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USA Today
02-08-2025
- Business
- USA Today
After a weak jobs report, here's where the economy stands
We learned a lot about the U.S. economy during the past week, but what we learned may leave us asking more questions. Consider a few of the most telling numbers: The encouraging news ◾ GDP grew 3%: The economy rebounded in Q2 after a -0.5% drop in Q1. The first quarter decline was driven by companies rushing to import goods ahead of new tariffs from President Donald Trump. Imports are subtracted from U.S. growth. ◾ Consumers are happier: Both consumer confidence and sentiment continued to climb in July, recovering from their April lows. Consumer spending is the largest part of the U.S. economy. The less encouraging news ◾ Inflation is rising: The Fed's preferred inflation gauge — the personal consumption expenditures (PCE) index — rose 0.3% from May. Economists say the increase may be one of the early signs that tariffs are starting to push up prices. ◾ Job revisions surprise: July's job gains came in at 73,000 — well below the expected 102,000. More concerning, however, were downward revisions to April and May's numbers, suggesting the labor market may be weaker than previously thought. Jobs fallout: Trump fires head of labor statistics bureau after weak jobs report One thing that didn't change this week: The Federal Reserve's stance on interest rates. Chair Jerome Powell and the policymaking committee kept the short-term rate range steady at 4.25% to 4.5%. But, that range may not hold for long. "The weak July jobs report increases pressure on the Fed to cut rates later this year," said Bill Adams, Comerica Bank chief economist. "The decision isn't a slam dunk, since labor supply also fell in July" because the number of foreign-born workers declined. Interest rate traders appear more confident that a rate cut is coming. Their latest bets suggest a 90% chance the Fed will lower rates in September — a sharp jump from the 45% percent chance shortly after the Fed's meeting on Wednesday. Will the Fed cut interest rates? Unable to view our graphics? Click here to view them. How is the U.S. economy doing? What is the U.S. unemployment rate? U.S. unemployment rate rose to 4.2% in July. The monthly number represents the percentage of people who are unemployed and looking for work. What the data shows: The unemployment rate has been relatively steady for the past year, hovering around the 10-year monthly median rate of 4.1%. Economists such as Nancy Vanden Houten at Oxford Economics have speculated that corporate decision makers have been stymied by the uncertainty surrounding tariffs: "The June (Job Openings and Labor Turnover Survey) painted a familiar picture of the labor market: Hiring remains quite low, but so do layoffs." Hiring had held stead throughout the year – although it was well below the 10-year median rate of 226,000 jobs per month. Analysts expected Friday's jobs report would show the economy added about 100,002 jobs in July. Stock prices and bond yields fell following the disappointing report. How big is the U.S. economy? The U.S. economy produced about $30 trillion of goods on an inflation-adjusted annualized basis in the first quarter, but real GDP, the value of goods adjusted for inflation, fell 0.5% in the quarter because imported goods – which subtract from GDP – jumped more than 50%. What the data shows: The Bureau of Labor Statisics report Wednesday morning showed the economy grew 3% in the second quarter – significantly higher than the 2.3% increase analysts expected. Much of the "growth" came from reduced spending on imports. How high is inflation? Inflation, a sustained increase in prices throughout the economy, touched its 10-year median of 2.3% in April – the first time since pandemic spending set off 40-year high inflation. The Fed policymakers say they prefer inflation at 2%, or "low and stable," so we can "make sound decisions regarding saving, borrowing, and investment." What the data shows: Inflation has fallen significantly but remains above the 2% that the Fed targets. The annual inflation rate as measured by the consumer price index rose to 2.7% in June from 2.4% in May. The July CPI report will be released Aug. 12. Are consumers still making purchases? U.S. consumers account for $7 of every $10 spent in the U.S. economy. Retail sales' median monthly increase has been about 0.4% for the past 10 years. That doesn't sound like much until you consider a 0.6% increase in June amounted to an extra $4.6 billion of spending. What the data shows: As the primary engine of the U.S. economy, we bought $720 billion worth of stuff on a seasonally adjusted basis in June. That was a big swing from the -0.9% decline in May. We'll find out Aug. 15 if