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Tag: employment data

Feeling Insecure At Work? That Fear Is Real -- And You Can Blame Trump

Groundhog Day's furry forecaster Punxsutawney Phil predicted six more weeks of wintry weather. What if we asked Phil to apply his insights to the frigid job market? He might answer the way an alarmed groundhog does, with chattering teeth, and then squeak, "Wheet! Wheet! Cold days are coming for American jobseekers, and they'll last a lot longer than six weeks."

Economists are using the term "deep freeze" to describe the current job outlook. These are strange times. The official unemployment rate of 4.45 percent is not a distressing number, but the reasons behind it are worrisome. Many workers are sticking with their jobs, fearful they can't find a new one.

Aside from some big-headline layoffs, most employers figure business is good enough to hang on to the staff they've got, but not strong enough to take new people on. The main reason: They have no idea what exactly is going on in the American economy.

Is it fair to pin this unsettling situation on Donald Trump? Sure, it's fair, though he doesn't deserve all the blame. What he does, reliably, is make a lot of problems worse.

Start with the tariffs. His trade war — slapping higher duties on essentially the rest of the world — was sold as a job-creation engine. It hasn't worked out that way. Since "Liberation Day," April 2, 2025, U.S. factory employment has fallen month after month. And last year, the number of job openings dropped by nearly a million.

What tariffs have done is push up prices that Americans pay for food and other everyday goods. In other words, they add to inflation. Prices haven't spiked as dramatically as some warned, but they've risen enough to leave consumers uneasy and on edge.

American companies that obtain parts and materials from abroad are now paying more for them. Some have swallowed at least some of those added costs, but much of the tariff tax gets passed onto buyers. Many companies say they will now have to pass more of those costs to consumers.

Such disruptions have hit Main Street businesses especially hard. They are less able than big corporations to deal with the confusion over tariffs. Who is meant to foot the bill? Vendors? Purchasers? Shoppers? Small companies employ almost half the American workforce.

Then there's the immigration crisis. Roundups of undocumented aliens were supposed to free up jobs for Americans. But Trump's spectacle of ICE agents sweeping up the foreign-born has created a mess for local businesses. Both legal and illegal immigrants are afraid to go to work and shop at stores. Immigrants, after all, are also customers.

Artificial intelligence isn't Trump's doing, but it's here. Analysts expect American companies to pour more money into robotics and artificial intelligence — technologies that replace human labor. A bachelor's degree will no longer shield many college grads from unemployment, as AI moves in on work many well-paid professionals considered safe.

Anthropic's "AI Assistant," Claude, can now read, write and analyze text. It can take on some accounting tasks, such as reviewing documents and drafting reports.

As demand for humans with such skills shrinks, employers looking to add staff have become super picky. That's making life especially tough for young people trying to land entry-level jobs. The office outlook is scary: a small cadre of senior executives, the "C-suite," presiding over rooms of smart machines that can match, or even outthink, Homo sapiens.

Businesses don't know which way is up, down or sideways, and Trump's daily dose of chaos isn't helping. The mystery of what will come next leaves many companies hesitant to hire.

Winter is settling in the job market. If you're feeling insecure, you may be on to something.

Froma Harrop is an award winning journalist who covers politics, economics and culture. She has worked on the Reuters business desk, edited economics reports for The New York Times News Service and served on the Providence Journal editorial board.

Reprinted with permission from Creators.

Yes, The Fed Should Lower Interest Rates (Because Trump Is Wrong On The Economy)

We all have come to accept that Trump makes totally whacked out claims about the economy, which his cabinet and other top aides must mindlessly repeat and embellish. His favorite invention is the booming economy.

Trump tells us that no one has ever seen anything like it. He boasts about $20 trillion dollars of investment coming into the country. At the same time, Trump is demanding that the Fed lower interest rates. If anything like Trump’s boasts were true, the Fed would be crazy to lower interest rates.

Twenty trillion dollars is two-thirds of GDP. If even one tenth of this amount of money was being added to investment it would imply a huge surge in demand. Rather than trying to boost the economy with a rate cut, with this sort of surge in investment, the Fed would be looking to raise rates to prevent inflation.

