June Jobs Reprt: Solid as a rock say some, others?

Holding strong the US Jobs report, released on Thursday, just before Independence Day by the Labor Dept. once again showed strength and resilience despite the “on again, off again” threat of tariffs, and, indeed, exceeded the expectations of most economists, with 147,000 non farm jobs when only 117,00 were expected.

The unemployment rate held steady at 4.1 percent, but  labor force participation was little changed at 62.3.

“You’re not just seeing any feed through for the tariffs as trade related stress,” said Joe Brusuelas, RSM chief economist to Yahoo Finance, and added, “We’ve got an absolutely solid payroll number,” but also gave this cautionary note, “This feeds right into the forecast of a slowing but solid economy.”

There is still economic uncertainty promulgated by President Donald Trump with his tariffs, first announced in the White House Rose Garden, on the so-called Liberation Day, albeit with the fuzzy math that international economists have criticized; and, all of which has not only caused consternation abroad, but for American consumers, the main drivers of the US economy, as they navigate prices from wedding gowns, (most of which are made in China), as well as steel, (ironically used to build Trump properties) and tariffs on aluminum that threaten a supermarket staple: canned goods.

All things considered equal, US employers have held back on hiring, but not enough for a deleterious effect, and with a steady hand on the tiller, the captains of industry are navigating threatening waters.

That aside, wages were up for June by 0.2%, an increase of 37 percent, which, for middle to high income earners allows them to deal with inflation, currently at 2.7 percent.

Overall what we are seeing is a smaller, but still robust, labor market that, much to the disappointment of Trump, will not allow for a rate cut, but as Priya Misra, a portfolio manager at JP Morgan Chase Asset Management told The New York Times, “There is no urgency, they can keep pushing it into the future.”

Stephen Miran, Chair of the White House Council of Economic Advisors, was ecstatic in the news as well as damning administration critics, when he stated, “Once again proving that the haters and doom sayers don’t know what they’re talking about.”

As reported in the past few months, the heavy hitters are local and state governments with 75,000 jobs, whose numbers may be possibly swollen from those approximate 69,000 federal workers sacked by Elon Musk and his DOGE team; leisure and hospitality at 20,000, education and health at 51,000 and construction increasing to 154,000.

Feeding the national trend with online shopping, transportation and warehouse jobs are holdings steady at 75,000,

The losers? Manufacturing which lost 7,000 workers, and who in April lost 1,000 jobs, and whose losses are caused by a myriad of factors: disturbances in the global supply chains, trade disputes, and tariffs, but also by American manufacturers who invest far less in process innovation, as do other countries, for example, Japan, who has invested, on the main, 55 percent more than Americans have, at last count 23 percent.

Taking a look at overall economic growth there are estimations of only 0.1 percent and 13 percent growth on a year to year basis, while other corporate think tanks, accounting firms, and private investment firms predict slower growth over the next two years, beginning this year between 1.5 percent and 2 percent; with much of that attributable to lowered consumer spending, business investment, and government policy, up to and including tariff policies.

The hits to the GDP (gross domestic product) are predicted to drift downwards by the fourth quarter of this year, with some predicting a recession, and by 2026 a fall to 1.7 percent.

Latest news on tariffs from the Trump administration is that ahead of the July 9 deadline letters will be sent to at least 100 countries that if they do not meet that deadline for trade negotiations, tariffs will revert back to the April 2 rates, between 10 and 50 percent, according to Scott Bessent, US Treasury Secretary, in an appearance Sunday on CNN’s “State of the Union.”

While it’s been long known that Trump is not a globalist, the results would further sever not only relations with foreign markets, and increase prices for their goods in the US.

Of course, the biggest news from the administration is that Congress approved is “Big Beautiful Bill,” his term, a signature piece of legislation that encompasses gnarly everything the president wants to achieve as part of his economic and cultural legacy, including making permanent the 2017 tax cuts, that mostly favor the very rich, with only modest income increases for the lower and middle classes.

The greatest concern among administration critics, including Democrats, is that to cement the expiring his 2017 tax cuts, the revenue needed to create them will be taken from a reduction in Medicaid to approximately 11 million people, and whose work requirements for certain recipients, seniors excepted, or volunteer work, and whose monthly reporting may prove onerous, especially to those tech challenged, or without access to the internet to file those reports may find themselves dropped and, the result will see a greater reduction in program coverage.

This coupled with cuts from the Supplemental Nutrition Assistance Program (SNAP) increases revenue enhancement, but will affect individuals, and families, especially those living in states with Medicaid expansion and in combination with the Affordable Care Act, has supported the health care needs of adults, and children, especially those with special needs, both developmental and genetic.