we continued to spend in July. Gas prices are holding steady Our gasoline purchases aren't a large part of most of our budgets, but it's hard to miss the big numbers outside every station and not have some emotional reaction to their swings. That can have a psychological impact on our spending. One report showed a recent improvement in consumer sentiment closely correlated with lower gas prices. What the data shows: We're in the midst of the summer driving season where gasoline prices typically peak, but a gallon of regular gas has held steady throughout the summer and several cents below last year's prices. So how confident are U.S. consumers now? The University of Michigan measures U.S. consumer sentiment on a monthly basis. The index been as high as 101 ahead of the pandemic in February 2020 and as low as 50 when inflation peaked at 9.1% in June 2022. What the data shows: Consumer sentiment has been rising haltingly since bottomed out in May. Current mortgage rates still elevated While the Fed's interest-rate decisions don't directly affect mortgage rates, they do ripple through the economy and have made the math more difficult for homebuyers. What the data shows: Since November, mortgage rates have moved in a relatively narrow range – between 6.6% and 7% – and well above the 10-year median, according to Freddie Mac's weekly mortgage rate survey. Rates are down significantly from the November 2023 peak of 7.8%. Higher mortgage rates weigh on home sales Existing home sales are the lion's share of homes sold each month. The NAR reports each month's sales at a seasonally adjusted annual rate. Annual home sales peaked in 2005 at 7.08 million units. In September 2024, that number fell to 3.9 million units – lower than sales during any year following the financial crisis. What the data shows: Not surprisingly as mortgage rates have risen, existing home sales have tumbled. At the same time, average home prices are also rising because fewer homes are on the market. Speculation has been that homeowners are unwilling to sell and give up their low-rate mortgages. So how are investors looking at this information? The nation's stock markets are not the economy, but their movements reflect the combined bets investors are making on the economy. Investors have a keen eye on data points like in the charts above. Significant swings in our spending, or even our thinking, might potentially impact corporate profits in coming quarters. What the data shows: After a dip in early April because of tariff-related uncertainty, the S&P 500 has steadily climbed, reaching several new highs since June. The upward trend could suggest that investors are increasingly confident the final tariff agreements won't weigh on the economy as heavily as once feared, but following the employment report Friday all three major U.S. index fell more than 1%. The tech-heavy Nasdaq Composite fell 2.2%. Contributing: Bailey Schulz
CNN
31-07-2025
- Business
- CNN
The US job market may be running low on gas
The US job market seems to have chugged along for the first half of this year — but the risk is rising that employment growth is running out of steam. The July jobs report, due for release at 8:30 a.m. ET Friday, is expected to show a net gain of 115,000 jobs, which would mark a considerable downshift from June's 147,000 jobs. The unemployment rate is expected to tick up to 4.2% from 4.1%, according to FactSet consensus estimates. Through June, the US has added between 102,000 and 158,000 jobs per month, Bureau of Labor Statistics data shows. Those are solid gains and widely thought to be in line with the breakeven point, where the jobs added keep up with labor force growth and hold the unemployment rate steady. However, outside of the pandemic recession in 2020, that current 130,000-jobs-per-month pace is the weakest January-to-June average since 2010, when the US economy was licking its wounds from the Great Recession. 'We're getting more and more reliant on a very small part of the economy to drive any sort of job growth,' Heather Long, chief economist for Navy Federal Credit Union, said in an interview with CNN. 'There just are no jobs right now, AI or no AI, tariffs or no tariffs.' Hiring has become anemic (with the exception of a select few industries). Businesses have held back on adding new workers in large part because they've been gripped by uncertainty about where tariffs might ultimately settle in President Donald Trump's volatile trade war. 'When companies can't make predictions about the economy and therefore their operations, they tend to wait for more information,' Elizabeth Renter, senior economist at NerdWallet, wrote earlier this week. 