The August jobs report indicates a modest increase of 22,000 positions, with little change in the unemployment rate and labor force participation. The labor market is being influenced by tariffs, persistent long-term unemployment, reductions in federal employment, and ongoing inflation concerns.
Ryan Young, Senior Economist at the Competitive Enterprise Institute (CEI), commented on the data: “Tariffs are hurting the job market. Job growth in August was 22,000 workers, while June and July’s figures were revised downwards by a combined 21,000 workers. Such revisions are regularly scheduled and are not a surprise to observers. June’s data now show a net loss of 13,000 jobs.
“The coming months may be even rougher. For the first time since the Covid pandemic in 2021, job seekers outnumber job openings. Long-term unemployment is up 385,000 people this year.
“From the administration’s perspective, one advantage of a poor jobs report is that the Federal Reserve is now more likely to cut interest rates, even without presidential pressure. While a rate cut could cause some short-term economic stimulus, it comes with a tradeoff: higher inflation. This is why the Fed has been reluctant to cut rates, since inflation is still higher than the Fed’s target.”
Sean Higgins, CEI Research Fellow, added: “The Labor Department’s disappointing Friday report that the economy gained only 22,000 jobs in August is further undermined by the revisions to June and July, erasing 21,000 in jobs in previously gains. This has been the Summer of Stagnation.
“Employers aren’t hiring because the current administration’s constantly fluctuating tariff policies have made long-term planning that much harder. If you don’t know much you’ll be able to sell abroad, you’re not going to be hiring the people to make those products. This is hurting domestic manufacturing, not boosting it. Employment in that sector fell by 12,000 in August and is down by 78,000 so far this year.
“Ironically, the August numbers partly reflect the administration’s own efforts to shrink the government. There are now 97,000 fewer federal employees and those numbers would be even larger if the Labor Department didn’t count those still receiving severance pay as employed.”
