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Reuters
03-07-2025
- Business
- Reuters
US job growth expected to slow in June, unemployment rate forecast to rise
WASHINGTON, July 3 (Reuters) - The U.S. labor market likely slowed further in June, with the unemployment rate expected to have edged up to more than a 3-1/2-year high of 4.3%, as economic uncertainty stemming from the Trump administration's policies curbed hiring. The anticipated moderation in job growth will probably be insufficient to spur the Federal Reserve to resume its interest rate cuts in July, with the Labor Department's closely watched employment report on Thursday also expected to show solid wage gains last month. The report is being published early because of the Independence Day holiday on Friday. A string of indicators, including the number of people filing for state jobless benefits and receiving unemployment checks, has pointed to labor market fatigue after a strong performance that shielded the economy from recession as the U.S. central bank aggressively tightened monetary policy to combat high inflation. Economists say President Donald Trump's focus on what they call anti-growth policies, including sweeping tariffs on imported goods, mass deportations of migrants and sharp government spending cuts, has changed the public's perceptions of the economy. Business and consumer sentiment surged in the wake of Trump's victory in the presidential election last November in anticipation of tax cuts and a less stringent regulatory environment before slumping about two months later. "It's a very uncertain time," said Martha Gimbel, executive director of the Budget Lab at Yale University. "It's just hard for people to make decisions right now." Nonfarm payrolls likely increased by 110,000 jobs last month after rising by 139,000 in May, a Reuters survey of economists showed. That reading would be below the three-month average gain of 135,000. Estimates ranged from a rise of 50,000 to 160,000 jobs. Average hourly earnings are forecast to jump 0.3% after advancing 0.4% in May. That change would keep the annual increase in wages at 3.9%. Economists estimate the economy needs to create between 100,000 and 170,000 jobs per month to keep up with growth in the working-age population. They will be watching for revisions to the April and May data. Revisions this year have been skewed to the downside. Some economists speculated that small businesses were filing late responses to the establishment survey, from which the nonfarm payrolls are derived. "Whatever the cause of the revisions, the established pattern means it makes sense to subtract about 30,000 from the first estimate of June payrolls and to focus on the trend rather than one month's numbers," said Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. Much of the slowdown in job growth reflects tepid hiring. Layoffs remain fairly low, with employers generally hoarding workers following difficulties finding labor during and after the COVID-19 pandemic. But layoffs are picking up and the lackluster hiring means fewer opportunities for those who lose their jobs, accounting for the anticipated uptick in the unemployment rate. A survey from the Conference Board last week showed the share of consumers who viewed jobs as being "plentiful" dropped to the lowest level in more than four years in June. The expected rise in the jobless rate last month to the highest level since October 2021 would follow three straight months in which it held steady at 4.2%. Most economists expect the unemployment rate will continue rising through the second half of this year, and potentially encourage the Fed to resume its policy easing cycle in September. The Fed last month left its benchmark overnight interest rate in the 4.25%-4.50% range, where it has been since December. Fed Chair Jerome Powell on Tuesday reiterated the central bank's plans to "wait and learn more" about the impact of tariffs on inflation before lowering rates again. "We are starting to see some important shifts that perhaps paint a worse light on the jobs market than most people have been thinking," said James Knightley, chief international economist at ING. "I don't think June's report is going to be weak enough to make the case for a July rate cut, but the risk is that the Fed is starting to think ... perhaps we need to put a bit more emphasis on where the jobs numbers are heading now." Some economists, however, see limited scope for the unemployment rate to rise as the immigration crackdown shrinks the labor pool. With the White House having revoked the temporary legal status of hundreds of thousands of migrants, economists said fewer than 100,000 additional jobs per month would likely be needed to keep the jobless rate stable. The healthcare sector likely continued to dominate the job gains last month. But leisure and hospitality employment could have been curbed by some migrants staying home in fear of being rounded up for deportation. Similar concerns could also have affected construction payrolls, while tariffs probably continued to weigh on manufacturing employment. Moderate federal government job losses likely persisted. The administration's unprecedented campaign to drastically shrink the federal workforce has been tangled in legal fights. "The mass of federal layoffs, the voluntary retirements and any reductions in force probably do not slow payrolls until October," said Michael Gapen, chief U.S. economist at Morgan Stanley. "Also, there has been little evidence yet of slower federal government hiring."
