Unemployment in the U.S. has just reached numbers not seen since 2021, during the COVID-19 pandemic. While this isn’t great news, some are hoping that it could push the Federal Reserve bank to lower interest rates.
That would make it easier to borrow money and potentially ease some of the economic stress Americans are already feeling. As they look to the future, many are also concerned about the impact artificial intelligence could have on their jobs.
Two reports came out this week regarding the jobs market – the Job Openings and Labor Turnover Summary (JOLTS) and the U.S. Bureau of Labor Statistics’ monthly jobs report. Per the JOLTS report, job openings declined to its lowest point in 10 months, and the employment report also showed lower than expected employment, dropping to its lowest since October 2021, per a Friday X post from economist and reporter Heather Long.
“I think overarching theme is largely the same, and my analysis and headlines on both are remarkably similar,” said Mark Hamrick, senior economic analyst at Bankrate, during an interview with WWL’s Newell Normand this week. New jobs have been on a declining trend since April, when President Donald Trump began implementing his tariff plans.
He said that one of the factors driving unemployment up is declines in healthcare and social assistance. The healthcare sector makes up a significant one-fifth chunck of the economy, so drops there are significant for employment. At the same time, while Americans are paying out more than other countries for healthcare, we also see some of the worst outcomes relative to that spending.
“The monthly employment report that we had this morning where we only added 22,000 jobs in August… we [had] a contraction in employment in June and the nation’s unemployment rate rising to 4.3%,” said Hamrick. “My overall thesis has been that this is largely a no hire, no fire job market. It’s the last part of that which is to some degree the salvation because that's keeping the unemployment rate at least so far at a relatively low 4.3% but that doesn’t give us any guarantees for the future.”
Overall, Hamrick said that we’re only “feeding a few” of the employment sectors in the economy right now. For example, he said that “one of the more painful realities of the situation is that the argument could be made for quite some time now that the manufacturing sector in this country has been in contraction mode.”
Hamrick continued on to explain that the goods producing sectors, including manufacturing, have not been adding jobs to the economy. Earlier this year, Trump touted success in the manufacturing sector, and he has argued that his tariff-driven economic approach will boost the economy.
So far, it has contributed to economic uncertainty, and Hamrick said that growth is not being observed in manufacturing. He said that tariffs have also have resulted in higher costs for manufacturers.
“There is the diminished demand where, you know, if you’re looking at a product coming in from India now with a tariff of 50%, that for example is a large supplier among other things of jewelry. You know, consumers aren’t going to raise their hand and say: ‘Yeah, I’m all on board on paying those increased costs.’”
Hamrick, like other economists, is weighing whether the new jobs data will move the Federal Reserve Bank to bring down interest rates.
“This tariff issue can be what I think Federal Reserve officials are largely aligning in their view upon and that is that it can be a one-time price adjustment,” he told Normand. Investor’s Business Daily also pointed out this week that Federal Reserve Chair Jerome Powell has pointed to unemployment as a figure that will decide rate cuts, indicating that one could be on the horizon soon.