The newest jobs report, insofar as the Trump administration has released any data so far, spells trouble ahead for the country, University of Michigan economist Justin Wolfers told MS NOW’s Katy Tur on Tuesday afternoon.
“Katy, it looks like you got a rough day today,” said Wolfers. “Lots of bad news, and I can deliver it with a smile. But I’ve just got more bad news for you, mate. Maybe I shouldn’t pretend. So unemployment is up. It’s up to 4.6 percent. A year ago, it was down at 4 percent. That tells you hundreds of thousands of Americans are struggling to find work right now. Wage growth is weak. That tells you that the labor market is weak. People aren’t finding it easy to go out and find themselves a better job when things aren’t looking good.”
The revisions of prior months, Wolfers noted, also “painted a new and much bleaker picture.”
“If you look all the way back to ‘Liberation Day‘ in April, it’s possible that the economy has actually created no jobs at all. The printed numbers are a little higher, but they’re widely expected to be revised down. So this is an economy that’s stalled and maybe even going backwards,” he said.
“Well, that doesn’t sound good at all,” said Tur. “The expectation among the White House is that things are going to turn around come January, that 2026 is going to be their year with the economy. Any reason to believe that things might get better next year?”
“We always wake up believing tomorrow can be a better day,” said Wolfers. “But I’m also an economist, and the single thing I know about the economy is the best way of figuring out what’s going to happen next year is probably guessing what happened last year is going to repeat itself again.”
“Look, there’s a rule out there, a rule of thumb lots of economists use called the Sahm Rule,” said Wolfers. “Basically, it says when the unemployment rate … has risen by half a percentage point, then a recession is imminent. It’s got a very good track record right now. The unemployment rate has risen by half a percentage point. So it is saying that we really are on the cusp of a recession. And if you really want to bring it home one more way, let me tell you, since April, the Canadian economy, the Canadians have created more jobs than the American economy has. And of course, we’re much, much bigger than they are.”
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