Yahoo
03-07-2025
- Business
- Yahoo
US job growth expected to slow in June, unemployment rate forecast to rise
By Lucia Mutikani WASHINGTON (Reuters) -The U.S. labor market likely slowed further in June, with the unemployment rate expected to have edged up to more than a 3-1/2-year high of 4.3%, as economic uncertainty stemming from the Trump administration's policies curbed hiring. The anticipated moderation in job growth will probably be insufficient to spur the Federal Reserve to resume its interest rate cuts in July, with the Labor Department's closely watched employment report on Thursday also expected to show solid wage gains last month. The report is being published early because of the Independence Day holiday on Friday. A string of indicators, including the number of people filing for state jobless benefits and receiving unemployment checks, has pointed to labor market fatigue after a strong performance that shielded the economy from recession as the U.S. central bank aggressively tightened monetary policy to combat high inflation. Economists say President Donald Trump's focus on what they call anti-growth policies, including sweeping tariffs on imported goods, mass deportations of migrants and sharp government spending cuts, has changed the public's perceptions of the economy. Business and consumer sentiment surged in the wake of Trump's victory in the presidential election last November in anticipation of tax cuts and a less stringent regulatory environment before slumping about two months later. "It's a very uncertain time," said Martha Gimbel, executive director of the Budget Lab at Yale University. "It's just hard for people to make decisions right now." Nonfarm payrolls likely increased by 110,000 jobs last month after rising by 139,000 in May, a Reuters survey of economists showed. That reading would be below the three-month average gain of 135,000. Estimates ranged from a rise of 50,000 to 160,000 jobs. Average hourly earnings are forecast to jump 0.3% after advancing 0.4% in May. That change would keep the annual increase in wages at 3.9%. Economists estimate the economy needs to create between 100,000 and 170,000 jobs per month to keep up with growth in the working-age population. They will be watching for revisions to the April and May data. Revisions this year have been skewed to the downside. Some economists speculated that small businesses were filing late responses to the establishment survey, from which the nonfarm payrolls are derived. "Whatever the cause of the revisions, the established pattern means it makes sense to subtract about 30,000 from the first estimate of June payrolls and to focus on the trend rather than one month's numbers," said Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. Much of the slowdown in job growth reflects tepid hiring. Layoffs remain fairly low, with employers generally hoarding workers following difficulties finding labor during and after the COVID-19 pandemic. RISING LAYOFFS But layoffs are picking up and the lackluster hiring means fewer opportunities for those who lose their jobs, accounting for the anticipated uptick in the unemployment rate. A survey from the Conference Board last week showed the share of consumers who viewed jobs as being "plentiful" dropped to the lowest level in more than four years in June. The expected rise in the jobless rate last month to the highest level since October 2021 would follow three straight months in which it held steady at 4.2%. Most economists expect the unemployment rate will continue rising through the second half of this year, and potentially encourage the Fed to resume its policy easing cycle in September. The Fed last month left its benchmark overnight interest rate in the 4.25%-4.50% range, where it has been since December. Fed Chair Jerome Powell on Tuesday reiterated the central bank's plans to "wait and learn more" about the impact of tariffs on inflation before lowering rates again. "We are starting to see some important shifts that perhaps paint a worse light on the jobs market than most people have been thinking," said James Knightley, chief international economist at ING. "I don't think June's report is going to be weak enough to make the case for a July rate cut, but the risk is that the Fed is starting to think ... perhaps we need to put a bit more emphasis on where the jobs numbers are heading now." Some economists, however, see limited scope for the unemployment rate to rise as the immigration crackdown shrinks the labor pool. With the White House having revoked the temporary legal status of hundreds of thousands of migrants, economists said fewer than 100,000 additional jobs per month would likely be needed to keep the jobless rate stable. The healthcare sector likely continued to dominate the job gains last month. But leisure and hospitality employment could have been curbed by some migrants staying home in fear of being rounded up for deportation. Similar concerns could also have affected construction payrolls, while tariffs probably continued to weigh on manufacturing employment. Moderate federal government job losses likely persisted. The administration's unprecedented campaign to drastically shrink the federal workforce has been tangled in legal fights. "The mass of federal layoffs, the voluntary retirements and any reductions in force probably do not slow payrolls until October," said Michael Gapen, chief U.S. economist at Morgan Stanley. "Also, there has been little evidence yet of slower federal government hiring."