But everyone knows that Trump is lying about the massive inflow of investment. That exists only in his head. That is why the Fed will lower interest rates this week.

A rate cut should not be a close call, precisely because the economy is weak, not strong. The jobs data from the Bureau of Labor Statistics is now more than two months old due to the shutdown, but it was clear that it was weakening at the time and there is nothing in the data from private sources that change that picture.

The September jobs report showed the unemployment rate had risen to 4.4 percent. That is still low by historical standards, but it’s a full percentage point above the low hit in 2023. It’s also 0.5 percentage points above the average for the years 2018-2019, when there was no evidence of accelerating inflation.

The weakness is also more visible for the most vulnerable segments of the workforce. The unemployment rate for Black workers was 7.5 percent in September. That is 1.4 percentage points above the year ago level and 2.7 percentage points above the low hit in April 2023.

The unemployment rate for young workers between the ages of 20-24 was 9.2 percent in September. That was the highest rate since May of 2021. It is 3.7 percentage points above the low hit in April of 2023.

The job growth numbers also suggest a weakening labor market, although this is harder to read due to the curtailing of immigration. Without any substantial flow of immigrants into the labor market, the underlying rate of labor force growth is likely in the range of 30,000 to 60,000 a month.

Over the four months ending in September, the economy added an average of just under 40,000 jobs. This could be consistent with the underlying growth rate of the labor force, so the figure is not necessarily disturbing even though it is down from an average of 170,000 a month in 2024.

However, the distribution of the job growth does provide cause for concern. More than 90 percent of the jobs created over this period were in healthcare. Manufacturing has continued to lose jobs and construction employment was flat. With the DOGE attack on federal workers, the federal government is shedding jobs, while job growth at the state and local level has slowed to trickle.

The DOGE influence is also visible in the private sector. The category, “scientific research and development services” has lost almost 20k jobs this year (2.0 percent), undoubtedly in part the result of reduced grant funding. It had been growing modestly, adding 6,400 jobs in 2024.

The private labor market measures that have come out in the last two months support the view of a weakening labor market. The Indeed jobs posting index continued to decline into November, although it did have a modest uptick at the end of the month.

The ADP jobs measure has been weak since the Spring and showed a loss of 32,000 private sector jobs in November. Manufacturing was especially hard hit in the ADP data, losing 18,000 jobs.

It is pretty much impossible to look at any of these data series and have any concerns about the labor market overheating. There are clearly some inflationary pressures in the economy, but they are not coming from the labor market.

The most important source of inflation pressure is the Trump tariffs. Without these tariffs, inflation would likely be very close to the Fed’s 2.0 percent target right now, instead of hovering near 3.0 percent. The Trump administration’s mass deportation is likely also causing some upward pressure on prices by disrupting production in sectors like restaurants and construction. There also is upward pressure on electricity prices as a result of the AI boom and the resulting surge in energy prices.

Higher rates will not have any noticeable effect on these causes of inflation. If the Fed were to do a Volcker and raise rates enough to cause mass unemployment this could eventually lower wages, and thereby reduce inflation, but it doesn’t seem like anyone at the Fed has the stomach for double-digit unemployment.

Short of pulling a Volcker, it is not clear what the Fed could hope to accomplish with high rates. Perhaps that will slightly hasten the end of the AI bubble, which will reduce inflation, but that is a rather indirect way of accomplishing this goal.

In short, a rate cut at this week’s meeting should be a no-brainer with a clear signal that another cut at the next meeting is also likely. But these cuts will be because everyone at the Fed knows Donald Trump is lying about the state of the economy, not because anyone takes his claims seriously.

Dean Baker is a senior economist at the Center for Economic and Policy Research and the author of the 2016 book Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer. Please consider subscribing to his Substack.

Reprinted with permission from Dean Baker.

How Trump Is Schooling Americans On The Economics Of Punitive Tariffs

Trump first announced his massive tariffs on “Liberation Day,” which was April 2. This was supposed to be the beginning of the United States rebuilding its manufacturing capacity. Since Liberation Day, the economy has lost 60,000 manufacturing jobs, factory construction is down at least five percent, and inflation has risen to 3.0 percent.

