President Donald Trump on Friday demanded the firing of the civil servant in charge of labor statistics after a weak jobs report cast fresh doubts about the strength of the U.S. economy and job market.
U.S. employers added just 73,000 jobs in July, the Labor Department reported Friday morning, falling short of expectations for job growth of about 100,000. Estimates for job growth in May and June were revised sharply downward, as well, eliminating 258,000 jobs from the data and bringing average job growth over the last three months to just 35,000 per month — the worst three-month showing since the Covid-19 pandemic.
The unemployment rate inched higher by a tenth of a point in July, rising to 4.2%. The labor force participation rate slipped to 62.2%, continuing a modest downward trend.
Most of the growth in July was recorded in healthcare and social assistance, which added about 73,000 jobs. Outside that sector, job growth effectively ground to a halt, with modest gains in retail and finance offset by losses in business services and wholesale trade. Trump’s war on the federal bureaucracy is also beginning to show up in the employment numbers, with the federal government shedding 12,000 jobs in July, contributing to a loss of 84,000 federal jobs this year. That number is expected to grow as more government workers enter the unemployment system.
Manufacturing employment continued to fall, as well, dropping 12,000 in July, the third straight month of losses. Trump’s tariffs appear to be weighing on the sector, which faces an increase in the cost of inputs, some of which are imported, as well as general uncertainty about the direction of the economy.
What the experts are saying: Many economists believe that the sharp slowdown in hiring is a sign that Trump’s bumpy rollout of new, higher tariffs on trading partners around the world is weighing on businesses, as is the crackdown on undocumented immigrants. The labor market has held up so far in 2025, but fissures are starting to appear, and they may be deeper than critics previously thought.
“I think we’re looking at a labor market that’s not absolutely falling off a cliff, but it’s getting materially weaker,” said economist Oliver Allen of Pantheon Macroeconomics.
Economist Daniel Altman, former chief economist at Instawork, wrote that, aside from the pandemic, “this was the worst three-month period for the labor market since July through September of 2010, during the aftermath of the Great Recession – and it's not even close.”
Economists pointed to Trump’s tariffs and the uncertainty they create for businesses as affecting the labor market. Altman warned that “tariff-affected sectors are facing stagflation.” And Diane Swonk, chief economist at KPMG, told The New York Times that businesses are more reluctant to hire when it’s unclear what Trump will do on tariffs. “It’s the uncertainty that causes the paralysis,” she said.
Peter Boockvar, the chief investment officer of Bleakley Financial Group, agreed. “Bottom line, let's be honest here, volatile and costly trade policy has stalled decision making on the part of companies with many hitting the pause button on hiring,” he said. “If I had a dollar for every earnings call where an executive mentioned 'the challenging macroeconomic environment.'”
For some analysts, the data suggests the economy is on the brink of a recession. “To me, today’s jobs report is what entering a recession looks like,” said Josh Bivens of the Economic Policy Institute. “Could we pull up? Sure. But if we look back and end up dating an official recession that starts 3-6 months from now, this is what it would look like today – rapid softening/deterioration in the labor market.”
Other analysts said weaker job growth may be the new normal due to the dramatic reduction in immigration under the Trump administration, and not necessarily a sign of trouble. “People are going to have to get used to employment gains that are meh that will not tell us on their own that the job market is weak,” Guy Berger of the labor-market think tank Burning Glass Institute told The Wall Street Journal. “That is a weird thing for people to get used to.”
Trump rages against the numbers: In response to the July report, the president demanded that the head of the Bureau of Labor Statistics be fired.
“I was just informed that our Country’s ‘Jobs Numbers’ are being produced by a Biden Appointee, Dr. Erika McEntarfer, the Commissioner of Labor Statistics, who faked the Jobs Numbers before the Election to try and boost Kamala’s chances of Victory,” Trump wrote on his social media platform. “We need accurate Jobs Numbers. I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY. She will be replaced with someone much more competent and qualified.”
McEntarfer was fired Friday afternoon.
Sen. Mark R. Warner, a Democrat who sits on the Finance and Banking committees, released a statement slamming both Trump’s policies and his decision to fire a civil servant who delivered unwelcome news.
“The jobs report confirmed what economists have been warning for months: President Trump’s chaotic trade war and erratic tariffs are slamming American businesses, stifling investment, and raising prices on families,” Warner said. “Firing the ump doesn’t change the score. Americans deserve to know the truth about the state of the Trump economy.”
White House sees an upturn – and wants a rate cut: Stephen Miran, Trump’s top economic adviser, argued Friday that the weak job numbers reflect a time before Trump’s tax and tariff policies were in effect. Looking forward, Miran predicted that the tax cuts and protectionist tariffs Trump has put in place will spark an economic boom.
Miran also said the data shows that Trump has been right to demand lower interest rates from the Federal Reserve, something the Fed refused to provide earlier this week when it decided to hold rates steady. Trump returned to that theme Friday, calling Fed Chair Jerome Powell “a stubborn MORON” who should lower rates — and he called on the Fed board to “ASSUME CONTROL” if Powell fails to do so.
The two Fed governors who voted unsuccessfully for a rate cut this week, Christopher Waller and Michelle Bowman, repeated their call for the Fed to cut rates.
“With underlying inflation near target and the upside risks to inflation limited, we should not wait until the labor market deteriorates before we cut the policy rate,” Waller said in a statement. “When labor markets turn, they often turn fast. If we find ourselves needing to support the economy, waiting may unduly delay moving toward appropriate policy.”
Bowman added that cutting in July would have “proactively hedged against a further weakening in the economy and the risk of damage to the labor market.”
However it plays out politically, Friday’s jobs report convinced investors that interest rate cuts by the Fed are now more likely. Saying “we can likely bank on a September Federal Reserve rate cut,” Bleakley’s Boockvar noted that the odds of two rate cuts this year quickly rose to 88%, up from 48% earlier this week.