White House economist Kevin Hassett described a “booming” economy this week, pointing to 83,000 construction workers currently building factories, unemployment claims at their lowest since World War II, and more job openings than unemployed workers.
But the latest government data tells a starkly different story, CNN senior business reporter Matt Egan said Monday.
The economy actually lost 23,000 jobs last month, far worse than expected, according to the July jobs report. Egan said it’s “pretty hard to square” the administration’s booming-economy description with figures showing the U.S. is losing jobs rather than adding them by the tens or hundreds of thousands, as would be typical when the labor market is genuinely strong.
May’s job count was revised down by 66,000, and June’s by 37,000, while July’s total came in 118,000 weaker than consensus estimates. Taken together, Egan said, the economy has roughly a quarter-million fewer jobs than previously believed just days ago. Manufacturing employment has also declined since President Donald Trump took office for a second term.
Labor supply, which normally rises as workers are lured off the sidelines during a strong job market, is instead falling, and wage growth — which should climb as employers compete for talent in a tight market — has hit a five-year low.
The weak jobs data raises the stakes for Wednesday’s inflation report. The Cleveland Federal Reserve estimates monthly inflation at a subdued 0.1 percent, though the annual rate is expected to hold at an elevated 3.4%. A tame reading could ease pressure on the Federal Reserve to act quickly and bolster Fed Chairman Kevin Warsh’s push for patience on interest rate hikes, given concerns that rushing hikes could further damage the job market. Odds of a September rate hike have dropped to about 46 percent, down sharply from 67 percent a week earlier.
Egan also flagged the stalled Iran diplomacy and a largely closed Strait of Hormuz as ongoing risks, noting oil, diesel, jet fuel and gasoline prices could stay elevated without a resolution.
“The stream of numbers that have been coming out that are underwhelming is growing and growing and growing,” said CNN’s John Berman, “which is why it’s so discordant to hear Kevin Hassett say the economy is booming because it’s really the stock market is booming the rest of the economy? Not as much.”
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