Though the President himself warned there would be short term disruption, it doesn’t matter who or what is to blame. It could be tariffs, it could be Trump, it could be that the job fairy is taking a vacation, or a mass delusion that the economy is worse than it is, numbers like this can’t continue forever.
If President Donald Trump’s entire Presidency were judged based on last Friday’s lackluster jobs report, he’d receive a failing grade. Simply put, the numbers were not good and certainly not what one would expect from a booming economy. Though economists had predicted generally lukewarm growth of 79,000 jobs, the actual number came in much lower at 22,000, barely a quarter, while the overall unemployment rate ticked up slightly to 4.3%. As CNN described it, “Job growth is practically non-existent,” citing Glassdoor economist Daniel Zhao who told the network, the market is “stalling,” “it’s slowing to a dangerous speed.” Further, more industries lost jobs in August rather than adding them, as evidenced by the report’s “diffusion index” which captures employment changes across 250 private-sector industries. A figure above 50 is said to mean more industries are gaining jobs than losing them while one below that threshold says the opposite. At 49.6 in August and having been slightly below 50 since April, it appears a small majority are in the red in terms of jobs and even those that are still adding them were minimal. While the healthcare sector remains the lone bright spot, adding 46,800 jobs in August after being one the primary drivers of growth in recent years, the goods industry including manufacturing has now lost jobs for four straight months. “For 85% of workers, they’re not seeing a lot of the jobs added,” explained Kory Kantenga, LinkedIn’s head of economics in the Americas, also to CNN earlier in the week. Black unemployment continued to rise as well, up 7.5%, the highest level since 2012, after hitting 6.8% in June and 7.2% in July. Economists consider this particular metric, the “canary in the coal mine” because “The unemployment rate for Black workers will usually rise more than for [White workers] when the labor market weakens, but they usually move in the same direction” eventually, at least according to Dean Baker, co-founder of the Center for Economic and Policy Research. Nor does it appear that the anemic growth was confined to August alone. The June numbers were revised downward into negative territory, meaning the economy lost jobs that month for the first time in five years, since the pandemic. Overall, the economy has only added 29,000 jobs per month for the past three months. If you exclude the rapid spike in unemployment caused by the lockdowns, that marks the lowest average since the summer of 2010. Considering that period was during the excruciatingly slow claw back from the Great Recession, it is not a comparison anyone wants to make.
For obvious and I would argue legitimate political reasons, Democrats and their progressive allies were quick to claim that President Trump had single handedly wrecked a booming economy handed to him by President Joe Biden. In their view, a combination of the tariffs, the uncertainty over tariffs, and the President’s mercurial personality are fully to blame. California Governor and frequent Trump-foil Gavin Newsom tweeted, “The unemployment rate has increased to 4.3%. This is the highest unemployment rate since the pandemic. Donald Trump is wrecking our economy.” “Genuinely impressive how quickly Trump wrecked the economy. A real feat,” claimed former New Republic writer Brian Beutler. Progressive influencer Brian Tyler Cohen tweeted, “Another miserable jobs report. Only 22,000 jobs added, well below expectations of 75,000. Unemployment rate rises to 4.3%. Hope Trump’s new BLS statistician didn’t get too comfortable,” alluding to President Trump’s firing of the director of that agency after last month’s report. Later, he condemned the entire Republican party, adding, “There has not been one single Republican administration in my lifetime that’s created more jobs than a Democratic administration. Since I’ve been alive.” For equally obvious though perhaps slightly less legitimate reasons, conservatives were quick to claim that the underlying numbers were much more positive, even what one would expect during a period of tighter controls on immigration and mass layoffs of government workers, amounting to some 300,000 in total. While some of these workers remain on the job through the end of the year, the August report included 15,000 federal government jobs lost for a total of 97,000 since January. As early as June, CNBC reported that “government layoffs could start becoming a factor,” citing Indeed Senior Economist Cory Stahle. “There are still a lot of questions about how that’s all going to trickle into the labor market. A lot of people are out there looking for work from the federal government. The big question is whether or not they’re going to be able to find them given the weaker demand for the higher education, white-collar jobs now.” The report also showed that jobs for foreign born workers have declined by 822,000 over the past year while native born workers have increased by 2.76 million. “The labor force is probably going to shrink, just because the native-born labor force is aging,” Manhattan Institute Fellow Daniel Di Martino to FOX business. “The fact that the border has been closed for several months means that there’s many fewer people entering the labor force. That’s a good thing, though, in the sense that you don’t want the labor force to grow because of illegal immigration. But it’s a fact that it’s going to mean the labor supply is much more restricted in illegal immigrant-heavy industries, which are construction, delivery services, restaurants and those services like that.”
