Impact of Trump's Policies on the Job Market
The latest labor market snapshot for June 2025 suggests a pullback in job growth, with economists predicting that employers added 115,000 jobs, a decrease from the initially estimated 139,000 for May. This slowdown comes as hiring activity is running near 10-year lows.
Despite the slowdown, layoff activity hasn't accelerated recently, as indicated by weekly jobless claims data, layoff announcement reports, Worker Adjustment and Retraining Notification Act postings, and the government's Job Openings and Labor Turnover Survey report. The most recent jobless claims data indicates that people are having a harder time finding work, as continuing claims are running near four-year highs.
In June, US-based employers announced 47,999 job cuts, marking a 49% decline from May and a 2% drop from June of last year. Foreign-born workers have accounted for about three-quarters of total labor force growth since February 2020.
The unemployment rate is expected to increase by 0.1 percentage point, to 4.3%, according to economists. Economist Daniel Zhao predicts a combination of headwinds, including tariffs, federal layoffs and funding cuts, slowing immigration, high interest rates, and more, could decelerate the job market.
The labor participation rate fell in the May jobs report, and the guts of the report indicated that cracks were continuing to spread, with nearly 91% of the month's job gains coming from health care and leisure and hospitality. Recent efforts to curtail unauthorized immigration are contributing to a shrinking of the labor force.
President Donald Trump's second-term policy actions, such as broad-based tariffs, deportations, federal spending cuts, and government workforce layoffs, have the potential to reshape the American economy and global order. President Trump celebrated the positive job numbers in May, highlighting that wages were up and prices down, and touted broader economic gains like tariff revenues and stock market growth.
Looking ahead, economists forecast a moderate slowdown in the labor market through mid-2025. The unemployment rate is expected to peak at 4.5% in the year ahead, according to economists at Wells Fargo. Job growth in the United States has become anemic, according to Ron Hetrick, senior labor economist at Lightcast. The headline numbers from the May jobs report indicated that the labor market was cooling, but not collapsing.
In summary, the U.S. labor market showed solid payroll gains in May 2025, adding 139,000 jobs, but with a slowdown expected in the coming months. The unemployment rate remained stable at 4.2% in May 2025, and federal employment declined, with 22,000 federal jobs lost in May and 59,000 lost since January. Economists forecast a moderate slowdown in the labor market through mid-2025, with the unemployment rate expected to rise to around 4.3-4.5% by June 2025 and possibly stay near that level through 2026.
In light of the forecasted moderate slowdown in the labor market, business owners may need to reevaluate their hiring strategies due to the anticipated rise in the unemployment rate to around 4.3-4.5% by June 2025. This shift in the job market could also influence policy-and-legislation related to immigration and workforce adjustments, potentially affecting general news and political discussions.
