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Tariffs

Labor Market Slows Down, Raising Concerns of Further Decline

Strategic Insights

— 1 min read

The US labor market has taken a sudden turn for the worse, with employers adding only 22,000 jobs in August, well below expectations, and the unemployment rate rising to 4.3 percent. The gloomy outlook has sparked concerns of a potential slowdown, with economists warning that the pace of hiring, layoffs, and quits is at a low, leaving little room for error. The darkening labor market picture poses risks for President Trump, who has staked his presidency on a strong economy, and could spell trouble for the president and Republicans ahead of the midterm elections.

Key Takeaways:

  • Employers added only 22,000 jobs in August, the lowest in two years, and below the expected number.
  • The unemployment rate rose to 4.3 percent, with the number of available job-seekers fading in the last several months.
  • The labor market has cooled since its pandemic peak, with the economy facing challenges from high interest rates, inflation, and tariffs.
  • The number of people unemployed for 27 weeks or longer rose to 1.93 million, or a quarter of everyone who is out of work.
  • Unemployment has been rising fastest among people ages 16 to 24, who tend to have less experience.
  • Average hourly earnings rose 3.7 percent from a year earlier, but at a slowest pace since July 2024.
  • The tax cuts in the Republicans' domestic policy bill may support some investment in the coming year, but economists remain cautious.

Statistics:

  • 22,000: The number of jobs added by employers in August.
  • 4.3 percent: The unemployment rate in August, up from 4.2 percent in July.
  • 1.93 million: The number of people unemployed for 27 weeks or longer, a quarter of everyone out of work.
  • 16-24 years old: The age group experiencing rising unemployment, with less experience.
  • 3.7 percent: The year-over-year increase in average hourly earnings, the slowest pace since July 2024.
  • 50 employees: The number of employees at Todson, a distributor of bicycle parts, which has put off hiring due to tariff uncertainty.

Sources:

  • Associated Press
  • Gallup
  • National Federation of Independent Business
  • Conference Board
  • S&P Global Market Intelligence
  • Guggenheim Partners

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