July Jobs Report shows a loss

Friday's July Jobs report from the US Labor Department sent shock waves reverberating across a range of people in government, universities, think tanks, banks and Wall Street with the loss of 23,000 jobs; but, in actuality, as the report stated things “changed little,” from June, but, in and of itself, with standard revisions and no rambunctious hiring, the loss was not a great surprise. It is worth noting that just under 70 percent of businesses responded to the government survey, the highest in more than two years, despite a loss of respondents over the long term, making this report especially significant for evaluation.

Those customary revisions showed April and May down to a cumulative loss of 103,000 bringing the monthly average for this year to 60.000 gains.

For some observers there was hope that with the March and April reports seeming to show a surge in hiring, that July was destined to sustain that growth. Even with that in mind, a review of the recent economic landscape of the US shows sustained blows to not only employment, but the immigration crackdown that deported hundreds of low skilled labor,  the yo-yo tariffs, and the Iranian war - in particular - things could have become much worse.  The current round of talks is not guaranteed to open the Strait of Hormuz freeing the transport of oil and fertilizer, important components of transportation, and production across the world, but especially in the US where gasoline prices, on average, have been as high as $4.69 per gallon of regular gasoline.

The unemployment rate at 4.1 is also little changed, but there is legitimate concern that further employment losses joined with the high rate of inflation and its effect on interest rates can cause headaches from Main Street to Wall Street as hundreds of American working families face not just high grocery and gasoline prices, but expensive costs for housing, whether buying, or renting, especially in urban areas, showing that affordability is not a political buzzword.

“We have a labor market that’s stable but stuck in second gear,” said Lydia Boussour, a senior economist at the consulting firm EY-Parthenon. “We still have an environment where those supply shocks are working their way through the economy, and a lot of uncertainty, and that will keep businesses cautious in hiring,” reported The New York Times.

While companies are not slashing payrolls, the “low hire-low fire” atmosphere cannot remain indefinitely, just as an economy sustained by high income consumers is not viable as it threatens to jettison the middle class.

“This kind of equilibrium can’t hold indefinitely. A market frozen between low hiring and low firing is only stable as long as nothing pushes on it. Should demand soften, the lack of hiring leaves no cushion to reabsorb workers who lose their jobs, and what now reads as a quiet labor market could tip into a rising unemployment rate quickly. The low-hire, low-fire dynamic has been remarkably durable, but durability isn’t permanence. The longer it persists, the more it’s worth watching for the first sign of which direction it finally breaks,” as we reported from the Hiring Lab in May,

One aspect getting a lot of attention in the last few months are hourly wages which “grew 3.5 percent 3.2 percent over the year, the slowest pace since May 2021 and likely less than the rise in prices over the same period,” added the Times.

Current inflation as of this date is 3.5 percent, down from 4.2 in May, according to the US Bureau of Labor Statistics.

The July price index will be released on August 12, and that will be a bellwether for further analysis, and predictions for the American economy.

One move that will please the White House is the growth in construction, but that is focused less on residential, but more on the construction of those controversial AI data centers, to the tune of 22,000 jobs; but, even with environmental concerns on water and electricity usage, this horse is out of the barn and is unlikely to return.

“There is no parallel in American history for the boom underway in the construction of data centers, fueled by companies with functionally unlimited cash that are racing to supply skyrocketing demand for their A.I. models, “ reported the Times.

According to Kush Desai, a White House spokesman, who said in a statement, “The Trump industrial resurgence is on schedule,” and is “unleashing more private-sector growth through President Trump’s proven economic agenda of tax cuts, deregulation and energy abundance.”

“It’s a sharp reversal from what we’ve seen in the past,” said Glassdoor chief economist Daniel Zhao. exercising some caution by saying “It’s also coming at a time when there’s an incredible amount of hype in the tech industry around data centers, and it’s just not showing up in the employment numbers.”

Healthcare is still reigning supreme in job growth, and, with our ageing population, is bound to continue; but, in some geographic areas, especially in the South, many of these jobs will suffer a loss with the end of the Temporary Protection Status for Haitians who make up a considerable bulk of health care employees, especially in nursing homes. This may have accounted for a slower growth of 22,000 jobs.

Of equal concern, especially to the Federal Reserve, is the Labor Force Participation rate, for workers between the ages of 25 and 54, and while July gave only a slight increase of 61.4, the employment ratio of 58.9 decreased by 0.4 percentage point. 

