
August entered with a thud today as the July jobs report fell short of expectations - and the labor market gains for the previous two months were revised sharply lower, suggesting that the economy has been slowing. President Donald Trump responded to the news by firing the head of the Bureau of Labor Statistics and insisting that his economy is "BOOMING."
Adding to the economic worries, Trump on Thursday modified the "reciprocal" tariffs on dozens of countries, leaving the customs duties at levels ranging from 10% to 41%. The one-two punch means that the U.S. economy may be weaker than was widely thought just a day or two ago even as it enters a new era of trade policy that adds massive challenges and uncertainty.
Here's your evening update.
Trump Fires the Messenger After Dismal Jobs Report
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.
Critics said the move was reminiscent of petty tyrants and dictators. 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 data.
"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.
Trump Announces Sweeping Tariffs on Dozens of US Trading Partners
President Trump on Thursday announced higher tariffs on goods from some 70 U.S. trading partners, imposing import duties ranging from 10% to 41% that are set to take effect on August 7.
Trump's executive order claims that "large and persistent" annual trade deficits "constitute an unusual and extraordinary threat to the national security and economy of the United States." As such, the president set a 10% tariff baseline for countries with which the United States enjoys a trade surplus, a 15% tariff for countries where the United States runs a small trade deficit and rates higher than 15% on goods from 26 other countries, including a 35% duty on Canada (up from 25%), 39% on Switzerland and 41% on Syria. Tariffs on Brazil will be at 50%. Trump allowed another major trading partner, Mexico, another 90 days to reach a trade deal.
Goods from countries that weren't listed in Trump's order will face 10% tariffs, adhering to the level Trump set in early April.
Trump has thus far announced new trade agreements with the European Union, the United Kingdom and five Asian countries. CBS News reports that countries that have yet to strike trade deals with the Trump administration, including Canada and Mexico, account for 56% of American imports, according to Goldman Sachs.
The White House said the tariffs reflect Trump's efforts to protect against foreign threats to the U.S. economy and national security by creating fair trade relationships that will benefit Americans and strengthen the nation's defense industrial base. Trump and his administration have also touted the billions of dollars in revenue that the tariffs are generating, including $27 billion in June. But independent analysts say that the tariffs will raise costs for U.S. consumers and warn that Trump is making a decisive shift toward protectionist and isolationist policy that would have long-lasting implications.
"Trump has decisively and irrevocably taken the hammer to the global rules-based trading system, breaking it apart in a way that is going to be difficult to put together again for a long time to come," Eswar Prasad, a professor of trade policy at Cornell University, told The New York Times.
Trump Administration Is Paying 154,000 Federal Employees Not to Work
The Trump administration is paying more than 154,000 federal employees not to work as a result of its deferred resignation program, part of a larger effort to slash the government workforce.
The number was reported Thursday by The Washington Post, which cited sources at the Office of Personnel Management (OPM), the government's human resources agency. The tally includes employees across federal agencies who accepted an offer to voluntarily leave their jobs while continuing to get paid through September or the end of the year, depending on the offer. It does not include the many thousands of workers who were fired. "The employees who have resigned amount to about 6.7 percent of the government's civilian workforce of 2.3 million people," The Post's Meryl Kornfield, Hannah Natanson and Laura Meckler note.
Senate Democrats on Thursday issued a separate analysis that said the Trump administration's Department of Government Efficiency (DOGE) has generated at least $21.7 billion in waste, including $14.8 billion for the deferred resignation program's paying employees not to work. The latter figure was reportedly calculated based on the average federal salary and an estimate that 200,000 employees resigned.
Sen. Richard Blumenthal of Connecticut, who released the Senate report, said it was an indictment of the DOGE effort and the Trump administration's priorities. "At the very same time that the Trump Administration is cutting health care, nutrition assistance, and emergency services in the name of 'efficiency' and 'savings,' they have enabled DOGE's reckless waste of at least $21.7 billion," Blumenthal said.
OPM defended the deferred resignation program and criticized the Democrats' report.
