Job openings have been on the decline since November — when 7.6 million jobs were on the market — to today’s 7.3 million. That decline tracks with actual hires as well. Compared to 223,000 hires a month last year, this year’s economy only nets 165,000 a month. The driver of this decline is, largely, President Trump’s trade policy.
“The probability of a recession in the next year has jumped,” said Loyola economics professor Sung Won Sohn. “This is a time to be cautious. Businesses are being careful about spending and hiring.”
As Spring turned to Summer, what was a modest slowdown expected at near-full employment sped dramatically. May added only 75,000 new jobs where April had 224,000. Downward revisions to jobs numbers took some wind from Spring’s sails as well. While the labor market still kept pace with population growth, the speed of that slowdown raised alarm bells for some economists.
There are other alarm bells as well — wage growth is still below where it should be at near full employment, the treasury yield curve nearly inverted this month which is widely seen as a sign of an imminent recession and the Federal Reserve cut interest rates for the first time since the 2008 recession.
Some of this is caused by Trump’s policies. Even Goldman Sachs predicted recession would follow Trump’s tax cuts, and Trump’s trade wars have been cited as reasons to slow hiring. This is exemplified by the response to the president’s recent tweet about new tariffs against China.
“We put hiring on hold again after the tweet came out,” JLab CEO Win Cramer said. “We’re in a business where we need certainty. We can’t make investments because we don’t know if those investments will have to be absorbed or dissolved.”
Trump has since walked back those tariffs somewhat, pushing the timetable for the increased tax on some products to the end of the year to minimize impact on holiday shopping.
Still, the president touts the strength of the economy, clearly making its performance central to his bid for reelection. The way companies have used the massive boon of Trump’s tax cuts to buy back stock has been, in turn, a benefit to the strong economy narrative — stock buybacks give Wall Street a massive influx of money that enriches investors while the business sector slashes jobs.
The labor market is a better indicator of the overall health of the economy than the stock market, and the labor market is giving clear warning signals.
(Featured image: Phillip Pessar/Creative Commons)
Katelyn Kivel is a contributing editor and senior legal reporter for Grit Post in Kalamazoo, Michigan. Follow her on Twitter @KatelynKivel.