The U.S. economy added just 73,000 jobs in July, far short of the 104,000 expected by economists, according to Friday’s Labor Department report. Unemployment rose to 4.2 percent, with significant downward revisions to previous months raising alarm about the true state of the labor market.
Job creation in May and June was slashed by a combined 258,000 positions. May was revised from 144,000 to only 19,000. June, initially estimated at 147,000, now stands at a meager 14,000. These changes suggest the strength of earlier labor reports was drastically overstated.
President Donald Trump criticized the Federal Reserve’s response, calling Chairman Jerome Powell a “stubborn MORON” and urging the Fed Board to override him and cut interest rates. Trump said on Truth Social, “DROP THE RATE! The good news is that Tariffs are bringing Billions of Dollars into the USA!”
Wages continued to rise despite the slowdown. Average hourly earnings increased 0.3 percent in July, bringing the annual gain to 3.9 percent. Blue-collar wages rose to $31.34 per hour, up 8 cents from June.
Private payrolls increased by 83,000, led by gains in healthcare and social assistance, which added 73,000 jobs. These government-adjacent sectors continue to dominate job growth. The leisure and hospitality sector grew by just 5,000 jobs, signaling weak discretionary spending.
Manufacturing lost 11,000 jobs, all in nondurable goods, while construction added only 2,000. Mining employment dropped by 2,000. The federal government cut 12,000 jobs, with declines also seen at state and local levels.
Notably, foreign-born employment declined while native-born employment rose. This labor market shift aligns with the Trump administration’s crackdown on illegal immigration and efforts to prioritize American workers.
Fed Governor Christopher Waller broke with the central bank’s decision to hold rates steady, stating that real labor market growth is near “stall speed.” He called for an immediate rate cut to avoid further deterioration.
Powell insisted the labor market remains “solid” and interest rates are only “mildly restrictive.” However, the latest jobs data and revisions have cast doubt on that claim. The Fed has now held its benchmark rate between 4.25 and 4.50 percent for five consecutive meetings.