It is also clear that businesses and consumers here have paid Trump’s tariffs, not foreigners as Trump seems to believe. Import prices have risen since Liberation Day. These are the price of the goods we import before Trump imposes his tariffs. If exporters are eating the tariffs, then the import price index should have fallen considerably. The data show this is not true.

That is all pretty much textbook on what to expect from a set of ill-considered tariffs designed by a president who knows next to nothing about economics. If the point was to bring back manufacturing jobs, as Trump claimed, then one obvious consideration would be to not impose tariffs on intermediate goods like steel or aluminum.

No one directly consumes these products; they are inputs into things like cars and airplanes. By raising the domestic price of these inputs, Trump is making U.S. manufacturing less competitive.

The arbitrary nature of the tariffs is also a problem. When Trump does things like impose a huge tariff on India, because it won’t nominate him for a Nobel Peace Prize, or imposes a 50 percent tariff on goods from Brazil because the government prosecuted his friend for trying to stage a coup, it makes it difficult for companies to plan.

This explains the general weakness of investment and the lack of business confidence in the economy. But the recent jobs data from the payroll firm ADP give evidence of another tariff lesson Trump has given us.

The data show that small firms have lost jobs in each of the last three months, even as large firms continue to create jobs at a healthy pace. In September, firms that employ 1-50 people cut employment by 40,000. Firms that employ 50 to 499 people lost 20,000 jobs. Meanwhile, firms that employ more than 500 people added 33,000 jobs.

In October, the corresponding figures were a loss of 10,000 jobs, 21,000 jobs, and a gain of 73,000 jobs. And in November the smallest firms lost 120,000 jobs, midsized firms gained 51,000 jobs, and the largest firms added 39,000 jobs.

This paints a picture where the largest firms seem to be doing fine. Smaller firms are struggling, and the smallest firms are shedding jobs like they are in a recession. This very much fits the textbook economics story of tariffs.

The largest firms, like Apple, can have their CEOs go see Trump and give him bribes to get tariff relief. Smaller firms don’t have the money and connections to make similar deals. As a result, they struggle to survive in an economy where the prices of many of their inputs have risen sharply. They also have no idea what will come next, since Trump can raise tariffs further, or lower tariffs for competitors, any time he feels like it. That situation does not create a good environment in which to do business.

This uncertainty has slowed growth and employment in the short-term, but it is likely to have even larger long-term effects. When the path to success depends more on currying Donald Trump’s favor than innovation and efficiency, it does not provide the basis for a strong economy and solid growth.

That is a story we have seen repeated in many countries all around the world. Perhaps the only really striking part of the story is that the evidence has shown up so quickly here. Donald Trump may not be very good at running the economy, but he has proven himself to be an outstanding teacher of basic economics.

Reprinted with permission from Dean Baker.

Trump Economy's Weak Job Market Is Driving Down Wages As Prices Rise

Going a month without government data makes it difficult to understand what is going on with the economy. We still have some data from private sources trickling in, and we have some state data, notable unemployment insurance claims, but without the federal data on items like unemployment, job turnover, and Gross Domestic Product it is much harder to make much sense of what is going on in the economy.

In assessing the economy, the state of the labor market should always be front and center. Most people get most of their income from working, so the labor market matters in a really big way. Also, since people spend much of their waking life at work, their working conditions matter a great deal. This means it matters a lot whether people feel they can quit a job they don’t like and easily find another. In addition, the option to work from home matters to tens of millions of workers.

The best place to start in viewing the labor market is Guy Berger’s weekly Substack, High Frequency Labor Market Indicators. Guy covers most of the available data, and like the rest of us, he is seeking out alternative sources during the shutdown.

In his most recent assessment, I’ll start with where I strongly agree with him. It is easy to exaggerate the importance of big layoff announcements at tech giants like Meta and Amazon.

As Guy points out, in a normal month, roughly 1.7 million workers lose their job. The 30,000 layoffs announced at Amazon or the 10,000 at Meta are just a tiny fraction of this number. If they are representative of what is happening at companies across the country, this is a big deal, but by themselves, they are not. We also have seen this story before. In 2022, there were announcements of big layoffs at the tech companies, even as the economy was adding jobs at a very rapid pace.

