US job market stalls under Trump’s return as hiring slumps, inflation surges

The United States job market has shifted from robust to sluggish during President Donald Trump’s first seven months back in office, as hiring slows dramatically and inflation begins to rise again amid the implementation of new tariffs.

Figures released in Friday’s employment report revealed that employers added only 22,000 jobs in August, while the unemployment rate increased to 4.3 per cent. The manufacturing and construction sectors saw a reduction in their workforce. Revised data also indicated that the economy lost 13,000 jobs in June — the first monthly decline since December 2020, during the Covid-19 pandemic.

The latest statistics highlight a growing disparity between the thriving economy Trump pledged to deliver and the more subdued reality of his current tenure. While the White House boasts of rapid action, officials are now urging the public to be patient. Trump suggested that a rebound in employment figures may take up to a year.

“We're going to win like you've never seen,” Trump said Friday. “Wait until these factories start to open up that are being built all over the country, you're going to see things happen in this country that nobody expects.”

This appeal for patience has done little to reassure the public. Economic issues, once seen as a key strength for Trump, have now become a liability. During his first term, approval of his economic management reached 56 per cent in early 2020, but recent polling by the Associated Press-NORC Centre for Public Affairs Research showed that number had dropped to 38 per cent by July.

The administration’s response has involved shifting blame, while Democrats assert that the issues stem directly from Trump’s own policies.

Blame game continues

Trump insisted on Friday that job growth would be stronger if Federal Reserve chair Jerome Powell had lowered interest rates. However, such a move, particularly to the extent Trump is suggesting, could potentially fuel further inflation. Investors do anticipate a rate cut at the Fed’s next meeting in September — partially in response to deteriorating employment data.

Senate minority leader Chuck Schumer, a Democrat from New York, criticised Trump’s approach, pointing to his trade policies as a cause of economic instability. “This is a blaring red light warning to the entire country that Donald Trump is squeezing the life out of our economy,” Schumer said.

In various aspects, the president appears to have backed himself into a corner, as the economy has yet to align with the ambitious vision he set out.

• In 2024, Trump claimed that removing undocumented immigrants would safeguard “Black jobs”. However, the Black unemployment rate has risen to 7.5 per cent — the highest since October 2021 — as the administration intensifies immigration enforcement.

• When introducing his tariffs in April, Trump declared, “Jobs and factories will come roaring back into our country and you see it happening already.” Yet, since then, the manufacturing sector has lost 42,000 jobs and the construction industry has seen a decline of 8,000 positions.

• In his inaugural speech, Trump suggested that oil — the “liquid gold” — would generate wealth for the nation. Despite that, the logging and mining sectors, which encompass oil and natural gas, have lost 12,000 jobs since January. While petrol prices have decreased, the Energy Information Administration estimated in August that crude oil production would fall by an average of 100,000 barrels per day next year.

• On the campaign trail in 2024, Trump pledged to eliminate inflation on “day one” and halve electricity costs within a year. However, consumer prices rose from an annual rate of 2.3 per cent in April to 2.7 per cent in July, with electricity costs climbing 4.6 per cent this year.

Shallow claims

Despite the setbacks, the Trump administration insists the economy is on the verge of significant growth, projecting that new tariffs could generate hundreds of billions in revenue annually — provided they withstand legal challenges.

Speaking at a dinner on Thursday night attended by executives from Apple, Google, Microsoft, OpenAI, and Meta, Trump said artificial intelligence infrastructure would ultimately lead to dramatic job growth.

“Jobs numbers like our country has never seen before,” he said, predicting they would materialise “a year from now.”

However, Michael Strain, director of economic policy studies at the conservative American Enterprise Institute, pointed out that Trump’s optimistic forecasts clash with his baseless claims that recent job figures were deliberately manipulated to harm him.

This accusation led to the dismissal of the head of the Bureau of Labor Statistics last month following major downward revisions in July's job data.

“The president clearly stated that the data were not trustworthy and that the weakness in the data was the product of anti-Trump manipulation,” Strain said. “And if that's true, what are we being patient about?”

The White House maintains that the latest job figures are an anomaly within an otherwise healthy economy.

Kevin Hassett, director of the National Economic Council, cited estimates from the Atlanta Federal Reserve projecting 3 per cent annualised growth this quarter. He suggested that such growth would normally be accompanied by monthly job increases of around 100,000.

Hassett also argued that inflation remains modest, wage growth is “solid,” and rising investment in physical capital will eventually boost employment.

But Daniel Hornung, former deputy director of the National Economic Council under President Biden, said he found no indication of a rebound in the August figures.

“Pretty broad based weakening,” Hornung said. “The decline over three months in goods producing sectors like construction and manufacturing is particularly notable. There were already headwinds there and tariffs are likely exacerbating challenges.”

Probing deeper

Stephen Moore, an economic fellow at the conservative Heritage Foundation and Trump supporter, acknowledged that the labour market is “definitely softening,” though he repeated Trump’s doubts about the accuracy of the data.

He suggested that the economy is adjusting to Trump’s focus on higher tariffs and reduced immigration, which may be shrinking the available workforce.

“The problem going forward is a shortage or workers, not a shortage of jobs,” Moore said. “In some ways, that's a good problem to have.”

Political analyst and pollster Frank Luntz offered a different perspective, arguing that voters are more concerned about inflation and the cost of living than the state of the labour market.

“That's what the public is watching, that's what the public cares about,” Luntz said. “Everyone who wants a job has a job, for the most part.”

According to Luntz, Trump still has time to turn public sentiment around before the midterm elections. Voter opinions on the economy tend to solidify around Labour Day the year before the election.

“It's still up for grabs,” he said. “The deciding point will come Labour Day of 2026.”