'In the current environment, that predictive information is changing from week to week, so we've ended up in a perpetual holding pattern when it comes to expanding or cutting back on workers.' Couple that with reticent workers discouraged about their job-hopping prospects, and it results in a labor market with little turnover, instead of the solid churn that's needed for a healthy economy. The latest federal data on labor turnover, which was released earlier this week, further confirmed that trend: The Job Openings and Labor Turnover Survey showed fewer job openings in June, hiring at a one-year low and a quits rate below the five-year average. Other closely watched indicators show that layoff activity hasn't accelerated recently, despite job cut announcements trending higher this year (in large part due to the Trump administration's gutting of federal agencies). Initial jobless claims have fallen for six weeks in a row; however, continuing unemployment claims have consistently butted against a November 2021 high. In terms of what could be coming down the pike, Challenger, Gray & Christmas' latest job cut announcement tracker showed 62,075 layoffs announced in July, up 29% from June. 'We are seeing the federal budget cuts implemented by [the Department of Government Efficiency] impact nonprofits and health care in addition to the government,' said Andrew Challenger, senior vice president of the outplacement and coaching business. 'AI was cited for over 10,000 cuts last month, and tariff concerns have impacted nearly 6,000 jobs this year.' The unemployment rate went down in June but so did the size of the labor force, and participation rates fell off as well. The unemployment rate is a critical indicator of economic health; however, in part due to seismic shifts around immigration, it's losing its luster and instead turning into a math problem. Foreign-born workers, irrespective of legal status, have accounted for about three-quarters of total labor force growth since February 2020, according to an analysis released in June from Wells Fargo economists. And recent efforts to curtail unauthorized immigration are contributing to a shrinking of the labor force, they noted. Job growth tends to slow in the summer months and at the turn of some firms' fiscal years, but the US labor market is also in the thick of a structural slog, with job gains overwhelmingly concentrated in a fraction of industries. 'The job market is frozen outside of health care and education, and this is a real hardship for anyone looking for a job,' said Navy Federal Credit Union's Long. The average duration of unemployment rose to 23 weeks in June, and the share of unemployed workers who have been out of a job for 27 weeks or more rose to 23.3%, edging near a three-year high, according to BLS data. In June, health care, social assistance and state and local government businesses — which account for under 15% of overall employment — were responsible for 94% of the month's job gains, BLS data shows. It's worth noting that there likely were some anomalies in the estimated gains for state and local government entities in June (they were clocked at +80,000). Education jobs typically fall in the summer months, but the drop-off this year might not have been as sharp as years past, so the BLS' seasonal adjustment factors registered that as a strong gain instead, economists noted last month. The expectation is that health care, social assistance and leisure and hospitality will drive the job gains in July. June's diffusion index of private industries, which measures the share of sectors adding jobs (essentially providing a window into how broad-based hiring was), measured 49.6. If the measure is below 50, then more industries lost jobs than added them. While some tariff-related price hikes are starting to appear online and in stores (and they're starting to bear out a little in the inflation data as well), the biggest impact they've had on the labor market so far is the uncertainty they've caused. In terms of reasons for drags on the labor market, Long puts tariff-related uncertainty as the clear No. 1, followed by a continued post-pandemic normalization and rebalancing of workforces, and then at a far third (for now) the AI effect. Wages have continued to outpace inflation, but the events of the recent months have kept the Federal Reserve on pause and brought the return of the 'K-shaped economy,' where the have-nots are struggling and an upper slice of the haves is driving most of the growth. 'People are really stretched thin,' Long said, adding that continued weakness in the labor market could negatively compound ongoing stressors such as growing household debt. 'There simply is not much hiring, white-collar or blue-collar,' she said. 'I'm hopeful that will change if we can get tariff certainty by the end of the summer and a rate cut by September,' she said.