June showed a fall of six tenths of a percentage point, for the LFP, the largest “one-month drop in more than 70 years outside of the pandemic,” bringing the total net loss of the LFP to a decline of 0.7 percent since January,

Also falling is the leisure and hospitality industry, as American families, and individuals, face higher inflation, and with weakened wage growth, those dinners out, hotel stays, and bar events are taking a downward trend from a once solid area of growth (it dominated for many months) with a loss of 80,000 jobs, which didn’t get the anticipated World Cup bump.

Threatening to eat further into American pocketbooks are tariffs which have taken a new turn after the US Supreme Court, in February, struck down the tariffs that President Trump had created under the International Emergency Economic Powers Act; and, on July 23 using a broad interpretation of Section 301 the US is adding tariffs “relating to forced labor that covers over 80 trading partners. The Tax Policy Center (TPC) estimates that these finalized provisions will raise $581 billion over 2026-2036 (less than the draft version of the tariff). The rate varies from 10 to 12.5 percent and is applied preferentially for certain trading partners, many of whom have previously signed a trade agreement with the administration.”

Critics have been quick to point out that this is a pretext from the administration to reestablish the tariffs that SCOTUS eliminated,

Earlier in June there was a fresh round of taxes on Canada: three new tariffs for 554 Canadian products, “citing Section 338 of the Tariff Act of 1930 for the first time” and covering alcohol, dairy and related goods, wood, electronics, furniture and plastics, hockey equipment, among other goods, including clothing, games, and art, all set to begin August 19 unless reduced, or modified through pending negotiations between the two countries.

“Prices for the goods affected by these new tariffs, and others in train, could start rising in the runup to the November 2026 midterm election. Many of the affected goods are currently subject to zero or very low tariffs, under the USMCA, other trade pacts, and the US tariff schedule bound in the World Trade Organization,” reported the Peterson Institute.

American households could in effect face a $920 tax rate per household;and, for the bottom quintile the tax rate will rise by 0.8 percent points, and 0.6 percent for the top quintile according to TPC estimates.

With growing uncertainty about the tariffs urban centers such as Chicago have seen less economic growth than forecasted, due to tariffs and high borrowing costs late last year, and with these new tariffs looming on the horizon its effect on employment is bound to reverberate, as they did in 2025 when Gus Faucher, PNC Chief economist told Crain's Chicago, “There are a lot of interest rate-sensitive industries in Chicago, a lot of internationally focused industries in Chicago. And so tariffs, high interest rates have been more of a drag on Chicago than in the national economy."

Interest rates continue to be a hot topic for observers and at its last meeting the Federal Reserve Open Markets Committee has kept rates the same as it did last month holding them at 3.5 percent to 3.75 percent, but there was dissension with three members saying that borrowing costs should have been raised to ease inflation.

That traditional 2 percent target range for inflation “has overshot that level for half a decade and has moved further away from it over the past year; not only because of the Iran War but also President Trump's tariffs and other factors,” reported the Times.

Price stability is a concern of new Fed chair Kevin Warsh, but so far we have not seen how he will deliver it despite his statements to make price stability the main focus of his tenure.

In July before members of Congress he said,”When prices go up, I know it hits your constituents every day. I'm not trying to sound dismissive of it, but I also don't want to say that there's much that we can do about cattle prices or milk prices today. But there's a lot we can do to make sure that the entire grocery aisle doesn't have higher prices, and that's what we're committed to do.”

US Supreme Court blocks Trump tarrifs

Friday’s news from the US Supreme Court that President Trump’s use of tariffs under his use of the International Emergency Economic Powers Act was unlawful came as a shock to much of the public, but some economists say they were not surprised, while others say that position might be one of cynicism rather than reality. But, no matter how it is termed, this represents a strong push-back on what has been seen as a legislative acquiescence to the demands of Trump since he began his second term.

“We claim no special competence in matters of economics or foreign affairs,” Roberts elaborated in his 21-page written opinion. “We claim only, as we must, the limited role assigned to us by Article III of the Constitution. Fulfilling that role, we hold that (the International Emergency Economic Powers Act) does not authorize the President to impose tariffs."

Along with immigration, tariffs have been a keystone of his administration, and also a campaign promise that the US would be very rich from them, But taken with tax cuts for the wealthy the lost revenue must be made somehow, and this was a major source of revenue, now compromised.

