On Tuesday, the US Labor Department announced that employers created just 22,000 jobs in August. This figure was far short of projections. National unemployment rate has edged up a tenth from 4.2% to 4.3%. This grim data represents a possible turning point in the recent momentum of the labor market. The quarterly census of employment salaries released last week showed that the US economy had added 911,000 fewer jobs than previously estimated for a year ending in March. This means that growth has, on average, been weaker than once thought.
The preliminary data released by the Labor Department highlights a concerning trend, particularly during the closing months of President Biden’s administration and into the early days of President Trump’s tenure. Now, economists are trying to balance these indicators of a slowdown with persistent worries about inflation. Even without a pandemic, the US central bank would likely be cutting its benchmark interest rate next week. This decision is a positive response to those developments. This decision is a departure from its position to date. So far this year, it has found ways to not raise rates.
Market analysts are looking for any hint from the central bank. First, they’re looking to see how it balances the risks of a softening job market with risks of rising inflation. President Trump’s tariffs would increase inflationary pressures, making the sustainability of any economic expansion a serious concern. In early trading Tuesday, the benchmark S&P 500 index was unchanged. Investors showed a careful hand as they continued to weave through footstep economic signals.
Even more than the substance of the jobs report, that process was what is likely to frustrate President Trump. In a fierce reaction, he forced out Erika McEntarfer, head of one of the Labor Department’s statistical agencies. He further accused her of cooking the jobs numbers without any proof to back up his allegations. This decision further highlights the administration’s heightened sensitivity to economic data, especially as the administration tries to thread a needle with possible electoral ramifications.