Donald Trump’s contentious decision to fire the U.S. statistics chief has done little to stem an economic slump, with the latest jobs report showing only 22,000 jobs were added in August - well below expectations.
One month after Trump sacked the Bureau of Statistics Commissioner Erika McEntarfer in response to weak job numbers, the unemployment rate rose to 4.3 per cent, the highest since 2021.
Revised data also showed employers cut 13,000 jobs in June, the first time that has happened since the pandemic effectively stalled the economy in December 2020.
“The jobs market is cracking,” analyst Saira Malik, chief investment officer of Nuveen, said on CNBC’s Squawk Box.
The numbers released on Friday mark the first such release since a dismal jobs report last month prompted Trump to fire McEntarfer, the bureaucrat in charge of them, and claim the data was politically manipulated.
He then nominated Heritage Foundation economist E.J. Antoni, a Project 2025 architect and fan of Nazi battleships, as her potential replacement.
But, in a silver lining for the President, the downturn could mean he may soon get his wish for the Federal Reserve to lower interest rates after months of pressure on central bank chairman Jerome Powell.
“This underlines growing risks in the labor market and injects fresh urgency into discussions over monetary policy direction,” Vervent chief executive David Johnson said in response to the data.
The figures are the latest snapshot of the US economy under Trump’s aggressive trade agenda.
They come after Commerce Secretary Howard Lutnick predicted, less than an hour before Friday’s data was released, that the report would be more accurate as a result of Trump’s decision to remove the bureau’s statistics chief last month.
“I think they’ll get better,” he told CNBC when asked whether people should believe the numbers were accurate.
Trump, however, sought to lower expectations on Thursday night, telling reporters at the White House: “They come out tomorrow, but the real numbers that I’m talking about are going to be whatever it is, but will be in a year from now on.”
On Friday, his press secretary Karoline Leavitt said the president had created more than half a million private sector jobs for American-born workers, re-shored manufacturing and implemented “the most aggressive pro-growth agenda in our country’s history.”
But she blamed Powell for holding them back, saying in a statement: “It’s time for the Fed to finally do the right thing on behalf of the American people and cut interest rates.”
According to the latest report, the number of Americans who have been out of work for more than six months has been steadily rising in recent months and hit 1.9 million in August.
Government bond yields, which underpin borrowing rates for companies and consumers, have continued to drop, and almost every industry apart from health care lost jobs.
Among them were manufacturing, construction and the federal government.
The figures undercut Trump’s ongoing claims about the economy booming.
“One year ago our country was a dead country, now we are the hottest country anywhere in the world,” he said earlier this week.
Economists and analysts have also attributed some of the softness to the impact of his tariff policies and trade wars, which have caused uncertainty for many businesses and consumers.
“August’s employment report confirmed that the labor market has headed off a cliff-edge,” Bradley Saunders, North America economist at Capital Economics, said in a Friday research report.
Kevin Hassett, the director of the White House National Economic Council, acknowledged the results were a “disappointing” readout.
Still, he argued that the economy was otherwise healthy, particularly in attracting more private investment.
“We expect this number will be revised up, that’s been the pattern over and over,” he said, speaking to Fox News about the August figures.
“If that happens then it will be consistent with all of the other indicators we’re seeing: industrial production is at an all time high, capital spending is up... there are a lot of real positive things to see.”