The result is that for those in these groups, their monthly budgets, already stretched thin, will be so even further as they attempt to fill the holes, and pay rent, or mortgages; despite the president stating that a family of four will gain at least $13,000 per year from the passage of this bill.

While economists disagree with him, and point to an assumption of an increase in the GDP, this bill can also affect employment in rural hospitals, since many may close, creating job loss; plus a crisis of care additional costs of care that might not be met by Medicaid, even if some remain open. Joining that concern is that one out of every four people in rural America are on Medicaid.

The biggest result of the bill, originally HR 1 from the US House of Representatives, adds a huge deficit to the US economy, as Factcheck.org noted in early May:

“The bill is certainly not the largest deficit reduction in nearly 30 years – it’s not deficit reduction at all,” Marc Goldwein, senior vice president of the nonpartisan Committee for a Responsible Federal Budget, told us in response to Leavitt’s claim. The increase to the deficit over 10 years will be $3.1 trillion with interest, according to CRFB’s breakdown.”

In response to the stated benefits from The White House, from Press Secretary Karoline Leavitt, they added, “The Tax Foundation, for instance, concluded, based on the version of the bill passed by the Senate Finance Committee, and accounting for the economic growth expected to be spurred by the bill, that the percentage change in after-tax income increases — on average – as income rises. For example, in 2034, those in the bottom 20% of earners are expected to see a 0.5% increase in after-tax income. That percentage increases to 2.6% for the next 20% of earners. Those with incomes in the middle 20% — who earn between $38,572 and $73,905 — would see a 3.5% increase in after-tax income in 2034. The largest increase — 3.7% — would accrue to those in the top 20%, the Tax Foundation said.”

In a further analysis of the aforementioned lower income population, “The Penn Wharton Budget Model looked at the effect of the Senate version of the bill on lifetime income, and factored in the effect of cuts to Medicaid and food assistance. Using a model that takes into account the expected economic growth from the plan, the PWBM found, “that households most affected by the cuts to Medicaid and SNAP — those in the bottom income quintile — experience the largest losses under this bill, averaging $27,500 in lifetime value for the working-age population.”

If the “Big Beautiful Bill”, or B3 as some has dubbed it, was the biggest news over the holiday weekend, then it bears looking at the role of the Federal Reserve, principally its chair, Jerome Powell who Trump has attacked over not lowering interest rates, and sending him damning handwritten notes and also with floating the idea of a shadow chair, possibly Bessent.

We have noted, over several reports over many months, that Powell is data driven and the data and the role of interest rates is dependent on macro economic basics, not political desires. And, one of Powell’s concerns, and data points, are tariffs, especially in their uncertainty; and, especially now with Bessent’s announcements, and effects on consumer prices, which history has shown, will see an increase.

March Jobs Report: the calm before the storm

For many economists the March Jobs Report released on Friday by the US Bureau of Labor and Statistics gave some restrained  squeals of delight, since it showed a higher than expected gain of 228,000 jobs, far less than the 135,000 many expected, and it also gave some concern for the future of two key areas: interest rate changes from the Federal Reserve, and the heavily promoted, but not yet announced, tariff program by President Donald Trump, and there was a collective tension among those whose job is to take the temperature on the American economy, the largest in the world; and, that palpable tension could be felt across the nation.

In and of itself, the report showed an unemployment rate of 4.2 percent, steady, slightly higher than previous months, but enough to give a measure of satisfaction, and against a background of interest rates holding steady at 4.25 to 4.5 percent created a background of sureness to those same observers.

There were some patterns that remained the same, ebbing and flowing, but fairly predictable in light of previous reports: government employment, swelling to 6,000; retail at 24,000 (in part ot the retreat of severe winter weather); 54,000 in health care; 23,000 for transportation and warehousing,all giving rise to a predictable report.

Wages were also up 0.3 percent with a year on year total of 3.8 percent year over year, and with current inflation, those would keep many heads above water, for the moment,

Trump weighed in, expressing joy, and in a post on social media, reported by The New York Times, saying in his characteristic all caps: GREAT JOB NUMBERS FAR BETTER THAN EXPECTED. IT’S ALREADY WORKING.”

This may have been premature but it is a typical response from the president, but like those prior months we see the main drivers leading in health care and social assistance, giving “a combined gain of 78,000”.

Revisions, which are a typical pattern by the BLS, now have January and February,  net gains of 45,000, but perhaps Joe Brusuelas, chief economist at the consulting firm RSM,who told the Times, possibly the best remark, avoiding optimism, and said, “What we are really seeing is the calm before the storm.”