The blow to importers in the US that paid what is in effect a tax, was in most cases passed onto American consumers, and while some companies stockpiled products ahead of their implementation, many smaller business could not, and many families were paying more than they wanted for them and, on the back of higher grocery prices, and increasing housing costs the president has received increasingly negative poll ratings on his handling of the economy.

To no one’s surprise Trump, in less than five minutes after the 6-3 decision was announced he stated that he would still levy global tariffs. As The Hill reported, “Even so, Trump still has plenty of power to impose new tariffs to replace the old, and he is warning trading partners against celebrating with his critics.”

“Any Country that wants to ‘play games’ with the ridiculous supreme court decision, especially those that have ‘Ripped Off’ the U.S.A. for years, and even decades, will be met with a much higher Tariff, and worse, than that which they just recently agreed to,” Trump wrote Monday in a post on Truth Social.”

“Trump had used the IEEPA to impose tariffs on Canada, Mexico and China soon after taking office last year, claiming those countries had not done enough to stop fentanyl trafficking into the U.S.,” the report added.

In April of last year, on the so-called Liberation Day, Trump’s announcement in the White House Rose Garden, themselves questionable in their calculation brought uncertainty not only to global markets but the aforementioned consumers, and the fallout caused the zigzag pattern of tariffs, on again, then off again, causing as much concern on Wall Street, as well as Main Street.

Now there are calls for refunds from American companies as well as politicians, and state leaders such as Illinois Gov. JB Pritzker who has called for a check to be cut for refunds to Illinoisans.

On Monday, NBC News reported that “FedEx today filed a lawsuit against the Trump administration, seeking a “full refund” of all tariffs it paid to the government under the overturned International Emergency Economic Powers Act.

“Accordingly...Plaintiffs seek for themselves a full refund from Defendants of all IEEPA duties Plaintiffs have paid to the United States,” lawyers for FedEx wrote in the lawsuit lodged at the Customs and Border Protection Agency in the United States Court of International Trade.”

Going ahead, the picture looks murky and in the same report from NBC we have “House Speaker Mike Johnson, R-La., [who] said today that the House was not likely to get on the same page when it comes to legislation on tariffs.

“We have a wide range of opinions on this topic, so I think it’d be difficult to build consensus around it, but we’ll have to see,” Johnson said.

Asked if Congress should take the lead on tariffs now that the Supreme Court has issued a ruling, Johnson said the House would “wait and see what the administration does with the executive authority” regarding tariffs.

“As I’ve said, it may take a couple weeks to sort all this out, given the Supreme Court opinion, so we’ll see,” Johnson said.

According to the Associated Press, “Trump has already signed an executive order enabling him to bypass Congress and impose a 10% tax on global imports, starting on Tuesday, the same day as his State of the Union speech.”

Taking a closer look at Trump’s next move, Yahoo Finance reported, “On Friday, he imposed a "global" tariff under Section 122 of the Trade Act of 1974. That statute allows the president to impose tariffs of up to 15% for up to 150 days to address trade deficits. After 150 days, Congress would need to approve any extension. That authority, however, has never been used to impose tariffs,” and is predicted to be a cumbersome process.

“On Monday, the US Customs and Border Protection agency said that it will stop all collections of tariffs imposed under the International Emergency Economic Powers Act (IEEPA) as of 12:01 a.m. EST on Tuesday. The agency said in a message to shippers on its Cargo Systems Messaging Service that it will deactivate all tariff codes associated with President Trump's IEEPA-related ‌orders.”

Ratification of the US trade deals from last year with the European Union are now pending, waiting for clarification. Yahoo Finance reported, "Tariff rates on goods negotiated separately, such as steel, automobiles, pharmaceuticals, semiconductors, critical minerals, and agricultural products, aren't impacted by the Supreme Court's decision and will remain in place."

In characteristic fashion the president lashed out against those justices that voted against him, and, “calling them “fools and lap dogs” and he suggested that two he had nominated during his first term — Justices Neil M. Gorsuch and Amy Coney Barrett — were “an embarrassment to their families” because they didn’t take his side,” according to The New York Times.

