Jobs data from May could show a mostly stable economy, but economists say Trump tariffs will soon bite
Signs are growing that President Donald Trump's unprecedented tariffs strategy is starting to take a bigger bite out of the U.S. economy.
Still, the latest jobs data from the Bureau of Labor Statistics is likely to show some economic stability persisted into May.
Forecasts were for 120,000 new payrolls added in the last month; most economists consider anything above 100,000 a healthy figure — though it would still represent the fewest monthly jobs created since February and fall below the recent 12-month average of about 150,000.
Even if the job numbers beat forecasts, other data are already pointing to signs of a softening economy.
On Wednesday, private payroll processor ADP reported the weakest monthly jobs total since March 2023. While economists say ADP's data often align with the official BLS data, the trend is clear, with ADP reporting fewer jobs added in five of the past seven months.
A separate report from the Institute for Supply Management showed that activity at U.S. service firms unexpectedly contracted last month for the first time in nearly a year, while hiring decelerated.
On Thursday, the Department of Labor reported weekly jobless claims came in higher than expected, reaching their highest level since October — while continuing unemployment claims remained elevated, an indication that it is taking longer for out-of-work people to find a job.
'We're throttling back — and the damage from the trade war is still coming,' Mark Zandi, chief economist at Moody's Analytics, told NBC News.
Zandi said forthcoming inflation readings are likely to reflect firms raising prices due to Trump's import taxes. Indeed, a Federal Reserve survey released Wednesday indicated 'widespread reports' of companies 'expecting costs and prices to rise at a faster rate going forward,' with higher tariffs 'putting upward pressure on costs and prices.'
Separately, a Congressional Budget Office study now estimates inflation will increase by an average of 0.4 percentage points in 2025 and 2026 as a result of Trump's tariffs.
As prices begin to rise, consumer dollars won't go as far, Zandi said. That will likely lead to a feedback loop of reduced economic activity and reduced hiring.
'The job market already feels fragile,' he added.
As demand softens 'more palpably,' Zandi said, 'we'll start to see layoffs' — with BLS jobs data likely falling consistently below 100,000 in the coming months.
Already, firms are showing signs of holding back on investment and bringing on new workers. Earlier in the week, the BLS reported that the hiring rate remains stuck at levels last seen in 2014, when the U.S. economy was still emerging from the Great Recession.
Trump has claimed that thanks to his tariffs, the U.S. economy is 'booming.' Yet he continues to pressure the Federal Reserve to lower interest rates, which would make it easier for businesses and consumers to borrow money. In a post on Truth Social Wednesday, he pointed to the weak ADP payrolls numbers as evidence that the economy needs support.
Analysts say that despite the gathering signs of economic deterioration, the bar remains high for the Federal Reserve to lower rates. Instead, the central bank will likely continue to err on the side of keeping interest rates elevated to ensure the pace of price growth remains under control, said Andrew Husby, senior U.S. economist at BNP Paribas financial group.
For consumers, that means relief is still not in sight.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Spectator
2 hours ago
- Spectator
Will America and China call a truce in their trade war?
High-level talks have started in London today between American and Chinese officials aimed at dialling down the trade tensions between the two largest economies in the world. If they result in a breakthrough, perhaps it will be known as the 'London accord'. But can President Trump strike a 'grand bargain' with China? There is every chance that he might – which would give a huge boost to the global economy. The talks in London follow on from a friendly chat on the phone between President Trump and his counterpart in Beijing, President Xi. Both sides have already stepped back from an all-out trade blockade, with the United States reducing the tariffs it imposes on Chinese goods from an extraordinary 145 per cent to a more manageable 30 per cent, while on the Chinese side, tariffs have come down from 125 per cent to just 10 per cent. The most important single trading relationship in the global economy is starting to get back on track. Even so, the trade war has hit both sides very hard.
