If Kevin Warsh wants to avoid “killing success,” as Donald Trump put it, by raising rates later this year, he needs cooler inflation, slower jobs growth or some combination of the two.
On cue, the BLS said the US economy added a mere 57,000 jobs on net in June, around half the number of additions professional forecasters collectively expected.
Revisions accompanying the release lopped a combined 74,000 jobs from the prior two months’ tallies.
As the figure shows, the three-month moving average for the NFP headline is now 111,000. It would’ve been 155,000 with no revisions to April and May and a consensus print for June.
Setting aside satirical Warsh conspiracy theories, this is the kind of report — i.e., a weak headline accompanied by meaningful downward revisions — that gets you fired at the BLS in a Trump presidency. And I mean that literally.
We’re coming up on the one-year anniversary of Erika McEntarfer’s ouster as America’s de facto top statistician. McEntarfer, you’ll recall, was removed following the July 2025 jobs report. In addition to a headline that came up short, that release found the BLS “disappearing” 258,000 jobs from the preceding two months.
Thursday’s release probably wasn’t bad enough to rile up Trump. In fact, and this time without the conspiratorial overtones, this release might’ve been just what The White House and Trump’s friend(s) at the Fed needed.
Prior to Thursday, it looked as though the US economy was on the verge of another overheat driven in no small part by a rekindled hiring impulse. That case is a bit (or even a lot) harder to make all of a sudden.
With the three-month average still north of 100,000, this is a “have your cake and eat it too” situation for Trump, assuming his vanity can suffer the weak June headline. It’s easier to hold rates in the face of four-handle inflation when jobs growth’s decelerating than when it’s on a demonstrable upswing.
Drilling down, private payrolls rose just 49,000 in the release. That was fewer than half the expected 107,000 (and likewise far below the 98,000 ADP headline for June).
Professional and business services, social assistance and health care added jobs, while every other major category was weak, including and especially leisure and hospitality, which dropped 61,000 workers in a break with seasonal precedent.
Average hourly earnings were in line, rising 0.3% MoM and 3.5% YoY. That latter pace is, you’re reminded, well below headline inflation, which is to say real wage growth’s negative.
On the household survey side, the jobless rate moved lower to 4.2%. The unrounded print was 4.189%. That suggests headline CPI could well overshoot UNR for June.
The figure above’s a reminder: Historical instances of such “crossover” events are rare, and typically presage curve inversions.
The important caveat: The UNR decline was accompanied by a three-tenths drop on the participation rate, which fell to 61.5%, the lowest in more than five years.
Simply put: You can write off the lower UNR, at least for the purposes of this release. The decline in the participation rate will overshadow the move lower in the jobless rate for anybody with even a passing interest in the data. And the Fed’s interest is more than passing.
The household employment print showed a decline of more than half a million.
Coming full circle, if there was any chance of a July hike from the Warsh Fed (and I don’t think there was), those odds are materially diminished.
This release should be (note the emphasis) bullish for stocks and front-end rates and (demonstrably) bearish for the dollar.