While the embattled president engages in his Plan B, according to some on Capitol Hill, he faces this from the NBC/Marist polls: “As of February 2026, a NPR/PBS News/Marist poll shows a record 59% of Americans disapprove of President Trump's handling of the economy, the highest in his terms. Only 36% approve, with 56% believing his tariffs hurt the U.S. economy. Key concerns driving this sentiment include inflation, cost of living, and the potential for a recession. “

Last April the president said that his goal was to even the playing field and force foreign companies to make their products in the United States, but that goal was 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. And, now we see the reality of those lofty goals, failure, rebuttal from the Supreme Court, and anger from those who expected more, and got less.

“The Supreme Court just confirmed what we already know. Trump’s tariffs are illegal. He did it without the support of Congress or the voters, and you paid the price,”  Gov. Pritzker said in a short video posted on the social platform X.

He claimed Trump “illegally took $1,700 from every American family,” a figure that falls within the range cited in Yale Budget Lab research from March of last year, which projected an average household loss of between $1,600 and $2,000 due to the tariffs.

“That’s a tax on working people. Donald Trump now owes you a refund for every dollar of it. America’s working families deserve a refund. Cut the check, Donald,” Pritzker added in a report from The Hill.

Notably, they added, “The governor, who’s been floated as a possible 2028 presidential contender, demanded in an accompanying letter that the president issue refunds of that amount to more than 5.1 million households in Illinois, totaling nearly $8.7 billion.”

January Jobs still strong despite a decline

The January Jobs report from the US Labor Department on Friday showed a slight dip in the non farm jobs, and this from an expected 175,000, a figure that would have aligned it with the private payroll firm ADP in its Thursday reporting of jobs in the private sector. But, as it was, the 143,000 did not reveal upon examination a weakening of American employment, in fact it showed much of the same detail as the prior months: strong hiring in government, leisure retail trade and hospitality, and the general unemployment rate, what we refer to as the marquee rate, which dipped down to 4.0.

What was remarkable about the report was that, other than the lower figure, it was not remarkable, in fact it has shown a steady stream of numbers that has given a consistency that is remarkable under varied market forces, political winds, and a weakening consumer confidence.

The same data points of prior reports are here; both for the unemployed and its continued litany of sameness: no change along racial or gender; the long term unemployed; those working part time hours that wanted full time work, people that were not in the workforce that wanted a job, and perhaps most significantly for policy wonks, as well as economists, the labor force participation rate which has remained the same at 62.6 percent.

Taking a look at the winners we see health care that added 44,000 jobs, but also showed gains in hospital work of 14,000; retail which enjoyed a good holiday earning margin , ratcheted up to to 34,000 in January; and social assistance added 22,000 jobs, that was “led by individual and family services of 20,000; and government employment held at a steady rate of 32,000.

This is all solid stuff, and for those looking for clouds in the silver lining they are not finding it. For example, it was expected that the fires in Los Angeles County, and the frigid temperatures that much of the nation faced, would be a factor, but DOL ruled this out when it said that these events had “no discernible effect” on employment. Of course, it was also noted in the household survey that record numbers of these workers were absent from their jobs.

While layoffs were up by 28 percent from 38.792 from December of 2024, according to Challenger, Gray and Christmas, they also reported that there was a decrease below 40 percent from the 82.307 from January of 2024.

All in all, most economists agree that, "There is still much to like about the U.S. labor market's resilience and sustainability," said Scott Anderson, chief U.S. economist at BMO Capital Markets, reported Reuters; and he noted, "This report cements the view that the Fed could be on hold for a considerable time before cutting rates again."

In fact, most market observers are saying just that, and there are some that are saying that any rate cuts might occur in mid-year, but at this point that is only speculation.

It bears to remember that the Fed cuts rate in response to the state of the economy: when it overheats and there is threat of inflation, rates are increased, when it cools down and needs stimulation, rates are cut to increase spending, and at this point in time, we are not seeing either scenario to dictate cuts or increases. 

“The Fed left its benchmark overnight interest rate unchanged in the 4.25%-4.50% range last month, having reduced it by 100 basis points since September, when it embarked on its policy easing cycle. The policy rate was hiked by 5.25 percentage points in 2022 and 2023 to tame inflation,” added the news agency.

Taking a broad view, this is a healthy labor market and especially noting that average hourly earnings hit a high of 0.5 percent, “the most since August, after gaining 0.3 percent in December; and, more than enough to meet inflation.