Yahoo
03-07-2025
- Business
- Yahoo
US job growth expected to slow in June, unemployment rate forecast to rise
By Lucia Mutikani WASHINGTON (Reuters) -The U.S. labor market likely slowed further in June, with the unemployment rate expected to have edged up to more than a 3-1/2-year high of 4.3%, as economic uncertainty stemming from the Trump administration's policies curbed hiring. The anticipated moderation in job growth will probably be insufficient to spur the Federal Reserve to resume its interest rate cuts in July, with the Labor Department's closely watched employment report on Thursday also expected to show solid wage gains last month. The report is being published early because of the Independence Day holiday on Friday. A string of indicators, including the number of people filing for state jobless benefits and receiving unemployment checks, has pointed to labor market fatigue after a strong performance that shielded the economy from recession as the U.S. central bank aggressively tightened monetary policy to combat high inflation. Economists say President Donald Trump's focus on what they call anti-growth policies, including sweeping tariffs on imported goods, mass deportations of migrants and sharp government spending cuts, has changed the public's perceptions of the economy. Business and consumer sentiment surged in the wake of Trump's victory in the presidential election last November in anticipation of tax cuts and a less stringent regulatory environment before slumping about two months later. "It's a very uncertain time," said Martha Gimbel, executive director of the Budget Lab at Yale University. "It's just hard for people to make decisions right now." Nonfarm payrolls likely increased by 110,000 jobs last month after rising by 139,000 in May, a Reuters survey of economists showed. That reading would be below the three-month average gain of 135,000. Estimates ranged from a rise of 50,000 to 160,000 jobs. Average hourly earnings are forecast to jump 0.3% after advancing 0.4% in May. That change would keep the annual increase in wages at 3.9%. Economists estimate the economy needs to create between 100,000 and 170,000 jobs per month to keep up with growth in the working-age population. They will be watching for revisions to the April and May data. Revisions this year have been skewed to the downside. Some economists speculated that small businesses were filing late responses to the establishment survey, from which the nonfarm payrolls are derived. "Whatever the cause of the revisions, the established pattern means it makes sense to subtract about 30,000 from the first estimate of June payrolls and to focus on the trend rather than one month's numbers," said Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. Much of the slowdown in job growth reflects tepid hiring. Layoffs remain fairly low, with employers generally hoarding workers following difficulties finding labor during and after the COVID-19 pandemic. RISING LAYOFFS But layoffs are picking up and the lackluster hiring means fewer opportunities for those who lose their jobs, accounting for the anticipated uptick in the unemployment rate. A survey from the Conference Board last week showed the share of consumers who viewed jobs as being "plentiful" dropped to the lowest level in more than four years in June. The expected rise in the jobless rate last month to the highest level since October 2021 would follow three straight months in which it held steady at 4.2%. Most economists expect the unemployment rate will continue rising through the second half of this year, and potentially encourage the Fed to resume its policy easing cycle in September. The Fed last month left its benchmark overnight interest rate in the 4.25%-4.50% range, where it has been since December. Fed Chair Jerome Powell on Tuesday reiterated the central bank's plans to "wait and learn more" about the impact of tariffs on inflation before lowering rates again. "We are starting to see some important shifts that perhaps paint a worse light on the jobs market than most people have been thinking," said James Knightley, chief international economist at ING. "I don't think June's report is going to be weak enough to make the case for a July rate cut, but the risk is that the Fed is starting to think ... perhaps we need to put a bit more emphasis on where the jobs numbers are heading now." Some economists, however, see limited scope for the unemployment rate to rise as the immigration crackdown shrinks the labor pool. With the White House having revoked the temporary legal status of hundreds of thousands of migrants, economists said fewer than 100,000 additional jobs per month would likely be needed to keep the jobless rate stable. The healthcare sector likely continued to dominate the job gains last month. But leisure and hospitality employment could have been curbed by some migrants staying home in fear of being rounded up for deportation. Similar concerns could also have affected construction payrolls, while tariffs probably continued to weigh on manufacturing employment. Moderate federal government job losses likely persisted. The administration's unprecedented campaign to drastically shrink the federal workforce has been tangled in legal fights. "The mass of federal layoffs, the voluntary retirements and any reductions in force probably do not slow payrolls until October," said Michael Gapen, chief U.S. economist at Morgan Stanley. "Also, there has been little evidence yet of slower federal government hiring."