Business Standard
30-07-2025
- Business
- Business Standard
Dollar index hits five-week high, Fed decision in focus
The US dollar index surged near 99 mark yesterday as markets stayed focused on the US Federal Reserves monetary policy decision on Wednesday. However, a tepid reading on the US labour market front has capped advances for the greenback. The U.S JOLTS (Job Openings and Labor Turnover Survey) data revealed a decline in job openings to 7.437 million in June 2025, down from 7.769 million in the prior month, marking a drop of 275,000. Dollar remains broadly supported at 98.63 right now and is up 1.30% this week as generally steady economic cues keep the currency elevated after it tested a multi-month low at the start of this month. Data out yesterday showed that the CB Consumer Confidence Index spiked to 97.2 in July, beating the previous reading of 93.
Japan Today
29-07-2025
- Business
- Japan Today
U.S. job openings fell to 7.4 million last month as job market continues to cool
By PAUL WISEMAN Employers posted 7.4 million job vacancies last month, a sign that the American job market continues to cool. The Labor Department reported Tuesday that job openings in June were down from 7.7 million in May and were about what forecasters had expected. The Job Openings and Labor Turnover Survey (JOLTS) showed that layoffs were little changed in June. But the number of people quitting their jobs — a sign of confidence in their prospects elsewhere — dropped last month to the lowest level since December. Hiring also fell from May. Posting on Bluesky, Glassdoor economist Daniel Zhao wrote that the report "shows softer figures with hires and quits rates still sluggish. Not dire, not amazing, more meh.'' The U.S. job market has lost momentum this year, partly because of the lingering effects of 11 interest rate hikes by the inflation fighters at the Federal Reserve in 2022 and 2023 and partly because President Donald Trump's trade wars have created uncertainty that is paralyzing managers making hiring decisions. On Friday, the Labor Department will put out unemployment and hiring numbers for July. They are expected to show that the unemployment rate ticked up to a still-low 4.2% in July from 4.1% in June. Businesses, government agencies and nonprofits are expected to have added 115,000 jobs in July, down from 147,000 in June, according to a survey of economists by the data firm FactSet. The seemingly decent June hiring numbers were weaker than they appeared. Private payrolls rose just 74,000 in June, fewest since last October when hurricanes disrupted job sites. And state and local governments added nearly 64,000 education jobs in June – a total that economists suspect was inflated by seasonal quirks around the end of the school year. So far this year, the economy has been generating 130,000 jobs a month, down from 168,000 last year and an average 400,000 a month from 2021 through 2023 during the recovery from COVID-19 lockdowns. Employers are less likely to hire, but they're also not letting workers go either. Layoffs remain below pre-pandemic levels. © Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
USA Today
29-07-2025
- Business
- USA Today
Here's where the economy stands as the Fed makes its interest rate decision
Is the job market still growing? How happy are U.S. consumers? Did the economy grow again in the second quarter after stumbling in the first? We'll get answers to those questions and more this week. But most analysts predict only minor changes from the previous months. The only exception: GDP, which tumbled in the first quarter as companies stocked up on imported goods ahead of President Donald Trump's new tariff policies. As the week closes, the tariffs and their impact may still be the biggest question weighing on the U.S. economy. It's a big enough unknown that few interest rate traders expect Fed chief Jerome Powell and the rest of the policymaking committee to announce an interest rate cut at 2 p.m. ET Wednesday. Will the Fed cut interest rates this week? Unable to view our graphics? Click here to view them. While the charts below may not match the level of detail used by Fed officials, they still offer valuable insights into the broader economic landscape. Among them is the Consumer Price Index (CPI), which – though not the Fed's preferred inflation gauge – remains a closely watched indicator. The June CPI report, released on July 15, showed inflation continuing to inch upward. This trend could complicate former President Donald Trump's repeated calls for the Fed to keep cutting short-term interest rates. How is the U.S. economy doing? Here's quick look at the data we've collected, charted and compared with their 10-year averages below. What is the U.S. unemployment rate? U.S. unemployment rate dipped to 4.1% in June. The monthly number, which represents the percentage of people who are unemployed and looking for work is expected turn back up to 4.2% when the July jobs report is released on Friday, Aug. 1. What the data shows: The unemployment rate has been