Consumer confidence is a factor that many are examining, and especially the Fed, and in a press statement, The Conference Board, said, in part, the following:

“The Conference Board Consumer Confidence Index® declined by 5.4 points in January to 104.1 (1985=100). December’s reading was revised up by 4.8 points to 109.5 but was still down 3.3 points from the previous month. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—fell sharply in January, dropping 9.7 points to 134.3. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—fell 2.6 points to 83.9, but remained above the threshold of 80 that usually signals a recession ahead. The cutoff date for preliminary results was January 20, 2025.”

As has been noted before the sentiments of the American consumer can loom large, both in perception, one tenth of the law as the old adage states, but if we have the good news, then consumers may see a different reality than that of economists, and even the Labor Dept.

Doing a deep dive into methodology, and statistics, there is a New methodology by DOL for the household survey has resulted in an incomparable reporting of the unemployment rate from December, now at 4.0%, its lowest since May.

One word of caution coming from The New York Times, “James Knightley, chief international economist at ING, has an interesting data point on the “quality” of the jobs being added. Initially, he noted that 78 percent of all U.S. jobs created since 2022 came from only a handful of sectors: government, leisure and hospitality and private education and healthcare. Following January’s revisions, that share has jumped to 88 percent. He adds, “We believe those three sectors tend to be lower paid, less secure and more part-time.”

Politically speaking, the Trump White House has eviscerated the 2024 job gains of the Biden administration, but, in truth, despite the larger revisions of the end of the 4th quarter, there was more substance than they might want to acknowledge, “And while job growth was weaker than earlier estimates showed, the revisions did little to change the overall picture of a strong labor market. Employers added 2.6 million jobs in 2023 and two million in 2024. Over President Joseph R. Biden Jr. 's four years in office, the economy added more than 16 million jobs, although much of that came during his first two years as businesses reopened from the pandemic,” said the Times in their coverage.

“The White House press secretary, Karoline Leavitt, leaned into the narrative that job growth was weaker in 2024 than previously estimated. “Today’s jobs report reveals the Biden economy was far worse than anyone thought, and underscores the necessity of President Trump’s pro-growth policies,” she said in an earlier statement.

Continuing along the political path, there is a great deal of anxiety and worry by many economists and observers, not to mention the average citizenry on the 25 percent tariffs by President Trump that began on Monday, on steel and aluminum from all of US trading partners, beginning March 12; but, as the Council on Foreign Relations reported, it is not clear if these will be in addition to "existing duties, though a White House official said this would be the case for Canada."

With the US importing ha half of aluminum for Canada, and two thirds from Canada, the effects on the American consumer would be great, causing a ripple affect on the cost of military aircraft, but many industries, as they reported use imported steel on specific productions of steel pipes and steel, which would boost production and increase jobs in the country. But, the offset would result "by losses in manufacturing and other industries that rely on steel."

As can be guessed, the cost of job loss and increased prices from consumers would be great, as it was done in 2018 in response to Trump tariffs.

The biggest job losses are from the federal government with the gutting efforts by the Department of Government Efficiency, headed by Elon Musk, but also many average working Americans who work in related industries that would affect their kitchen table issues, quite literally fruit and vegetables from Mexico, and lumber and auto parts from Canada; which has created tensions on the borders between the two countries, especially seen in Windsor, Ontario and Detroit, where hundreds of auto parts as well as automobiles cross between the two countries.

Anticipating the hardships that Americans might endure, Canadian Prime Minister Justin Trudeau, in a video warned Americans of the pending economic consequences.

Economists have warned that the average American household expense would rise to $1200 per year if they are enacted.

Recent news has shown the bloodletting from these losses, and what is known, now, but with more to come, are from a workforce of nearly 200,000 workers across the country. Here is just a partial list of those that now face unemployment: USAID, 10,000; Dept. of the Interior, 2,200; Small Business, 20% of its workforce; Dept. of Energy, 1200 to 2000; Centers for Disease Control, 10 %; Dept. of Homeland Services, 400,00; and in Veteran Affairs, 1,000 of the 43,000 probationary employees were fired.

And there is more to come in the coming days and weeks

Finally, there is Immigration, or the presence of illegal, or undocumented, immigrants to the US, like them, or not, they have contributed to greater employment in not only agriculture but construction, and manufacturing; and, while there is plenty of blame to be assigned, the fact remains that many local governments participated in the hiring of these workers, often flouting local and state laws that skirted existing federal laws against their hiring. And, their loss, through deportation, adds to the instability of a mostly strong American economy in the coming months.

Updated February 16, 2025 at 10:20 p.m. CST