That storm came swiftly on April 2, Liberation Day, as the White House titled the announcements of tariffs pegged to the US trade imbalance of 10 to 50 percent across the board and a hefty 25 percent on all foreign cars, pending the following week.

Reactions across the US and abroad were swift and negative, as it threw the global economy into disarray, and the specter of a possible recession; and the net results will affect not not only the tariffs that are paid by US importers; but most importantly, passed onto American consumers in the form of higher prices.

Just beyond, but no less significant, is the threat to long standing alliances with foreign countries, further jeopardizing future interactions with global trade.

Adding tariffs on steel and aluminum will crush the American, Canadian and Mexican auto industry with higher prices, and an exchange of  foreign parts, the result will be higher than average car prices, exceeding the average new US car price of $50,000.

While the Trump administration says its goal is to even the playing field and force foreign companies to make their products in the United States, that goal is hardly feasible, with tariff retaliation, and the near impossibility of suddenly reformatting global supply chains, which in the best case scenario could take years, and considerable expense.

There has been growth in some industries manufacturing in the US, under the Biden administration, yet that hasn't been mentioned by the Trump administration, as it steadfastly clings to its goals.

Considering the massive layoffs in the federal workforce, not reflected in this report since the BLS gathers its data points in the first two weeks of each month, it’s equally important to note that, while some are not technically fired, yet, due to being placed on administrative leave, caused by the Department of Government Efficiency, as a goal of firing even more federal workers.

 After the initial decimation of the US Agency for International Development there are planned workforce reductions of 83,000 employees of the Department of Veteran Affairs by the end of September of this year; 20,000 for the Internal Revenue Service, and a possible 1,155 for the Environmental Protection Agency, among many others with a possible total of 40,000 workers, 80% of them living and working outside of Washington, DC, with a resulting devastation not only to working families, but their local economies.

While there has been rampant criticism of the influx of cheap Chinese goods to the US yet many of them principally clothes, from tee shirts to sweaters have actually been a gain for lower income families, and as an earlier report from the Times noted, “lower prices are in effect a pay increase, leaving consumers with more money to spend on goods and services.”

With widespread price increases, low income families, the poorest, will see a double whammy and Marketplace.org reported, “The Yale Budget Lab also estimated [among other cost increases] that Trump’s tariffs alone will slash disposable income in the poorest households by at least $,1700 a year. Simply put. The lowest income households spend more money on necessities.”

Furthermore, they added how higher grocery prices will affect the same households, noting that the top half of higher income households spend about “10% of their income on food,” but noted Tim Richards, an agribusiness professor at Arizona State University, “But, if you look at the lowest 20% of income earners, they spend 30% of their income on food.”

The national media has been awash in criticisms of the president, but even some conservatives have criticized the formula that the White House has used and as Axios has reported:

• “The administration's calculation assigns a value of 0.25 to that variable, which in the math of price elasticity suggests most of the tariff impact does not hit the import price of an item as it enters the country.

• But the AEI paper says they used the wrong value for import prices, and instead used the value for a retail price, or what happens to the final consumer price after the good is imported and distributed.

• They argue, instead, that the right value is 0.945 — in other words, almost all of the tariff hits the import price of a good as it's brought into the country.

• "It is inconsistent to multiply the elasticity of import demand with respect to import prices by the elasticity of retail prices with respect to tariffs," the authors write.

Supporting the formulaic errors, FactCheck.org discussing tariffs, expanded these assertions by claiming that the formula used on the chart that Trump held aloft in the Rose Garden, is self created,”Those listed numbers are simply not tariffs, but some other made up measure based on a formulaic trade deficit calculation,” noted Kimberly Clausing, a nonresident fellow at the Peterson Institute for International Economics, told us via email. “In almost every instance countries’ true trade barriers are far, far lower.”

What worries people most, not only in the US, but across the world is that these tariffs will create a global recession, and as we have seen the stock market drop in the thousands, not seen in 5 years, these fears are justified.

Paradoxically the president said on Monday, from Air Force One, that he doesn't want to see “anything go down,” but suggested that we have to take a little bad medicine to make things good.

Commerce Secretary Howard Lutnick has said that these tariffs and fiscal policies are “worth it” even if they cause a recession, reported the Times, and his position was seconded by Treasury Secretary Scott Bessent who added that the economy might need a ‘“detox period” after becoming dependent on government spending.”

Good, however, may be a relative term with many working families, and even the more affluent facing financial  challenges that will affect retirement savings, children, or grandchildren’s education, among other things.