New York Times
01-07-2025
- Business
- New York Times
Poorest Americans Dealt Biggest Blow Under Senate Republican Tax Package
Millions of low-income Americans could experience staggering financial losses under the domestic policy package that Republicans advanced through the Senate on Tuesday, which reserves its greatest benefits for the rich while threatening to strip health insurance, food stamps and other aid from the poor. For many of these families, the loss of critical federal support is likely to negate any improvements they might have seen as a result of slightly lower taxes, experts said. That reality could undercut Republican lawmakers and President Trump, who insisted anew this week that their legislative vision would benefit the entire economy. The latest evidence arrived in the hours before lawmakers finalized their signature legislation. Studying a since-amended version of the Senate bill, experts at the Budget Lab at Yale, a research center, concluded Monday that it would parcel out its benefits disproportionately. Americans who comprise the bottom fifth of all earners would see their annual after-tax incomes fall on average by 2.3 percent within the next decade, while those at the top would see about a 2.3 percent boost, according to the analysis, which factors in wages earned and government benefits received. On average, that translates to about $560 in losses for someone who reports little to no income by 2034, and more than $118,000 in gains for someone making over $3 million, the report found. Martha Gimbel, the co-founder of the budget lab, described the Senate measure as 'highly regressive.' The disparity owes largely to the fact that Republicans aim to pay for their tax cuts by slashing programs for the poor, including Medicaid and food stamps. The cuts amount to one of the largest retrenchments in the federal safety net in a generation. But the savings they generate only offset a fraction of the total cost of the bill, which is expected to add more than $3 trillion to the federal debt by 2034. Want all of The Times? Subscribe.
Time of India
02-06-2025
- Business
- Time of India
Trump's tax plan may cost poor Americans $1,500 a year—while tipping the rich $104,000
U.S. President Donald Trump's proposed tax break on tips might sound like a win for working-class Americans, but analysts say it offers limited benefits for low-income earners—and could, in fact, leave them worse off overall. The "no tax on tips " idea is one of several elements in a sweeping tax and spending bill currently before Congress. While it targets service workers like bartenders and hairdressers, experts say most won't benefit much. In fact, broader cuts to healthcare and food assistance programs could erase any gains. 'If you're thinking about things that could help low-income workers, 'no taxes on tips' would not be high up on my list,' said Martha Gimbel, director of the Budget Lab at Yale University. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like If You Eat Ginger Everyday for 1 Month This is What Happens Tips and Tricks A Shift in Wealth According to multiple independent analyses, the bill would effectively redistribute wealth—from the poor to the rich. The Penn Wharton Budget Model estimates that families earning less than $22,000 per year would lose $1,500 in after-tax income. Meanwhile, those making more than $5.2 million could see an annual windfall of $104,000. Live Events The Congressional Budget Office (CBO) supports these findings, also highlighting large gains for the wealthiest Americans. Limited Reach for Tipped Workers Despite the popularity of the 'tax-free tips' idea—especially in hospitality-heavy swing states like Nevada—it would benefit only a small portion of workers. Tipped employees make up just 2.5% of the U.S. workforce, and 37% of them earn too little to owe any income tax at all, meaning the deduction wouldn't apply to them. The bill passed in the House would allow workers earning up to $160,000 a year to deduct their tips from gross income until 2029. However, the income would still be subject to Social Security and Medicare taxes. House Republicans claim the bill would provide an average $1,300 tax cut per family, and that business tax breaks will lead to better wages. Jason Smith, Chairman of the House Ways and Means Committee, said the plan helps workers afford housing, food, and save for the future. Benefits for the Wealthy, Barriers for the Poor But critics argue the benefits are tilted toward higher earners. Tax breaks on tips, overtime, and auto loan interest only help people who already owe income tax—excluding many low-wage earners. 'All of those will only benefit someone if they have enough income that they are paying a positive tax liability,' said Brandon DeBot, policy director at NYU's Tax Law Center. Worse, other changes in the bill would restrict access to key support programs: Up to 8.7 million lower-income Americans could lose health coverage due to Medicaid and ACA cuts, according to the CBO. New restrictions on the Child Tax Credit would exclude 4.5 million eligible children by requiring a Social Security number for qualification. The Earned Income Tax Credit, which reached 23 million tax filers in 2022, would impose stricter eligibility standards. Reduced IRS funding could make it harder for low-income families to navigate the new tax code. Long-Term Costs for the Poor The bill is also projected to add $3.8 trillion to the national debt by 2035, pushing the total to over $36 trillion. That burden, economists say, will fall disproportionately on the poor. Penn Wharton found that low-income households could see a lifetime loss of $8,500 due to a weaker safety net and higher debt service costs. Wealthier households, on the other hand, could gain $17,800 over their lifetime. 'You're inheriting this higher debt, this higher burden. Somebody has to pay for it,' said Kent Smetters, director of the Penn Wharton Budget Model. With agency inputs