Reuters
2 hours ago
- Reuters
Morning Bid: London showdown
LONDON, June 9 (Reuters) - What matters in U.S. and global markets today I'm excited to announce that I'm now part of Reuters Open Interest (ROI), opens new tab, an essential new source for data-driven, expert commentary on market and economic trends. You can find ROI on the Reuters website, opens new tab, and you can follow us on LinkedIn, opens new tab and X., opens new tab Soothed by another resilient U.S. employment report and optimism about trade deal breakthroughs, stocks are continuing to nudge higher as all eyes turn to U.S.-China bilateral trade talks in London on Monday. I'll discuss this and the rest of today's market news below. In today's column, I explore a plan for jointly issued euro zone debt that could be a game-changer. Today's Market Minute * Three of President Donald Trump's top aides will meet with their Chinese counterparts in London on Monday for talks aimed at resolving a trade dispute between the world's two largest economies that has kept global markets on edge. * California National Guard troops were deployed to the streets of Los Angeles on Sunday to help quell a third day of protests over President Trump's immigration enforcement, a step the state's Democratic governor, Gavin Newsom, called unlawful. * Japan is considering buying back some super-long government bonds issued in the past at low interest rates, two sources with direct knowledge of the plan said on Monday. * Trump's move to double tariffs on aluminum imports increases the risk of a full-blown scrap war with the European Union, Reuters Open Interest metals columnist Andy Home says. * Europe's ambition to develop cheap, clean energy has recently received a harsh reality check, Reuters Open Interest energy columnist Ron Bousso argues, as power failures and a string of cancelled renewables projects make clear that the road to inexpensive power will carry a very high price tag. London showdown A top-level U.S. delegation including Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer is in the UK to meet with Chinese representatives for trade talks. China's vice premier He Lifeng is also in the UK. The meeting follows a 90-minute phone call between Presidents Donald Trump and Xi Jinping last week to restart the stalled process. Tensions between the countries remain high, but on a positive note, there was some relief on Friday from news that Beijing had granted temporary export licenses to suppliers of rare earth minerals to the top three U.S. automakers: Ford, General Motors and Stellantis. Meanwhile, trade pressures on China's stuttering economy were all too evident in the latest sweep of May export and inflation numbers released on Monday. China's exports to the U.S. plunged 34.5% year-on-year in May, the sharpest drop since February 2020 when the COVID-19 pandemic upended global trade. The decline in imports from America also deepened to an annual drop of 18%. By contrast, Wall Street stocks were buoyed by the April U.S. payrolls report released on Friday, with the S&P500 (.SPX), opens new tab gaining more than 1% by the close to reach its highest point since February. Both the S&P 500 and the Nasdaq (.IXIC), opens new tab are now back in positive territory for the year. Nonfarm jobs increased by 139,000 jobs last month, slightly above consensus forecasts, the Bureau of Labor Statistics said. While downward revisions to the two prior months' figures are a cause for some concern, the sweep of the report showed few major cracks. Treasury yields rose after the report, with 30-year yields back within a few basis points of 5% again on Monday ahead of the week's big long bond auction and the May U.S. consumer price inflation data release on Wednesday. Despite President Trump's call for a full percentage point cut in Federal Reserve interest rates on Friday and his statement about naming Fed Chair Jerome Powell's successor soon, Fed easing expectations remain subdued. Futures now only price about a 70% chance of a move by September and expect only 46 bps of cuts by yearend. Outside of the U.S., the Japanese yen firmed to 144.43 per dollar as Japan's economy contracted at a slower-than-expected pace in the January-March period. Japan's government is considering buying back some super-long bonds it issued at low interest rates, according to Reuters sources. The move would come on top of an expected government plan to trim issuance of super-long bonds in the wake of sharp rises in yields. Be sure to check out today's column, which looks at a novel proposal for expanding the size and liquidity of jointly issued euro sovereign bonds. This possible plan comes at a critical juncture when global investors are looking for possible alternatives to the dominant U.S. Treasury market. Chart of the day China's export growth slowed to a three-month low in May as U.S. tariffs slammed shipments, while factory-gate deflation deepened to its worst level in two years, heaping pressure on the world's second-largest economy on both the domestic and external fronts. While the trade story has hogged the spotlight this year, the deflation picture has been brewing for several years, partly because the country's property bust has depressed domestic demand. Today's events to watch * New York Federal Reserve's May survey of consumer expectations, U.S. May employment trends (10:00 AM EDT); Mexico May inflation (8:00 AM EDT) * U.S. Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer meet Chinese trade delegation, including China's vice premier He Lifeng, in London * Argentina's President Javier Milei meets with French President Emmanuel Macron in France Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias.
