A Historic Job Market Win Streak Ends

Getty Images
By Yuval Rosenberg and Michael Rainey

Good evening. Friday brought another weak jobs report and new rebranding of the Department of Defense. We'll get you caught up heading into the weekend.

The US Job Market Breaks a Historic Win Streak

U.S. employers created just 22,000 new jobs and the unemployment rate rose a tenth of a percentage point to 4.3% in August, the Bureau of Labor Statistics reported Friday morning. The job growth total fell well short of expectations of around 75,000, providing another sign that the labor market has weakened considerably over the last few months.

Previous monthly reports were revised lower, as well, with the updated data showing a job loss of 13,000 in June - the first time the economy has lost jobs since December 2020, during the Covid pandemic, breaking a streak of 53 straight months of gains. The July tally was revised slightly higher, but the combined numbers for June and July moved lower by 21,000. Over the last four months, only 104,000 jobs were created, an exceptionally low number by historical standards.

Modest job gains in healthcare (+31,000) and social assistance (+16,000) were offset by losses in a number of other sectors, including federal government (-15,000), wholesale trade (-12,000) and manufacturing (-12,000). Over the past year, employment in manufacturing - which President Donald Trump wants to revive through tax cuts and an unorthodox campaign of tariff increases - is down by 78,000.

White House framing: The Trump administration downplayed the report. Trump had fired the head of the BLS last month after a weak jobs report, claiming the data was "rigged" to make him look bad, and on Thursday night he said that the "real" numbers would be out a year from now.

Kevin Hassett, the director of the White House National Economic Council, admitted that Friday's numbers were "a little bit disappointing," but said he expects the data to be revised higher in the future. Hassett claimed that better days for the economy are just around the corner, if not already here, thanks to the tax cut package Trump signed into law in July.

Treasury Secretary Howard Lutnick offered a similar line of analysis. Asked early Friday if the August jobs numbers would be trustworthy, Lutnick told CNBC that he expects the jobs data to get more accurate over time as "people who are just trying to create noise against the president" are removed from the federal bureaucracy, with the numbers revealing a much stronger economy, thanks to the president's tariff policy. "This is going to be the greatest growth economy ... six months from now, a year from today."

What the analysts are saying: For the most part, economists said the numbers confirm that the labor market is struggling, in part due to Trump's tariff hikes, which have weighed on U.S. businesses exposed to global markets.

"The labor market is continuing to slow to stall speed," Rebecca Patterson, an economist at the Council on Foreign Relations, told The Wall Street Journal. "The economic outlook is incredibly uncertain. Companies are being very cautious about adding personnel."

Scott Anderson, chief U.S. economist at BMO Capital Markets, wrote in a commentary that hiring was "slumping dangerously close to stall speed. This raises the risk of a harder landing for consumer spending and the economy in the months ahead."

RSM Chief Economist Joseph Brusuelas said while multiple factors are weighing on the labor market, including immigration policy and the ongoing retirement of the baby boomers, Trump's tariffs are particularly notable. "The impact of tariffs on hiring is undeniable-not only in August's numbers but throughout the May-August period, when tariffs pushed economic uncertainty to the highest level in years," he wrote in a research note.

A group representing U.S. manufacturers said Friday that the latest jobs numbers indicate the need for changes in policy. "The August jobs report should hopefully spur on two important actions," Scott Paul, president of the Alliance for American Manufacturing, said in a statement. "First, a cut in interest rates by the Federal Reserve. Second, concluding tariff actions and trade deals to provide businesses with the certainty they need to hire, invest in new capital equipment, and realign supply chains."

Most analysts agreed that the report provides additional data to support a rate cut by the Federal Reserve when the central bank meets later this month. "The fourth month of sub-par employment performance signals a dramatic stall in hiring and fully supports the Fed starting rate cuts at the next meeting on September 17," Nationwide economist Kathy Bostjancic wrote.

Trump Signs Executive Order to Rename Pentagon the 'Department of War'

President Trump signed an executive order on Friday allowing the Department of Defense to be called the Department of War, restoring a name that had been used from 1789 to 1947.

"We won the first World War, we won the second World War, we won everything before that and in between, and then we decided to go woke and we changed the name to Department of Defense. So we're going Department of War," Trump said in the Oval Office. "I think it's a much more appropriate name, especially in light of where the world is right now."

Asked what message the rebranding sends to enemies, allies and the American people, Trump said it was a message of victory. "I think it sends, really, a message of strength. We're very strong. We're much stronger than anyone would really understand."

A formal renaming would require an act of Congress, and Trump allies on Capitol Hill are proposing legislation to do so. Without such legislation, Trump's order authorizes the use of "Department of War" as a secondary title and allows officials including Defense Secretary Pete Hegseth to use titles such as "Secretary of War" in official correspondence and public communications. The order reportedly also directs Hegseth to recommend actions leading to a permanent renaming as the U.S. Department of War.

Hegseth said Friday that the United States hadn't won a major war since the Defense Department name was adopted. "This name change is not just about renaming, it's about restoring," Hegseth said. "We're going to go on offense, not just on defense."

Under President Harry S. Truman, the War Department was split into the Department of the Army and the Department of the Air Force in 1947, with those two new entities joining the Department of the Navy, created in 1798, as part of the "National Military Establishment (NME)." In 1949, the NME was renamed the Department of Defense, and the secretary of defense was given more control over the military departments. The 1949 changes also created the position of chairman of the Joint Chiefs of Staff.

Truman said the changes were "a major step toward more responsible and efficient administration of the military affairs of the Nation" and would provide "better financial management."

Politico notes that an official renaming would have a financial impact: "It would likely cost billions of dollars to change the names of hundreds of Pentagon agencies, their stationary, emblems, plaques and other signage at the Defense Department, along with bases around the world. The expense could put a serious dent into the administration's efforts to slash Pentagon spending and waste."

Asked about the cost of his change, Trump downplayed the expense.

"Not a lot," he said. "We know how to rebrand without having to go crazy. We don't have to re-carve a mountain or anything. We're going to be doing it not in the most expensive - we're going to start changing the stationery as it comes due, and lots of things like that."

He went on to criticize the renaming of nine military bases that had honored Confederate leaders. The Trump administration restored the previous names, but to get around a ban on honoring people who fought against the United States, the military used the names of service members with similar names to the Confederate ones that had been removed.

Quote of the Day

"Looks like we've lost India and Russia to deepest, darkest, China. May they have a long and prosperous future together!"

  • President Trump, in a social media post accompanied by an old photo of Russian President Vladimir Putin, Chinese President Xi Jinping and Indian Prime Minister Narendra Modi, who met this week in China - a gathering that is widely viewed as a sign that the three countries are strengthening their ties. Trump has levied steep tariffs on India, in part due to its continued purchases of Russian oil.

Fiscal News Roundup

Views and Analysis