Where I differ with Guy is his more generally sanguine view of the state of the labor market. Guy points to the weekly data on unemployment insurance, where both initial and continuing claims show no major upticks. This is important evidence that there has been no big uptick in layoffs.

But I am more concerned about the other side of the story. It looks like hiring has fallen off. My main piece of evidence here is the Indeed hiring index. Guy also points to this index but says that we are just on the same downward slope we’ve been seeing for the last three and a half years.

This is true, but this is a case where we have to think about levels rather than changes. The most recent level reported for the week ending October 24 was 101.9. This is 5.5 percent lower than the 107.8 reading for the week ending April 19, six months ago. That was already a point where the labor market was notably weaker by most measures than in 2024. If we are seeing a modest rise in layoffs, and a five percent drop in hires, we would expect this to lead to a further weakening of the labor market. This is not falling off a cliff, but a gradual deterioration.

There is the complication that labor force growth has fallen through the floor, now that immigration has been largely halted. But again, it is important to remember that the net additions to the labor market each month are swamped by flows. The falloff in new entrants due to the cutoff of immigration is perhaps 100,000 a month, the number of new hires is over five million a month.

Supporting this deterioration view is the Conference Board’s Index measuring the number of people saying jobs are plentiful, minus those saying jobs are hard to get. This index has been on a steady decline since peaking in early 2022. The current level is roughly where we were at the start of 2017 when the unemployment rate was over 4.5 percent. That is not a disaster, but it is a deterioration from where we have been and notably worse than 2018-19, two strong years for the labor market prior to the pandemic.

This downturn also seems to be affecting wage growth. The Indeed measure for wage growth in advertised jobs is down to 2.5 percent, 0.8 percentage points below its year ago level. This is also close to a percentage point below its 2019 level. With inflation ticking up modestly due to tariffs and other factors, this slowing in nominal wage growth (also shown in recent data from the establishment survey) likely means that real wage growth has fallen close to zero.

To be clear, none of this suggests a disastrous picture. We are not looking at recession levels of unemployment, but to me it looks like the labor market is notably weaker than 2024 or 2018-2019. Workers no longer feel they have their choice of jobs, and real wages are barely rising for most workers, and for many they are falling. And workers in disadvantaged groups, like Black and young workers, are seeing considerably worse labor market conditions.

Is Avian Flu Making a Comeback?

There are accounts from around the country of avian flu hitting both wild bird populations and also poultry stocks on farms. Last year avian flu sent egg prices soaring. Wholesale prices have already risen sharply from lows hit in October but are nowhere near the peaks we saw last March. I have no great insights to offer here but given the politics of egg prices around the election last year, it would be worth keeping an eye on this one.

The Circular Flows of the AI Bubble

There has been considerable reporting on how the AI bubble at this point might be driven in part by circular payments, with producers giving money to customers to buy their products. For example, Nvidia is investing $100 billion in OpenAI, which is a major customer for its chips.

If the potential problem here is not clear, imagine Oscar Meyer invested $1 billion in both Jack and Jill’s premium hot dog stand. Jack and Jill then made huge purchases of Oscar Meyer hotdogs, which they then sold at a massive loss. Jack and Jill could keep doing this because Oscar Meyer kept investing more money in their hotdog stands.

On Oscar Meyer’s books all looks great because their hotdog sales, and profits, are soaring. The money invested in the hotdog stands does not count as a loss. It is an investment, which they can keep on the books as long as market conditions don’t force them to write it down. If Jack and Jill’s hot dog stands are privately traded, that could be a very long time.

I don’t know if this describes the current situation in AI, but it is a serious possibility. At the end of the day, someone may get stuck with some really bad meat.

Reprinted with permission from Dean Baker.

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Smart. Sharp. Funny. Fearless

Start your day with The National Memo Newsletter

Feeling Insecure At Work? That Fear Is Real -- And You Can Blame Trump

Yes, The Fed Should Lower Interest Rates (Because Trump Is Wrong On The Economy)

How Trump Is Schooling Americans On The Economics Of Punitive Tariffs

Trump Economy's Weak Job Market Is Driving Down Wages As Prices Rise

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