{"id":212733,"date":"2025-09-09T11:51:09","date_gmt":"2025-09-09T11:51:09","guid":{"rendered":"https:\/\/www.europesays.com\/us\/212733\/"},"modified":"2025-09-09T11:51:09","modified_gmt":"2025-09-09T11:51:09","slug":"the-august-jobs-slowdown-the-dispatch","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/212733\/","title":{"rendered":"The August Jobs Slowdown – The Dispatch"},"content":{"rendered":"

White House officials sought to downplay the alarming numbers over the weekend. Friday\u2019s report was \u201ca little bit disappointing,\u201d said Kevin Hassett<\/a>, director of the National Economic Council. \u201cI expect it will be revised up,\u201d he added, pointing to a history of the BLS later adjusting August numbers upward. The August 2024 jobs report, for example, was later revised upward<\/a> from 142,000 jobs to 159,000.\u00a0<\/p>\n

Other members of the Cabinet gave less wonky reasons for doubting the numbers. Commerce Secretary Howard Lutnick told CNBC on Friday that once the White House had removed all of the president\u2019s opponents from the BLS, jobs reports would improve. \u201cYou\u2019ll take out the people who are just trying to create noise against the president,\u201d he claimed<\/a>, arguing for Trump\u2019s eventual appointee, Heritage Foundation economist E.J. Antoni, to clean house at the BLS. Antoni has not yet been confirmed by the Senate, dogged by accusations of a thin academic record and a recent CNN report<\/a> into an anonymous social media account he allegedly created that shared conspiracy theories about the 2020 election and sexist remarks about former Democratic presidential nominee Kamala Harris.<\/p>\n

In endeavoring to explain the weak job market, administration spokespeople also argued that if immigrants are taken out of the equation, data shows a purported rise<\/a> in employment among native-born workers. However, those numbers are mainly a \u201cstatistical artifact,\u201d Jed Kolko, a senior fellow at the Peterson Institute for International Economics, told TMD<\/strong>.\u00a0<\/p>\n

Unemployment numbers are gathered through a survey that includes asking respondents whether they are foreign- or native-born. But while the pool of respondents may change, the total population does not, as this is based on projections from the beginning of the year. In short<\/a>, if a greater share of native-born workers responds to the survey due to deportations of illegal immigrants, lower immigration, and hesitancy to respond among immigrants, then the percentage of native-born workers mechanically rises to fit the predetermined population estimate.\u00a0<\/p>\n

Other measures also attest to this. \u201cIf it were purely a decrease in the labor supply, you would be seeing fast-rising wages,\u201d Peter Coy, an economic commentator and former columnist for the New York Times, told TMD<\/strong>. But real wage growth has actually declined slightly in the last few months to 4.1 percent in July, down from 4.2<\/a> percent in June.\u00a0<\/p>\n

The new numbers, along with the downward revisions, solved a bit of an economic mystery: Why did the labor market appear to be so robust, even as economists almost unanimously agreed that tariffs would raise prices and deportations would reduce the pool of eligible workers?\u00a0<\/p>\n

The answer, it appears, is that the market isn\u2019t as strong as previously thought.\u00a0<\/p>\n

However, it\u2019s also true that unemployment has remained relatively unchanged, increasing to 4.3 percent in August, compared to 4.2 percent in June. Federal Reserve Chairman Jerome Powell has called<\/a> this combination of low unemployment and low job growth a \u201ccurious kind of balance\u201d: Aggressive deportations and sharply curtailed immigration mean that even weak job numbers don\u2019t drastically alter employment rates.\u00a0<\/p>\n

The White House remains committed to its anti-immigration and anti-trade policies. Cutting interest rates, a decision made by the (for now) independent Federal Reserve, remains the last lever to pull to encourage hiring. In recent months, Trump has campaigned for the Fed to cut interest rates (including by attempting to fire Fed Governor Lisa Cook), but Powell and the vast majority of Fed governors have been reluctant to do so. Inflation remains at 2.7 percent, above the Fed’s 2 percent target<\/a>, and injecting cash into the economy by making money cheaper risks increasing inflation.<\/p>\n

