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I always caution not to make too much of a single report or single month’s data, but I think we can look at the July report and say it was unambiguously bad news. The job growth number for the month wasn’t bad at 73,000, but with the sharp downward revisions to the prior two months’ data, the average for the last three months was just 35,000. That is bad.

But it gets worse. Health care accounted for 55,400 of the new jobs created in July. It accounted for 142 percent of the job gains over the last three months. That means the economy outside of health care has been shedding jobs since April. That is not a good story.

Also, if you want a bit more bad news, the direction of revisions to data tends to be correlated. That means if the prior month’s revision was downward, odds are the current month’s will also be downward and vice-versa. That means when we get the August jobs report, the odds are better than even that the July numbers will have been revised downward, making a bad story worse.

The bad news on jobs is pretty much across sectors. Manufacturing has been losing jobs at a rate of 12,000 a month since April. Construction is treading water, adding 2,000 a month. Coal mining lost 400 jobs in July, 1.0 percent of employment in the sector. 

Restaurants lost 300 jobs in July, leaving employment in the sector just 1,800 higher than in December. Scientific research lost 1k jobs in July, down 11.1k since January, or 1.2% of total employment. That’s what happens when you whack the NIH budget and clamp down on university supported research.

Wage growth has also slowed. The annual rate of wage growth taking last three months (May, June, July) compared with prior (Feb, March, April) is 3.7%, down from 4.0% in 2023 and 2024. Slower wage growth, coupled with rising inflation, means lower real wage growth. 

The average hourly wage for non-supervisory workers in restaurants rose at just a 2.5% annual rate comparing the last three months with prior three months. These are the lowest paid workers whose pay tends to be very responsive to labor market conditions. 

While the overall unemployment rate, at 4.2 percent, is still relatively low, the unemployment rate for Black workers is at 7.2 percent. This is 2.4 percentage points above its all-time low hit in April of 2023. The employment-to-population ratio for Blacks is also at recession levels.

Taking my caution about not looking at a single report in isolation, this jobs report is consistent with other data we have been seeing. GDP grew at just a 1.2 percent annual rate in the first half of the year, with consumption growing at just a 0.9 percent rate. It grew 3.4 percent in 2024.

Inflation is edging higher due to Trump’s tariffs. Higher inflation coupled with slower wage and employment growth will mean slower consumption growth. That is not a good story for the economy.

I wish there was something positive I could point to in this month’s job report, but I really can’t. Employment, as measured by the household survey, has actually fallen over the last four months. Those data are highly erratic, but the direction is clearly wrong. 

Anyhow, I suppose Trump can celebrate that the jobs report will distract people from the Epstein scandal, but it’s hard to see how it is good for much else.

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