The U.S. economy posted disappointing job numbers in July, adding just 73,000 new positions, far below expectations, while the unemployment rate rose to 4.2%, according to the Labor Department’s report released Friday.
Economists had projected a gain of around 104,000 jobs, though estimates ranged from zero to 140,000. However, downward revisions to previous months further revealed just how weak the labor market has been. June’s initial 147,000 gain was slashed to just 14,000, and May’s was revised down to 19,000 — a combined reduction of 258,000 jobs.
Reacting to the numbers, President Donald Trump blasted Federal Reserve Chairman Jerome Powell on Truth Social, writing:
“Too Little, Too Late. Jerome ‘Too Late’ Powell is a disaster. DROP THE RATE! The good news is that Tariffs are bringing Billions of Dollars into the USA!”
Weak Hiring Across Sectors
Private payrolls rose by 83,000, with healthcare and social assistance accounting for the vast majority — 73,000 jobs — in what many consider government-adjacent sectors. Meanwhile, leisure and hospitality added just 5,000 jobs, reflecting weak consumer demand and the potential effects of the Trump administration’s immigration crackdown.
Key sectors fared poorly:
- Manufacturing lost 11,000 jobs
- Mining shed 2,000
- Construction added just 2,000
- Federal government employment dropped by 12,000
- Professional and business services lost 15,000
- Information sector lost 2,000
In contrast, financial services added 15,000 jobs, and retail trade managed a modest gain.
Labor Market Shifts: Native-Born Up, Foreign-Born Down
The July data also highlighted a continued shift in the labor force. Foreign-born employment fell, while native-born employment rose, consistent with the Trump administration’s focus on reducing illegal immigration and restoring balance to the domestic labor market.
Powell Defends Rate Policy as Trump Pushes for Cuts
Despite the weakening job numbers, the Federal Reserve left interest rates unchanged at 4.25–4.50% for the fifth consecutive meeting. In a press conference, Powell described the labor market as “solid,” citing low unemployment and stable financial conditions.
“The labor market’s solid, historically low unemployment… The economy is not performing as though restrictive policy were holding it back inappropriately,” Powell said.
Trump strongly disagreed, calling Powell a “stubborn MORON” and urging the Fed Board to take action:
“Jerome ‘Too Late’ Powell… must substantially lower interest rates, NOW. IF HE CONTINUES TO REFUSE, THE BOARD SHOULD ASSUME CONTROL.”
Fed Governor Christopher Waller, one of two dissenters, argued for a rate cut now, saying the surface-level strength of the labor market is misleading:
“Private-sector payroll growth is near stall speed… With underlying inflation near target… we should not wait until the labor market deteriorates before we cut the policy rate.”
Wages Rising, But Job Growth Stalling
Despite soft job creation, wages continued to rise. Average hourly earnings climbed by 12 cents (0.3%) to $36.44, with a 3.9% increase over the past year. Blue-collar workers saw gains as well, with average hourly earnings rising to $31.34.
Still, analysts say the labor market’s apparent resilience may be overstated, as significant data revisions paint a much bleaker picture of recent months. With the economy slowing and uncertainty growing, pressure is building on the Fed to act — and on Powell, who is now firmly in the political crosshairs.