"Ultimately, the deferred resignation program was not only legal, it provided over 150,000 civil servants a dignified and generous departure from the federal government," OPM spokeswoman McLaurine Pinover said in a statement to the Post. "It also delivered incredible relief to the American taxpayer. No previous administration has gotten even close to saving American taxpayers this amount of money in such a short amount of time."
In an online post, OPM Director Scott Kupor accused the Democrats of ignoring long-run annual savings of $20 billion or more by focusing only on the one-time costs involved in the resignations.
"It's backward logic like this that got us in our current financial dire straits - $7 trillion in annual spend (up 50% since 2019) and $36 trillion in total debt (increasing to the tune of $2 trillion per year)!" Kupor wrote. "As for costs? Much of what these Senate Democrats points to is a direct result of the legal and bureaucratic muddle we operate in. If the federal government had a modern, at-will employment framework like most employers, we wouldn't need complex workarounds or face sky-high administrative overhead just to get things done."
Fiscal News Roundup
- US Notches Worst Three Months for Jobs Growth Since Pandemic – Bloomberg
- Trump Fires BLS Commissioner After Weak Jobs Report and Baseless Claim of 'Faked' Stats – ABC News
- Labor Secretary Hails Trump Move to Fire BLS Chief – The Hill
- Trump Tariff Blitz Unleashes Delayed Shock to Global Economy – Bloomberg
- Senate Unlocks 'Minibus' Deal, Prepares to Advance Three Spending Bills – Politico
- Donald Trump Reignites Global Trade War With Sweeping Tariff Regime – Financial Times
- Senate Strikes Deal to Approve Funding Bills Ahead of August Recess – The Hill
- Senate Panel Advances More Than $1 Trillion in Government Funding for 2026 – The Hill
- Republicans, Appropriators Dominate House Earmarks – Roll Call
- Trump Fumes at Powell, Urging Federal Reserve Board Takeover – The Hill
- Deep Staff Cuts at a Little-Known Federal Agency Pose Trouble for Droves of Local Health Programs – KFF Health News
- Trump Says He Asked 17 Drugmakers to Take Steps to Cut U.S. Prices Within 60 Days – CNBC
- Corporation for Public Broadcasting to Shut Down After Federal Funding Cuts – ABC News
- GOP Group Launches $6 Million Plan to Defend Megabill – Politico
- CDC Says Childhood Vaccination Rates Have Dropped Again – New York Times
- Massachusetts Governor Proposes $400 Million for Colleges, Citing Federal 'Uncertainty.' – New York Times
Views and Analysis
- After a Week of Mediocre Economic News, Trump Wants to Fire the Messenger – Binyamin Appelbaum, New York Times
- Tariffs? In This Economy? Good Luck With That – Robert Burgess, Bloomberg
- Trump's Trade Deals Make America European Again – Joseph C. Sternberg, Wall Street Journal
- Trump's Tariffs Are Doing Just What His Critics Feared – Ramesh Ponnuru, Washington Post
- The Big Chill Hits the Labor Market as Job Creation Cools in July – Joseph Brusuelas, RSM
- Trump's Tariffs Are Undermining the Peaceful, Prosperous World Order – Fareed Zakaria, Washington Post
- Welcome to Liberation Day 2.0. Six Experts Weigh In – Washington Post Opinions
- Here's a Better Plan for Retirement Than Social Security – Nir Kaissar, Bloomberg
- 'Trump Accounts' Cannot Possibly Replace Social Security – Ryan Cooper, American Prospect
- Here Are the Winners and Losers of the Trade War – Madison Mills, Axios
- The Best Way to Provide Relief Is to Repeal Tariffs, Not Offer Tariff Rebate Checks – Alex Durante, Tax Foundation
- The Floods in Texas Show Why We Need to Fully Fund NOAA Labs – John Dos Passos Coggin, The Hill
- Data From Calif. and D.C. Shows How Minimum Wage Hikes Can Hurt – Washington Post Editorial Board
- The Army's Acquisition Process for New Weapons Systems Is Still Broken – Dov S. Zakheim, The Hill
- Trump's Policies Are Here to Stay – Megan McArdle, Washington Post