Signs are becoming increasingly evident that President Donald Trump’s tariff strategy is impacting the U.S. economy significantly. Despite this, the latest jobs data from the Bureau of Labor Statistics indicate some level of economic stability into May. Analysts predict that around 120,000 new jobs were added last month, which, while a positive figure, is the lowest since February and falls short of the recent average of about 150,000.
The private payroll processor ADP highlighted that April saw the weakest job growth since March 2023, further reinforcing the indications of a cooling job market. Economists often note that ADP’s reports tend to align with official government data; however, the trend suggests that job creation has been sluggish, with fewer jobs added in five of the last seven months.
Additionally, the Institute for Supply Management reported an unexpected contraction in service sector activity for the first time in nearly a year last month. The Department of Labor also announced that weekly jobless claims exceeded expectations, reaching the highest levels since October, signaling a challenging landscape for job seekers.
Mark Zandi, chief economist at Moody’s Analytics, remarked that the implications of the trade war are still unfolding, and inflation is expected to rise as businesses react to Trump’s tariffs by increasing prices. A recent Federal Reserve survey indicated widespread anticipation of rising costs, which could be attributed to these tariffs. The Congressional Budget Office further projected an average inflation increase of 0.4 percentage points in 2025 and 2026 due to these trade policies.
Zandi emphasized that, as consumer purchasing power diminishes with rising prices, a reduction in economic activity and hiring may soon follow. Hiring rates are stagnating at levels reminiscent of 2014, a time when the economy was still recovering from the Great Recession. Trump has asserted that his tariffs are leading to a “booming” economy, yet he simultaneously urges the Federal Reserve to lower interest rates to facilitate borrowing.
Despite the visible signs of economic strain, analysts caution that the Fed may maintain elevated rates for the time being to manage inflation. As Andrew Husby from BNP Paribas stated, substantial changes in the economy would need to occur before relief through lowered borrowing costs is realized for consumers.
In conclusion, while economic indicators such as job growth may show some stability, the broader picture suggests caution with inflation looming and the job market showing signs of fragility. This complexity indicates that the economic landscape will likely continue to be challenging in the upcoming months.