relatively steady for the past year, hovering around the 10-year monthly median rate of 4.1%. Economists such as Nancy Vanden Houten at Oxford Economics have speculated that corporate decision makers stymied by the uncertainty surrounding tariffs: "The June (Job Openings and Labor Turnover Survey) painted a familiar picture of the labor market: Hiring remains quite low, but so do layoffs." Hiring has also grown steadily throughout the year – although well below the 10-year median rate of 226,000 jobs. Analysts expect Friday's jobs report will show the economy added about 100,000 more jobs in July. How big is the U.S. economy? The U.S. economy produced about $30 trillion of goods on an inflation-adjusted annualized basis in the first quarter, but real GDP, the value of goods adjusted for inflation, fell 0.5% in the quarter because imported goods – which subtract from GDP – jumped more than 50%. What the data shows: Economists predict the economy grew in the second quarter when the Bureau of Labor Statisics releases it's report on Wednesday. Much of that "growth" could come from reduced spending on imports. How high is inflation? Inflation, a sustained increase in prices throughout the economy, touched its 10-year median of 2.3% in April – the first time pandemic spending set off 40-year high inflation. The Fed policymakers say they prefer inflation at 2%, or "low and stable," so we can "make sound decisions regarding saving, borrowing, and investment." What the data shows: Inflation has fallen significantly but remains above the 2% that the Fed targets. The annual inflation rate as measured by the consumer price index rose to 2.7% in June from 2.4% in May. The July CPI report will be released Aug. 12. Are consumers still making purchases? U.S. consumers account for $7 of every $10 spent in the U.S. economy. Retail sales' median monthly increase has been 0.4% for the past 10 years. That doesn't sound like much until you consider a 0.6% increase in June amounted to an extra $4.6 billion of spending. What the data shows: As the primary engine of the U.S. economy, we bought $720 billion worth of stuff on a seasonally adjusted basis in June. That was a big swing from the -0.9% decline in May. We'll find out Aug. 15 if we continued to spend in July. Why are gas prices going down? Our gasoline purchases aren't a large part of most of our budgets, but it's hard to miss the big numbers outside every station and not have some emotional reaction to their swings. That can have a psychological impact on our spending. One report showed a recent improvement in consumer sentiment closely correlated with lower gas prices. What the data shows: We're in the midst of the summer driving season where gasoline prices typically peak, but a gallon of regular gas has held steady throughout the summer and several cents below last year's prices. So how confident are U.S. consumers now? The University of Michigan measures U.S. consumer sentiment on a monthly basis. The index been as high as 101 ahead of the pandemic in February 2020 and as low as 50 when inflation peaked at 9.1% in June 2022. What the data shows: Consumer sentiment has been rising haltingly since bottomed out in May. Michigan will release its final measure of July sentiment on Friday. Current mortgage rates still elevated While the Fed's interest-rate decisions don't directly affect mortgage rates, they do ripple through the economy and have made the math more difficult for homebuyers. What the data shows: Mortgage rates have moved in a relatively narrow range – between 6.6% and 7% – and well above the 10-year median, according to Freddie Mac's weekly mortgage rate survey. Rates are down significantly from the November 2023 peak of 7.8%. Higher mortgage rates weigh on home sales Existing home sales are the lion's share of homes sold each month. The NAR reports each month's sales at a seasonally adjusted annual rate. Annual home sales peaked in 2005 at 7.08 million units. In September 2024, that number fell to 3.9 million units – lower than sales during any year following the financial crisis. What the data shows: Not surprisingly as mortgage rates have risen, existing home sales have tumbled. At the same time, average home prices are also rising because fewer homes are on the market. Speculation has been that homeowners are unwilling to sell and give up their low-rate mortgages. So how are investors looking at this information? The nation's stock markets are not the economy, but their movements reflect the combined bets investors are making on the economy. Investors have a keen eye on data points like in the charts above. Significant swings in our spending, or even our thinking, might potentially impact corporate profits in coming quarters. What the data shows: After a dip in early April because of tariff-related uncertainty, the S&P 500 has steadily climbed, reaching several new highs since June. The upward trend could suggest that investors are increasingly confident the final tariff agreements won't weigh on the economy as heavily as once feared.
