Employment Growth Stalled: America's Labor Market in Tariff-Uncertainty Twilight
The Federal Reserve is boxed in—with neither a reduction in rates to fight possible recession nor an increase to fight possible inflation prudent—with sputtering payroll as continued random tariff...
The Federal Reserve is boxed in—with neither a reduction in rates to fight possible recession nor an increase to fight possible inflation prudent—with sputtering payroll as continued random tariff threats cloud economic policy and Federal Reserve decision-making…
Let me extend my note from Friday September 5, 2025 dawn:
<https://substack.com/@delongonsubstack/note/c-152668421>
Well, well, well: seasonally-adjusted, payroll employment in July was no higher than we had thought yesterday it had been in June. Our estimate of the June level has been revised down by 21,000—yes, the last report that maddened Trump was more optimistic than it looks now like the situation warranted. And the seasonally-adjusted gain from June to July was only 22,000:
BLS: Employment Situation Summary: ‘Total nonfarm payroll employment changed little in August (+22,000) and has shown little change since April, the U.S. Bureau of Labor Statistics (BLS) reported today. The unemployment rate, at 4.3 percent, also changed little in August. A job gain in health care was partially offset by losses in federal government and in mining, quarrying, and oil and gas extraction…. The change in total nonfarm payroll employment for June was revised down by 27,000, from +14,000 to -13,000, and the change for July was revised up by 6,000, from +73,000 to +79,000. With these revisions, employment in June and July combined is 21,000 lower than previously reported…
Total gain over the past three months: 88,000, which 29,000 per month: genuine stall speed.
If the tariff situation were at all settled, this would put me on the side of looking through what are (probably) still one-off price-level increases and lead me, were I on the FOMC, to prefer an 0.50% policy interest rate cut.
But the tariff situation is not at all settled, is it?:
Josh Wingrove: Trump Says ‘Fairly Substantial’ Chips Tariffs Coming ‘Shortly’ <bloomberg.com/news/arti…>: ‘“Tim Cook would be in pretty good shape,” Trump said Thursday of the Apple chief executive officer…. “I’ve discussed it with the people here, chips and semiconductors, and we’ll be putting tariffs on companies that aren’t coming in,” Trump said. “We’ll be putting a tariff very shortly. You probably are hearing we’ll be putting a fairly substantial tariff, or not that high, but fairly substantial tariff”…
So the right and prudent policy for the Fed at its September meeting is, still, to stand pat. It is in a box, and there is no good path out of it until we get some policy stability.
Given the corruption of the Trump Administration, it is probably time to shift my attention to the ADP employment series. It has problems, and is different from the BLS establishment survey in its biases in ways I do not understand. But my knowledge base from an adult lifetime of learning the biases and quirks of the BLS establishment survey is about to be burned in a fire, isn’t it? And looking forward big disagreements between BLS and ADP have to be presumed to be something going very wrong at the BLS.
Here’s ADP payroll, monthly changes:
And here is the ADP monthly manufacturing change:
The Pew Research Center used census data to estimate that foreign born workers in America decreased 1.4 million from January to June this year. Considering that the surge in ICE funding hadn't happened yet, loss of 3 million foreign born workers looks like a lowball estimate for 2025. Unlike TRUMP'S TERRIBLE TARIFF TANTRUM that wishful thinkers are hoping will stabilize at some point, 4 years of virulent anti-immigrant hostility will continue to reduce GDP and raise prices. Hello stagflation.
https://www.pewresearch.org/short-reads/2025/08/21/key-findings-about-us-immigrants/
The numbers on the graphs are too hard to figure out. The IRS has data on what income is from, from all our households, by time periods. Households can have W-2 income (payroll), self employment income, and retirement income. My neighborhood is mostly retirees. Out of 6 households, 5 are retirement income and 1 W-2 (payroll) income.