out federal workers who were not male or white,” in violation of Title VII of the Civil Rights Act.”
Furthermore, “Kelly Dermody, one of the lawyers representing the plaintiffs, said that of the workers who sought legal help to challenge their dismissals, 80 percent were people of color, and the majority were Black women.”
“When an organization goes after really, really highly competent, singularly great, Black women — the message it sends, the terror it sends to every other professional woman, person of color, really is so profound,” she said.”
Returning to the report, one figure that is closely watched, the labor force participation remained little changed at 62.3 percent, and is bound to be considered by the Federal Reserve as it continues its twin mandate of inflation at below 2 percent, and full employment but, while this figure has not wavered much, currently at 2.7 percent, the overall cooling of the jobs market cannot be overlooked.
It should be noted that the White House in the person of Trump fired the BLS manager, Dr. Erika McEntarfer last month because he felt, without evidence, that last month’s figures, which showed the beginning of the cooling down, and revisions of early reports were cooked, to reflect a bias against him; and, to that effect has nominated a new commissioner, EJ Antoni, a proven loyalist.
CNBC reported. “Earlier Friday, Commerce Secretary Howard Lutnick told CNBC’s “Squawk Box” that BLS jobs reports will be more accurate with McEntarfer gone, because “you’ll take out the people who are just trying to create noise against the president.”
Taking an overall view of why the jobs market is cooling are not only the role of tariffs but the loss of workers, not simply those who are on the margins, seeking work but also the drain from the deportation of immigrant labor, both legal and undocumented, and as Pew Research has shown, significant areas where they dominate, but overall, represent 20 percent of the US workforce, and notably 30 percent in construction, 45 percent of agricultural workers, and 24 percent of all service workers.
Costs, even on a one time basis, for the deportations will cost the US a total of $315 billion dollars as Newsweek reported, from the American Immigration Council, with others estimating a cost of $88 billion per year.
Taking the above into consideration, we are seeing a 4.3 unemployment force with a net reduction of immigrant labor, plus reluctant employers holding off on hiring, which gives a lowered unemployment figure that a casual reader might not be aware of; with a total loss of 750,000 immigrant workers.
The bull in the china shop is inflation, and with next Thursday’s report all eyes will be laser focused on the Fed, as it makes any interest rate decisions.
As has been well known the president is after Federal Reserve Chair Jerome Powell to lower interest rates and has resorted to public name calling, accusations of cost overruns on the headquarters, and in his latest move to wrest control of the Reserve from, its traditional independence from politics, has fired Lisa Cook, the first Black woman to serve as a Reserve governor on a past mortgage application, a charge that she denies, and as The New York Times reported “by forcing out sitting governors, the president could appoint a set of loyalists who share his desire to lower interest rates which the central bank has kept steady in response to persistent concerns about inflation.”
The 3 percent reduction from its current range of 4.25 to 4.6 that the president wants could lead, say many economists, to stagflation, “where prices spike, companies lay off workers, and consumption craters. In that scenario, the Fed would be left with two bad choices. It could cut interest rates to shore up the economy, and risk stoking inflation. Or let the labor market flounder, while getting inflation under control.” said the Times.
Ms. Cook has said she has “no intention of being bullied,” and there are doubts whether Trump could fire her under current legal parameters.
Meanwhile Powell has hinted, say some, that there could be a lowering of interest rates based on the report and dial back on earlier restraints that had been in place, although it’s clear the “soft landing” that he had earlier desired was achieved and gave the US economy stability.