The Guardian
2 hours ago
- The Guardian
Trump's EPA set to claim power-plant emissions ‘not significant' – but study says otherwise
Donald Trump's administration is set to claim planet-heating pollution spewing from US power plants is so globally insignificant it should be spared any sort of climate regulation. But, in fact, the volume of these emissions is stark – if the US power sector were a country, it would be the sixth largest emitter of greenhouse gases in the world. Trump's Environmental Protection Agency (EPA) has reportedly drafted a plan to delete all restrictions on greenhouse gases coming from coal and gas-fired power plants in the US because they 'do not contribute significantly to dangerous pollution' and are a tiny and shrinking share of the overall global emissions that are driving the climate crisis. However, a new analysis shows that the emissions from American fossil-fuel plants are prominent on a global scale, having contributed 5% of all planet-heating pollution since 1990. If it were a country, the US power sector would be the sixth largest emitter in the world, eclipsing the annual emissions from all sources in Japan, Brazil, the United Kingdom and Canada, among other nations. 'That seems rather significant to me,' said Jason Schwartz, co-author of the report from New York University's Institute for Policy Integrity. 'If this administration wants to argue only China has significant emissions they can try to do that, but a court will review that, and under any reasonable interpretation will find that US power plant emissions are significant too.' Fossil fuel-derived electricity is responsible for the second largest source of emissions in the US, behind transportation. No country in history has caused more carbon pollution than America, and while its power sector's emissions have declined somewhat in recent years, largely through a market-based decline in heavily-polluting coal, it remains a major driver of the climate crisis. The cocktail of toxins emitted by power plants have a range of impacts, the NYU analysis points out. A single year of emissions in 2022 will cause 5,300 deaths in the US from air pollution over many decades, along with climate impacts that will result in global damages of $370bn, including $225bn in global health damages and $75bn in lost labor productivity. 'We were surprised when we ran the numbers just how quickly these deaths start tallying up,' said Schwartz. 'All of these harms stack up on top of each other. Climate change will be the most important public health issue this century and we can't just ignore the US power sector's contribution to that public health crisis.' The Trump administration, though, is looking to dismantle a plan to curb greenhouse gas emissions from power plants. The move comes as part of a wider deregulatory blitz upon a wide range of rules aimed at protecting clean air and water; on Thursday, the EPA also confirmed a plan to delay the implementation of Clean Air Act protections against methane and other harmful pollutants from fossil fuel production. Removing these protections will prove not only dangerous, but also costly, said Christopher Frey, who was a science advisor to Joe Biden and led a clean air EPA committee under Barack Obama. 'A 'do nothing' policy to rollback greenhouse gas emission standards is not really a policy to do nothing,' said Frey, now an associate dean at North Carolina State University's college of engineering. 'It is a policy to force us to have to do more later to compensate for not taking preventive action sooner. It is a policy to knowingly cause more damage for folks in the not so distant future to contend with.' The power plant plan has endured a tortuous history, having been first put forward by Barack Obama's administration, only to be halted by the first Trump administration and also the supreme court. Joe Biden's administration last year rolled out a more limited version of the plan aimed at satisfying the supreme court's ruling. This version is now targeted for repeal by the Trump administration, expected in the coming weeks ahead of a public comment period and further expected legal challenges. Despite pointing to declining power plant emissions in its justification, the Trump administration has simultaneously attempted to increase these emissions by demanding a revival of the coal industry, boosting oil and gas drilling and axing incentives for cleaner energy. 'President Trump promised to kill the clean power plan in his first term, and we continue to build on that progress now,' said Lee Zeldin, administrator of the EPA. 'In reconsidering the Biden-Harris rule that ran afoul of supreme court case law, we are seeking to ensure that the agency follows the rule of law while providing all Americans with access to reliable and affordable energy.' Trump has long claimed that the US should not engage in international climate talks because its emissions footprint is negligible, noted Judith Enck, who served as an EPA regional administrator under Obama. Meanwhile, his administration has cracked down on states' ability to regulate emissions, she said. 'Apparently there is no level of governance where we can have these regulations,' Enck said. 'It's a completely illogical argument: There's not a lot of emissions so don't worry, but yet it we have to block every attempt to control them at the state, federal, international levels?' Experts have questioned whether pollution needs to be deemed 'significant' in order to be subjected to the Clean Air Act, which has been used to regulate even proportionally small levels of environmental toxins. 'There is absolutely no legal basis for them to propose a pollutant like CO2 has to meet some sort of significance, they are making this up, this is make-believe law,' said Joseph Goffman, who led the EPA's office of air and radiation during Biden's term. 'This is a sort of cheat code to try to neutralize any tool they fear might be used to reduce greenhouse gases.' The climate crisis is a global problem of the shared commons that experts say requires all countries, particularly the largest emitters, to remedy. Goffman said the Trump administration is attempting to reject this basic tenet. 'They are trying to write one of the biggest historical emitters in the world a get-out-of-jail-free card,' he said.
