There are growing signs that President Donald Trump’s unprecedented tariff strategy is beginning to take a bigger sip from the US economy.
Still, the latest employment data from the Bureau of Labor Statistics likely shows economic stability that continues into May.
The forecast added 120,000 new payroll calculations last month. Most economists consider over 100,000 healthy people, but that still represents the fewest monthly jobs created since February, below the average of around 150,000 in the last 12 months.
Even if job numbers win the forecast, other data already point to soft economic signs.
On Wednesday, Private Payroll Processor ADP reported that it had the weakest monthly total employment since March 2023. Economists say ADP data is often in line with official BLS data, but the trend is clear, with ADP reporting fewer jobs added in five months of the past seven months.
Another report from the Institute for Supply Management showed that activities at U.S. services companies unexpectedly signed for the first time in almost a year last month, causing employment to slow down.
On Thursday, the Department of Labor reported weekly unemployment claims were higher than expected, reaching its highest level since October.
Mark Zandy, chief economist at Moody’s Analytics, told NBC News.
Zandi said future inflation measurements likely reflect companies raising prices due to Trump’s import tax. In fact, a Federal Reserve survey released Wednesday showed that “expanding reports” from companies that “hope costs and prices will rise at a faster rate in the future” are high tariffs, “putting pressure on costs and prices.”
Separately, a survey by the Congressional Budget Office estimates that inflation rates will increase by an average of 0.4 percentage points in 2025 and 2026 as a result of Trump’s tariffs.
As prices start to rise, consumer dollars aren’t that far away, Zandi said. That could possibly lead to a feedback loop of declining economic activity and declining employment.
“We already feel the job market is fragile,” he added.
As demand softens “more obviously” Zandi said, “we will start to see layoffs.” BLS job data could be consistently below 100,000 over the next few months.
Already, businesses are showing signs that they are holding back their investments and bringing new workers. Earlier in the week, the BLS reported employment rates remained at the level last seen in 2014, when the US economy is still emerging from the Great Recession.
Trump claims that the US economy is “booming” thanks to his tariffs. But he continues to pressure the Federal Reserve to lower interest rates, making it easier for businesses and consumers to borrow money. In a Truth Social Wednesday post, he pointed to weak ADP salary figures as evidence that the economy needs support.
Analysts say the Federal Reserve remains high to lower rates despite signs of collection of economic degradation. Instead, central banks are likely to continue making mistakes on the people who raise and maintain interest rates to ensure that the pace of interest rate growth is under control, says Andrew Husby, a US economist at BNP Paribas Financial Group.
For consumers, that means that relief is still in sight.
“It’s going to take something that breaks something in a clearly sustainable way,” Husby said, in order to cut the borrowing costs.