Some conservatives, including President Trump himself blamed the Federal Reserve for the poor numbers, claiming Chairman Jerome Powell has retained high interest rates for far too long. “Jerome ‘Too Late’ Powell should have lowered rates long ago,” he posted on Truth Social after the release of the report. “As usual, he’s ‘Too Late!’” U.S. Labor Secretary Lori Chavez-DeRemer told FOX Business’ Varney & Co. that “Jerome Powell should be embarrassed by this report because he has not done his job.” At least some agree this is likely a factor. Employco USA President Rob Wilson told Fox News Digital, “I agree with Labor Secretary Lori Chavez-DeRemer on her comments that it is time for the Fed to take action and lower interest rates. The number of job openings available is the lowest in 10 months. With an interest rate cut, you will see businesses start to hire in larger numbers. The lower rates will have a ripple effect across the economy. August’s weak jobs numbers are a clear signal that interest rates may be too high, as President Trump has asserted. Higher interest rates are slowing economic growth, as intended by the Fed, but the jobs numbers are weak enough to justify a reconsideration of policy.” “The August jobs report should hopefully spur on two important actions,” Alliance for American Manufacturing President Scott Paul said in a statement. “First, a cut in interest rates by the Federal Reserve. Second, concluding tariff actions and trade deals to provide businesses with the certainty they need to hire, invest in new capital equipment, and realign supply chains. Manufacturing will be treading water until we see those changes.” To be sure, CNN was also quick to blame the tariffs – while noting that at least some of this was entirely cyclical, meaning economies don’t add jobs forever even under optimal circumstances. “Even before this year, the job market was on a slowing trend, interest rates have been fairly high, but we do see with the data in the last few months that some of these tariff-sensitive sectors like manufacturing or construction have slowed and in fact, started losing jobs,” explained Mr. Zhao, combining both views. “So, there does seem to be some impact from tariffs and the uncertainty associated with them.” “But, as we start to see unemployment rise, that does start to suggest that this is not just because of shifts on the labor supply side,” he continued with a caution. “When unemployment starts to rise, those impacts can start to stack up very quickly and unpredictably…That can build into a cycle of a sharper economic slowdown.” At the same time, other metrics suggest a much healthier economy. “We expect growth and hiring to reaccelerate as the combination of interest rate cuts, tax cuts and full expensing of business investment bolster demand for labor later this year and early next,” RSM US economist Joe Brusuelas wrote to investors after the report. “Thus, we do not expect the economy to slip into recession in the near term.”
While I am not an economist by any means, it’s my opinion that the truth is somewhere in the middle. The combination of tariffs putting upward pressure on pricing in some markets combined with an outsize panic over their impact and a general sense of uncertainty has undoubtedly had an impact on hiring in particular since April. The President himself warned that there would be some short term disruption and it seems likely we are experiencing it now, but ultimately: It doesn’t matter who or what is to blame. It could be tariffs, it could be Trump, it could be that the job fairy is taking a vacation, simply shitty luck, or a mass delusion among hiring managers that the economy is worse than it is. Whatever the case, numbers like this can’t continue forever and if they do not improve by early next year, the Republicans prospects in the midterms will be fundamentally impacted for the worse. In an era of big political promises and a craving for instant results, you cannot expect the public to wait years for policies to work. Perhaps even worse from the Republican perspective, it’s not clear they can do anything about it either way. Even if President Trump were to reverse all the tariffs, there is no guarantee hiring will immediately increase, especially as economists can’t even agree on their impact and even those who are decidedly anti-tariff also believe other factors are at play. It’s also true that President Trump has invested a lot of political capital in tariffs and has recently taken to promoting them as a necessary revenue generating mechanism to reduce the deficit and ultimately balance the budget. Reversing course would necessarily be seen as a huge defeat. To be clear, this is not to suggest I feel the job market won’t substantively improve over the next three to six months or that tariffs are the wrong policy to begin with. Indeed, there are those that are largely against the policy who see evidence that they are having the impact President Trump seeks. David Mastio, writing for the Kansas City Star, claimed “Dismal new job numbers might be a sign of Trump’s successes, not failures.” As he sees it, “the screams, and the rocketing stock market hoping for a rate cut based on the numbers, miss the fact that this dismal employment picture might be a sign that Donald Trump’s policies are working as intended.” He continued to cite the reduction in government jobs, including state and local governments, a slight drop in non-profit hiring that was at least partially funded by the federal government, the drop in foreign workers, and a slight uptick in manufacturing, was up by 2,000, if you leave out strike-impacted transportation equipment production.” Mr. Mastio concluded, “I am no fan of Trump’s mercantilist economic policies, but any analysis of these job numbers has to consider how much of this is a sign of MAGA success, not economic disaster.”
Time will tell, but time is not on President Trump’s side much longer.
Confessions of a Conservative Atheist 