Dissatisfying employment figures fuel anxiety over potential tariffs in the U.S.
Slowdown in US Job Market Sparks Concerns and Fed Rate Cut Expectations
The US job market experienced a significant slowdown in July 2025, with employers adding only 73,000 jobs, far below expectations. This marks the weakest monthly gain in over two years and has caused a shift in Federal Reserve expectations, leading markets to price in an 80% chance of an interest rate cut in September [1][4][5].
The unemployment rate also rose slightly to 4.2% from 4.1% in June. Moreover, earlier job growth estimates for May and June were drastically revised down by a combined 258,000 jobs, indicating that the labor market strength was overstated in earlier data.
This cooling labor market has led Jerome Powell, the Fed chair, to emphasize that the unemployment rate is now the key number to watch, given that job growth figures can be affected by various supply and demand factors [1][2].
Analysts view the July labor data as one of the first clear signs of negative impacts from President Donald Trump's new tariffs. The tariff measures, implemented starting in April, are believed to have contributed to slowing job growth and the broader weakening in business and consumer activities reflected in the revised May and June job data. This suggests that Trump's tariff policies may be influencing the labor market deterioration [2].
Meanwhile, in the private sector, the slowdown in job creation is a bigger issue than the headline jobs number, according to Jason Furman, a Harvard economist. The new jobs created in July were primarily in the health care and social services sectors [3].
In response to the weak job growth, Beijing is preparing national security countermeasures in response to the US's hawkish AI stance [6]. Elsewhere, executives are looking to beef up building security after the Manhattan shooting, and Big Tech companies are ramping up billions in spending on AI [7].
Stock markets extended losses on the new job growth data, while bond prices rose. Hours after the jobs report, Trump said he had directed his team to fire the commissioner of the Bureau of Labor Statistics [8]. The New York Times is also under scrutiny due to the shifting Gaza narrative [9].
References:
- CNN Business
- Bloomberg
- The Wall Street Journal
- The Washington Post
- The New York Times
- Reuters
- The Guardian
- Politico
- Al Jazeera
The slowdown in the US job market has raised concerns about its effects on business and finance, with the Federal Reserve now expected to cut interest rates in September.
The mild job growth in July and the downward revision of earlier job growth estimates indicate a cooling labor market, which may be negatively impacted by President Trump's tariff policies.
