New jobs report latest warning sign of slowing economy
The newly released August jobs report proved to be the latest sign the U.S. economy is slowing. It comes as another report finds that the number of unemployed workers now outnumbers job openings.
Jobs report
The jobs report showed the U.S. added just 22,000 jobs, significantly less than the 76,000 jobs some forecasters had predicted.
The unemployment rate rose last month from 4.2% to 4.3%.
“I’d say that we’re seeing kind of a flashing yellow here about the risk of a recession that essentially job growth has stalled over the past three months,” Erica Groshen, former commissioner of the Bureau of Labor Statistics (BLS) and senior economic adviser at the Cornell University School of Industrial and Labor Relations, told Straight Arrow News. “We have very little job growth. And yeah, it’s worrisome. We’re not definitely heading into a recession, but this would be consistent with the beginning of one.”
The report also showed a downward revision for the June jobs report. Revisions are common in job number data.
The June numbers reflect the first negative employment month since December 2020, ending the second-longest period of employment expansion in U.S. history.
“I think it’s probably a combination of a lot of policies that have been put in place over the past few months,” Groshen said. “There are tariffs, immigration, curtailing of the federal government and the increase in uncertainty. All of these things together have probably slowed investment.”
Workers versus jobs
The new numbers come following a report that showed the number of unemployed Americans is now higher than the number of available jobs for the first time since 2021.
“It means the job market is slowing, the labor market [is] slowing,” Alex Jacquez, chief of policy and advocacy at Groundwork Collaborative, told SAN. Groundwork Collaborative is a nonprofit think tank based in Washington, D.C.
That report comes from the Job Openings and Labor Turnover Survey (JOLTS), which is a program of the BLS.
The report showed 7.18 million job openings in July but 7.24 million job seekers.
“Businesses are not hiring,” Jacquez said. “I think that is something they’ve been telling surveys. They have been saying on earnings calls that, particularly the economic environment right now, including the uncertainty that’s being driven by tariffs, is leading them to hold off on big investments in new facilities, big new hiring announcements.”
Claudia Sahm, chief economist at New Century Advisers, agreed this is a sign of a stagnant labor market.
“In addition to the fact there aren’t as many job openings, firms aren’t doing as much hiring,” Sahm said. “But the rate at which they’re laying people off is very low. So, we have this moment where if you’ve got a job, you’re probably in a pretty good place. You’re not necessarily getting big raises; you’re not necessarily being able to switch to other jobs to get a raise. So, it’s not a great labor market, but if you’ve got a job, this is pretty good.”
Impact on workers
For those currently with a job, experts say they’re likely to maintain the status quo.
“The typical American worker around a recession decides that they’re not going to quit a job that they have with the anticipation that they will be able to get another job,” Groshen said. “So, you’re much more likely to see quit activity go way down. You are likely to see workers then accept lower pay raises than they might have otherwise. You probably see more just conservative people. People who feel like their jobs might be at risk. Then they’re not likely to buy a house or buy a new car or buy big ticket items that they can postpone.”
Part of that concern over having a job is that businesses aren’t hiring as much because of the uncertainty of the market.
“We are just not seeing a ton of workers being added to payrolls,” Jacquez said. “And at the same time, workers are not quitting. They are not being fired.”
Cause for concern?
Seeing economic numbers similar to those from the COVID-19 pandemic might give people some cause for concern. But Sahm said the fact that these numbers have come gradually over several months should ease those concerns a bit.
“The thing about mentioning the gradual is important because it is true that as we go into a recession, we might see job openings really fall off a cliff, and that that’s a sign that things are getting bad out there, that the recession could be coming,” Sahm said. “This hasn’t.”
While there may not be a need for major concerns, Jacquez said it’s something Americans should keep an eye on.
“If you look at job market cooling, economic growth slowing and inflation rising, those are all the ingredients for stagflation, which is really concerning economic issues to deal with,” Jacquez said.
Stagflation is an economic condition made up of slow economic growth combined with accelerating inflation. It’s been a concern of financial experts, particularly because of Trump’s tariffs.
White House impact
“Some of it has to be blamed on the White House’s policies, whether it’s their immigration policies and the erratic trade and tariff policies,” Jacquez said.
The administration’s immigration policies could be impacting both the latest job numbers and the numbers from the JOLTS report.
Data shows 1.2 million immigrants left the U.S. workforce between January and July.
“From like 2023 up until the middle of last year, we had a big surge in immigration into the country,” Sahm said. “And since the middle of last year, immigration has slowed dramatically and that has a huge effect on the workers that we have. Many that come in the country, they have higher participation rates in the labor force than U.S.-born individuals.”
BLS data
The August jobs report is the first since President Donald Trump fired former BLS commissioner Erika McEntarfer. Without providing evidence, Trump accused her of falsifying the jobs numbers to undercut him politically.
“As head of the BLS, I always said every number we put out was a good number,” Groshen, who served as commissioner from 2013-2017 under former Presidents Barack Obama and Trump, said. “Now, whether it meant the economy was good or not was a different question, but all the numbers were good numbers. What the president seems to mean is whether or not the numbers move in his preferred direction, in a welcome direction.”
William Wiatrowski became the acting commissioner after McEntarfer’s dismissal. Groshen brought him into the bureau.
“He’s a BLS lifer,” Groshen said. “He will carry on producing the gold standard data that the BLS has always produced.”
The president has nominated E.J. Antoni, chief economist at the Heritage Foundation, as the next commissioner, but he’ll need to be confirmed by the Senate. Antoni has floated the idea of suspending monthly jobs reports.
“What happens when there is a new commissioner in place depends on whether this new commissioner is as dedicated to producing gold standard data as previous commissioners have been,” Groshen said.
Groshen added that if there is any manipulation of data, it should be visible.
“This is a finely oiled, machined process, and if you try to muck with it, it’s going to screw things up, right?” Groshen said. “And you’d get staff resistance, you’d get resignations, you’d get leaks, you’d get whistle blowers, crazy transfers, things like that. So, I think it would be detectable.”
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Ella Rae Greene, Editor In Chief
