The labor market is in a summer-long slowdown.

The Bureau of Labor Statistics will release its August jobs report on September 5. The most recent JOLTS report, also from the BLS, showed job openings fell by 176,000 in July, after falling twice that much in June.

That pretty much matches the July jobs report, released in early August, which was dismal. The economy added 73,000 jobs, which was below expectations. There were also major downward revisions to the nonfarm payroll numbers for May and June. It turns out, the economy added about a quarter of a million fewer jobs than initially reported.

When that news broke, President Trump raged on social media — without evidence — that the numbers were rigged against him. Then, he fired the messenger, BLS Commissioner Erika McEntarfer. 

However, economists predict that relatively anemic job gains­ — in the 50,000-75,000 range — are likely to be the norm going forward. 

“Looking at the last three months, we’re creating fewer jobs by quite a lot,” said Betsey Stevenson, former chief economist at the Labor Department and now a professor at the University of Michigan. “Instead of creating 180,000 jobs per month” — the approximate rate during the last two years of the Biden administration — “we’re creating something closer to 35,000 jobs-per-month.”

To know if this slowdown is a problem for the economy, said Stevenson, it’s crucial to understand why job growth was so strong coming out of the pandemic.

“We don’t actually have enough population growth normally to sustain that kind of job growth,” said Stevenson. “And yet, people kept showing up. Where were they showing up from? Other countries. So we did have a surge in immigration. And that allowed that kind of rapid hiring to continue.”

But the surge in immigration, both legal and undocumented, is over. The Trump administration is trying to seal the southern border and deport millions, while also reducing refugee and asylum admissions.

The number of foreign-born workers in the labor force has fallen by 1.6 million, about 5%, just since March, according to the Labor Department. (The data is not seasonally adjusted.)

“Job growth is probably going to be lower now, based on demographic shifts tied to immigration.” said Skanda Amarnath, executive director of Employ America and a former New York Fed economist. “Less people migrating in, maybe some people leaving, people going further off the books.”

There are other big demographic changes helping to shrinking the labor force, including a lower birth rate and Baby Boomer retirement. But Amarnath thinks more of the current labor-market slowdown results from a decline in labor demand as employers struggle to deal with the new Trump tariffs. 

“We saw a lot of trade-sensitive sectors show much slower job growth,” he said, referring to the July jobs report, “in sectors like manufacturing, mining and construction. But it also includes services sectors — retail, wholesale trade, and also warehousing.”

Another factor will depress payroll numbers going forward: DOGE’s federal job cuts, many of which will show up in BLS data in coming months, said Kitty Richards, senior fellow at the Groundwork Collaborative. “The Trump administration just announced that they expect to see 300,000 fewer federal employees by the end of this calendar year,” Richards said. “We’ve already seen unemployment rise in areas heavily affected by federal government cuts.”

Still, the unemployment rate nationwide remains low, at 4.2% — the same level it was a year ago. If job creation remains this weak, won’t unemployment become more of a problem?  

Not necessarily, said University of Michigan’s Betsey Stevenson. Because part of what’s keeping job creation low is less labor supply, i.e., fewer people working or chasing jobs. 

“The question is, is that an economy that’s really declining, or are we sort of out of people?” said Stevenson. “If the economy is slowing and we only have 35,000 jobs-per-month, that’s a problem if there’s a lot of people who want jobs and can’t find them.”

Stevenson thinks the job market is still pretty healthy, though she does see growing signs of distress among job-seekers: long-term unemployment keeps rising, and more recent college graduates than usual still don’t have a job heading into fall. 

Slow or stagnant job creation also has a knock-on effect on the wider economy, said Skanda Amarnath at Employ America.

“People spend proportionally to what they’re earning,” he said. “When job growth slows, that’s fewer people earning a new paycheck. So the volume of consumer spending also slows. And that means top lines for businesses are likely to grow at a slower rate as well.”

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