SCOTT SIMON, HOST:
A burst of economic news this week offers an unflattering picture of the U.S. economy six months into President Trump's new term. Official tallies show fewer jobs, higher prices and slower economic growth as the President's tariffs take effect. Even the stock market, which had been shrugging off worries about the president's policies, sagged on Friday, and President Trump called for firing one of the government's top number crunchers. NPR chief economics correspondent Scott Horsley joins us now. Scott, thanks for being with us.
SCOTT HORSLEY, BYLINE: Good morning.
SIMON: Let's begin with that jobs report yesterday. Kind of a gut punch. What does it say?
HORSLEY: It says that the labor market is not as strong as many people thought. Employers added a lot fewer jobs than expected in July. And job gains for May and June, which had looked pretty healthy, were all but erased when the regular monthly revisions came in. Now, it is important to note that the U.S. workforce is not growing as fast as it was a few years ago. Immigration's pretty much dried up, and with a lot of Baby Boomers retiring, we don't need to add as many jobs as we once did to keep pace with the population. But even with that low bar, hiring fell short in these last three months, so the unemployment rate inched up to 4.2%.
SIMON: Scott, why would job growth be so weak?
HORSLEY: Well, it's matching a slowdown in the wider economy. We got new GDP numbers this week, which show the economy is still growing but only about half as fast as it did in the two previous years. If you strip out some of the noise around imports and government spending, private sector demand has downshifted. And economist Jed Kolko, who's with the Peterson Institute for International Economics, says that means employers just don't need as many workers.
JED KOLKO: It looks like overall demand in the economy is weakening, and that's consistent with a slowdown in payrolls that we now see more clearly is happening.
HORSLEY: Kolko also suggests that industries that rely on a lot of immigrant labor, like construction and restaurants and home health care, may be having trouble finding the workers they would like to hire. The share of immigrants who are in the workforce has dropped over the last year, and it seems likely that increased immigration enforcement has driven some people underground.
SIMON: President Trump also announced plans this week for increased tariffs on imports from many countries. What kind of effect does that have on the economy?
HORSLEY: Tariffs are achieving one of the president's goals, which is raising a lot of money for the government. Tariffs are bringing in close to $30 billion a month right now, and that could go higher if these increased taxes take effect. But so far, tariffs don't seem to be meeting another of the president's goals, which is boosting domestic manufacturing. Factory orders are in a slump. Factories cut jobs last month for the third month in a row. Tom Derry heads the Institute for Supply Management, which conducts a monthly survey of factory managers. He says the only silver lining of this new round of tariffs is that business owners may finally get some degree of certainty.
TOM DERRY: Most of us in the business world believe a zero tariff is preferred, but, you know, that's not what we're living with. If it becomes more stable, we can react and deal with it.
HORSLEY: Meanwhile, Trump's tariffs are pushing up prices, especially on things like toys and appliances. The Commerce Department said this week consumer prices were up 2.6% in June from a year ago, which was a bigger increase than the previous month. So inflation's moving in the wrong direction, and that makes it harder for the Federal Reserve to cut interest rates, even if that might help to prop up the sagging job market.
SIMON: And of course, the president called for the head numbers cruncher of the government to be fired. What does that do to the markets?
HORSLEY: Yeah, the president suggested with zero evidence that the jobs number had been rigged to make him look bad. It's not the first time Trump has attacked the government's numbers. He loves to tout them when they're favorable, and when they're not, he tries to deflect the blame. Economists across the political spectrum sounded the alarm about this move to fire the top statistician at the Labor Department, saying it's the kind of thing you'd expect to see in a banana republic, not the United States of America.
SIMON: Scott Horsley, thanks so much.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
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