Why the U.S. job market has soured

The latest data released by the Bureau of Labor Statistics on Friday paints a grim picture of the U.S. job market. With only 73,000 jobs added in July, economists are sounding the alarm that the slowdown in job growth is more than just a trend – it’s a reality.

Laura Ullrich, director of economic research for North America at job site Indeed, noted that the job market needs to add around 80,000 to 100,000 jobs per month just to keep up with population growth. The fact that July’s figure falls short of this benchmark indicates that the job market is not only stagnating but actually contracting.

What’s even more concerning is the downward revision of job growth figures for May and June. Initially reported at 144,000 and 147,000 jobs added, respectively, the revised numbers paint a much bleaker picture with only 19,000 and 14,000 jobs added in those months. In total, employers added 258,000 fewer jobs than previously thought.

Economists attribute these large revisions to the softness of the job market. While it’s not a disaster, the weak job numbers are not what one would expect in a robust economy. The possibility of further revisions in August looms as the data continues to be analyzed.

The average job growth over the past three months stands at a meager 35,000, significantly lower than the 111,000 per month average in the first three months of 2025. Most new jobs have been concentrated in the health care and social assistance sectors, indicating a lack of broad-based opportunities.

The recent announcement of new tariffs by President Donald Trump adds another layer of uncertainty to the job market. Tariffs, when kept in place long-term, increase prices for consumers and squeeze business profits by raising input costs. The inconsistent approach to tariffs creates further instability, causing many businesses to hold back on hiring.

Other factors contributing to the job market’s stagnation include immigration policy reducing the available workforce, cuts to the federal workforce and government spending, and higher interest rates. The national hiring rate is at its lowest since 2014, exacerbating the challenges faced by job seekers.

Despite the low layoffs rate, the lack of movement in and out of jobs signals a high degree of stagnation in the job market. The labor force participation rate has fallen to its lowest level since 2022, and the unemployment rate rose to 4.2% in July. Additionally, the share of long-term unemployed Americans has increased, posing further challenges for job seekers.

In conclusion, the latest data paints a troubling picture of the U.S. job market, indicating a significant slowdown in job growth and overall economic uncertainty. It remains to be seen how policymakers and businesses will respond to these challenges in the coming months.