The labor market is cratering

This summer marked a turning point for the U.S. economy: Hiring screeched to a halt in recent months, ending a streak of orderly cooling.Why it matters: The days of boom-like jobs numbers appear firmly in the past. Employers are pulling back as they adjust to the Trump economy, one that features heightened uncertainty, costlier foreign goods and a diminished labor supply amid immigration crackdowns.What they're saying: "Whatever the underlying cause — a scarcity of available workers, a more cautious hiring stance, lingering questions about the near-term impact of tariffs — labor conditions have cooled considerably in recent months," Jim Baird, chief investment officer at Plante Moran Financial Advisors, wrote in a note. Driving the news: Friday's jobs data confirmed that the weak hiring that became clear in last month's report was no head-fake.The economy added just 22,000 jobs in August, with health care among the few sectors with increasing employment.The intrigue: Once again, the real stunner came in the revisions, which showed the economy's 53-month-long streak of jobs growth ended in May.The Bureau of Labor Statistics said that employers shed 13,000 jobs in June — the first employment contraction since December 2020. It was a downward revision from the data that showed a gain of roughly as many jobs.With those revisions, the economy has added an average of 29,000 jobs over the past three months — a stall-speed pace compared to the three-month average of 111,000 in March.Zoom in: The federal workforce continued to shrink, with another 15,000 jobs lost. Since January, employment has decreased by roughly 97,000 workers.That might be an undercount: The BLS warns that federal workers on paid leave or receiving severance might still be considered employed in its survey.Manufacturing, touted by the Trump administration as the potential winner of its trade policy, shed 12,000 jobs in August. The sector has 78,000 fewer employees compared to the same period a year ago.The big picture: The huge debate among economic policymakers is why hiring is so lackluster — less demand for staff, less supply of them (or a combination of both). Harsher immigration policy is contributing to a huge shift in population trends. That makes it difficult to know how many workers the economy needs to add to keep the unemployment rate steady.For that reason, Federal Reserve chair Jerome Powell says he is watching the unemployment rate more closely.It edged up by 0.1 percentage point to 4.3%, the highest since 2021. The increase was a combination of factors, largely as workers entered the labor force for the first time since April — but there were also more unemployed Americans.Of those who are unemployed, roughly 26% have been jobless for six months or longer — the largest share since February 2022 and a sign that finding work is getting increasingly difficult.The other side: National Economic Council director Kevin Hassett, in a Fox News appearance, tried to blame the weak jobs numbers on the BLS."One of the things we know is that they've been really, at BLS, struggling with bad response rates," Hassett said. "We expect this number will be revised up; that's been the pattern over and over," said Hassett, referencing what he said was recent Goldman Sachs research showing a pattern of August revisions.

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