Voldemort's tariffs are increasing inflation and costing jobs!

Hello? Hello Xi can you hear me? This is Voldemort, we have relatively unchanged job growth, and our inflation rate has actually dropped. How are you doing?

Oh really! Sorry to hear that.

In Chaotic Economy, Hiring Remained Steady in May

Employers added 139,000 jobs last month, continuing a steady run of hiring. The unemployment rate was unchanged at 4.2 percent.

By Lydia DePillis, NY Times

June 6, 2025

The labor market persevered in May, continuing a consistent run of job creation that is nonetheless showing signs of drag from tariffs, high interest rates and federal government downsizing.

Employers added 139,000 jobs last month, the Labor Department reported on Friday, which was about in line with economists’ expectations. The unemployment rate remained 4.2 percent.

But underneath those calm numbers, signs of turbulence are starting to come into view. Revisions showed that employers added 95,000 fewer jobs in March and April than previously reported. And President Trump’s chaotic economic policy has deterred hiring in parts of the economy that depend on international trade, as businesses stall expansion plans while awaiting any sense of stability.

The manufacturing and retail sectors cut jobs, and an earlier surge of employment in transportation and warehousing, probably driven by businesses importing ahead of new import duties, has now faded.

“It’s a bit too soon to fully assess the fallout from the tariff shock, but it’s a slow-burning deterioration of the labor market,” said Samuel Tombs, the chief U.S. economist at Pantheon Macroeconomics, a forecasting firm. “We think by the fall, you’ll see a much weaker trend emerge.”

Job growth was fueled almost entirely by health care and social assistance, which added 78,000 positions, as well as leisure and hospitality, with 48,000. Most other sectors were roughly flat. That lopsidedness suggests that growth isn’t as broad-based as economists would like. Growth in health care is driven in large part by the aging U.S. population and therefore is not always a reliable measure of the strength of the economy overall.

“Outside of really health care and social assistance, there isn’t that much hiring demand across the economy,” said Sam Kuhn, an economist at the digital recruiting firm Appcast. He noted that the annual average pace of job growth was now lower than it had been in over a decade, outside of the pandemic downturn.

Still, job growth is slowing, not collapsing. Wages continued to grow at a brisk clip, adding 0.4 percent from April and 3.9 percent since last year. Applications for unemployment benefits have picked up somewhat, but not to an alarming level.

Overall, the May data was most likely solid enough to keep the Federal Reserve from making any immediate changes to interest rates, including at its meeting this month. Officials are expected to hold off on rate cuts until they see clearer signs that the labor market is weakening, given rising angst about inflation tied to Mr. Trump’s tariffs.

Sign up for Your Places: Global Update. All the latest news for any part of the world you select. Get it sent to your inbox.

The Fed’s caution is putting it on a collision course with the president, who has repeatedly urged the central bank to cut interest rates. He did so again on social media on Friday, calling Jerome H. Powell, the Fed chair, “a disaster” and suggesting policymakers should cut rates a full percentage point.

Still, the risks facing the economy, on both inflation and unemployment, stem in large part from Mr. Trump’s own policies.

The most drastic drop in employment in May came from the federal government, which shed 22,000 jobs last month and 59,000 since January. That is not counting those who are on administrative leave, or who were let go when federal contracts were cut; a hiring freeze has also prevented hires that would normally be happening.

The brunt of these layoffs has been felt in and around Washington, where they are starting to spill over into parts of the economy that depend on that relatively high-income base of federal workers. The Northern Virginia Economic Development Alliance expects the region to lose about 64,000 jobs directly, counting both federal employees and those on government contracts, and tens of thousands more as their spending power evaporates.

Victor Hoskins, the chief executive of the Fairfax County Economic Development Authority, said his organization was working to help people find new opportunities as soon as possible so they didn’t leave the area.

“The hard part is, how do you match them quickly?” Mr. Hoskins said. “And we haven’t figured that out. We’re doing everything that we can, but the scale may outpace us pretty soon.”

One person navigating the rapidly shrinking federal sector is Davina Sasser of Frederick, Md., who has worked on a series of federal contracts doing information technology security since 2019. In mid-April, she heard that the contract she was working on for the National Oceanic and Atmospheric Administration would end in July and not be renewed.

She has applied for 224 jobs so far. Ms. Sasser is grateful to have some time before her paychecks stop — more runway than many fired contractors have been afforded — but she has never found it this difficult to find another gig.

“I’m at a point where I’m looking at salaries less than mine,” said Ms. Sasser, who is 49. “My husband tries not to stress, but I can see it and I know the worry, so I just have to do what I need to do.”

In the private sector, stalled hiring in fields like manufacturing, construction and professional services suggested that businesses were holding off on big decisions while the economic policy landscape remains uncertain. Surveys show that companies are planning to hire fewer people.

That applies to Gordon Seabury, the chief executive of Toad & Company, an outdoor and casual apparel brand based in Santa Barbara, Calif. He has gradually shifted the company’s sourcing out of China, so the tariffs haven’t hit as hard as they otherwise might. But the disruption has arrested his previously ambitious plans for this year and next.

“The changes have basically put us into a bit of a hunker-down position, where we’re taking care of our team,” said Mr. Seabury, who employs about 70 people. “It’s business as usual, but we’re being very, very conservative about any kind of growth.”

Workers feel it, too: In the University of Michigan’s consumer sentiment survey, expectations of rising unemployment have jumped in recent months. The Labor Department data on Friday showed that although the unemployment rate remained steady in May, the labor force shrank as fewer people looked for work. The share of people ages 25 to 54 who were working or wanted a job dropped to 83.4 percent and seemed to have plateaued after nearing a two-decade high.

Part of that may stem from Mr. Trump’s crackdown on immigrants, which has recently expanded to high-profile raids on construction sites and restaurants. About 500,000 people recently lost their ability to work legally, when the Supreme Court allowed the Trump administration to cancel temporary protected status for migrants from four countries. It is not clear how many of them have left the country or simply stopped going to work, afraid of being apprehended.

But some of the fall in participation is undoubtedly American citizens. That could come from a sense that opportunities have gotten less appealing since the middle of 2022, when there were about two open positions for every available worker. Although joblessness remains fairly low, for those on the sidelines, it doesn’t necessarily feel like they’re missing out on much.

“Even though, in absolute terms, things are looking pretty good, in terms of how people are experiencing it, it’s just slowdown ongoing month after month,” said Kory Kantenga, the head of economics for the Americas at the job search platform LinkedIn. “The incentive that people have to come into the labor market has definitely declined.”

Most economists foresee unemployment rising a bit further in the coming months, as tariffs continue to burden household budgets and constrain spending on small luxuries, like going out to eat or buying a new sofa. Although that may not in itself precipitate a full-blown recession, it is making the economy more fragile.

“Anytime the job market is slowing, there is a concern that any small shock could be enough to push it over the edge,” said Daniel Zhao, the lead economist with the job review site Glassdoor.

Colby Smith contributed reporting.