But, fortunately for Trump, the Fed\u2019s rate-cutting reticence is likely to end in about a week, driven by the decline in job growth. \u201cThat [a rate cut] will happen is pretty certain,\u201d Coy said. The CME Group\u2019s Fedwatch, a widely used prediction market for rate cuts, currently projects<\/a> a 100 percent probability of a rate cut, with a 90 percent chance of the Fed lowering the target rate by one quarter of a percentage point, and a 10 percent chance of a half-point cut.<\/p>\n

On the one hand, the case for cutting rates is now obvious. The Fed has a dual mandate to maintain maximum employment and stable prices, and the most obvious solution to weaker job market growth is to free up capital by lowering the benchmark interest rate. Even with inflation currently above the Fed\u2019s target, some members of the board believe it can \u201clook through\u201d supply shocks, such as tariffs, assuming that prices will simply stabilize after a one-time increase, rather than accelerating higher due to looser monetary policy.<\/p>\n

On the other hand, consumers don\u2019t necessarily view the macroeconomy in the same way Fed governors do\u2014and that matters. \u201cIf consumers and businesses get the perception that inflation is rising, then they\u2019ll behave that way,\u201d said Coy. \u201cIt doesn\u2019t matter if economists tell them they should look through inflation.\u201d<\/p>\n

Lowering rates at a time when the president is engaged in a very public campaign to pressure the Fed also carries its own risks. \u201cI think it\u2019s widely seen that Trump wants interest rates to go lower, and that could unsettle people\u2019s expectations,\u201d David Beckworth, the director of the monetary policy program at the Mercatus Center at George Mason University, told TMD<\/strong>. With increasing deficits on the horizon as well, \u201clooking through inflation caused by negative supply shocks may not be sufficient,\u201d he noted.\u00a0<\/p>\n

The president\u2019s policies also don\u2019t determine the fate of an economy by themselves. \u201cNo one person can control the economy, for good or bad,\u201d said Coy. Other factors, such as an ongoing economic slowdown<\/a> in China or the potential impact<\/a> of artificial intelligence on entry-level jobs, are also significant influences on the broader economy and the job market, he argued. Beckworth also noted that supply shocks, like immigration restrictions or tariffs, usually aren\u2019t capable of causing a recession on their own. \u201cFull-blown recessions usually are caused by something like a severe financial crisis or the Federal Reserve tightening rates,\u201d he noted.<\/p>\n

The U.S. economy might continue to steam forward, but it will increasingly be sailing against the current. In 2024, U.S. GDP grew at an average annual pace<\/a> of 2.5 percent; for the first six months of 2025, growth was 1.4 percent. Last year, the U.S. economy created 2.2 million jobs<\/a>, while this year, it\u2019s on pace<\/a> for roughly half that number<\/a>. At this point, the deceleration seems undeniable.\u00a0<\/p>\n

Observers of consumer data are also pointing to warning signs. \u201cThe middle class is stretched,\u201d Heather Long, the chief economist at Navy Federal Credit Union, told TMD<\/strong>. \u201cThere\u2019s not a lot of room left in their budgets.\u201d Even though overall spending levels haven\u2019t declined drastically, she noted, middle- and working-class consumers are starting to pinch pennies: shopping at wholesale clubs, reducing vacation time, and saving more in checking accounts. \u201cWe\u2019re in a slow-speed economy,\u201d said Long.<\/p>\n

Trump may not be able to singlehandedly wreck the economy, then, but he can slow it down. \u201cTo some extent, this robust economy has absorbed all the shocks, all the challenges, all the stress that\u2019s been imposed by the ad hoc policies\u201d of the White House, said Beckworth. \u201cBut I think we\u2019re running low on the ability to absorb such shocks.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"White House officials sought to downplay the alarming numbers over the weekend. Friday\u2019s report was \u201ca little bit…\n","protected":false},"author":3,"featured_media":212734,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[64,69,79,263,1597,266,2177,4352,2179,67,132,68],"class_list":{"0":"post-212733","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-donald-trump","10":"tag-economy","11":"tag-employment","12":"tag-federal-reserve","13":"tag-inflation","14":"tag-monetary-policy","15":"tag-trump-administration","16":"tag-unemployment-rate","17":"tag-united-states","18":"tag-unitedstates","19":"tag-us"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/115174197823511768","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/212733","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=212733"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/212733\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/212734"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=212733"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=212733"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=212733"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}