The Job Market Is Humming? Surely This Isn’t As Good As It Gets

Economic

Summary:

US joblessness remains extraordinarily low, and that’s worth celebrating this Fourth of July. A Bureau of Labor Statistics report on Thursday showed that the unemployment rate slipped to 4.1% in June from 4.2% a month earlier, a number that economists have long considered just about as good as it gets. That’s led investors to cut the likelihood that the Federal Reserve will move to lower policy rates in the coming months.

I’m glad that the labor market is holding up, but this economy still needs a bit of the central bank’s medicine to keep on truckin’ — and it needs it sooner rather than later.

Consider the latest numbers. The so-called establishment survey data showed that the economy added 147,000 jobs in June, but 73,000 of them came from the government (mostly state and local). Among the 74,000 private sector jobs added, most of the growth was in the health care and social assistance category. A job is a job, but that mix isn’t indicative of an economy that’s firing on all cylinders.

The other issue is the step-down in the unemployment rate, which seemed to stem from people leaving the labor force — not usually a good thing. As a quick reminder, the BLS only considers you unemployed if you were available to work and have actively looked for work in the past four weeks. Otherwise, you’re considered “not in the labor force,” a category that includes so-called “discouraged” workers (who want a job but have stopped actively hunting because they don’t believe there are any available to them) and the “marginally attached” (who stopped looking for other reasons). The numbers of such people are trending upward, as are ratios of labor underutilization such as the U-4 metric, which measures the numbers of unemployed plus discouraged workers. (The denominator of this ratio is the sum of the labor force and discouraged workers.)

All in all, this looks like a labor market that’s stuck, lacking the churn and growth opportunities that we expect from the US economy. It’s not collapsing, and that’s wonderful news given the many uncertainties around, but it feels extraordinarily frustrating to some.

Who are all these discouraged and marginally attached workers? First, young recent graduates are notoriously having a hard time finding work. Some observers blame over-hiring during the pandemic years, while others think that artificial intelligence is already allowing companies to do more with less, at least at the margin. Whatever the cause, it’s hard to deny that Generation Z faces unique obstacles when finding its footing in this labor market — a fact that could have long-term ramifications for the economy. If they finish school, start their job search and then stop looking (at least for a while), then they’re probably in the statistical bucket of discouraged workers.

Another hypothesis is related to the recent trend in immigration policy and rhetoric. The Trump administration’s workforce raids and deportation pledges appear to be having a chilling effect both on would-be new immigrants and those who are already here. That includes both the undocumented population and people who had been living in the US under Temporary Protected Status and similar programs that President Donald Trump has sought to change. Legal status isn’t a factor when considering whether someone is “in the labor force” or not, but the threat of immigration raids could conceivably cause an undocumented worker to stay away from work and become a discouraged worker. The confusing policy environment may also be prompting employers to hire fewer immigrants, a related source of potential discouragement.

Of those two hypotheses, the real explanation could be a bit of both. Even more generally, hiring rates are simply bad: Irrespective of age and birthplace, it’s just hard to find a job these days.

To be clear, the past several years have been filled with labor market reports that felt something like this: The headline numbers were pretty good, yet pundits found some under-the-radar wrinkle that allegedly augured a near-term turn for the worse. I’d agree that we shouldn’t look a gift horse in the mouth. An unemployment rate of 4.1% is fantastic! But the economy is still missing something, and I’m hoping that monetary policy will help deliver it later this year (provided the inflation data cooperate). The incredible US labor market is supposed to give us fireworks on the Fourth of July. It’s supposed to be dynamic and ever-changing, and it’s certainly not supposed to feel this discouraging to so many people.

Source: Bloomberg Europe

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Daniel Carter

Political

Economic

The U.S. imposed sanctions on Thursday against a network that smuggles Iranian oil disguised as Iraqi oil, and on a Hezbollah-controlled financial institution, the Treasury Department said.

A network of companies run by Iraqi-British national Salim Ahmed Said has been buying and shipping billions of dollars worth of Iranian oil disguised as, or blended with, Iraqi oil since at least 2020, the department said.

"Treasury will continue to target Tehran's revenue sources and intensify economic pressure to disrupt the regime's access to the financial resources that fuel its destabilizing activities,” Treasury Secretary Scott Bessent said.

The U.S. has imposed waves of sanctions on Iran's oil exports over its nuclear program and funding of militant groups across the Middle East.

Reuters reported late last year that a fuel oil smuggling network that generates at least $1 billion a year for Iran and its proxies has flourished in Iraq since 2022.

Thursday's sanctions came after the U.S. carried out strikes on June 22 on three Iranian nuclear sites, including its most deeply buried enrichment plant Fordow. The Pentagon said on Wednesday the strikes had degraded Iran's nuclear program by up to two years, despite a far more cautious initial assessment that had leaked to the public.

The U.S. and Iran are expected to hold talks about its nuclear program next week in Oslo, Axios reported.

Said's companies and vessels blend Iranian oil with Iraqi oil, which is then sold to Western buyers via Iraq or the United Arab Emirates as purely Iraqi oil using forged documentation to avoid sanctions, Treasury said.

Said controls UAE-based company VS Tankers though he avoids formal association with it, Treasury said. Formerly known as Al-Iraqia Shipping Services & Oil Trading (AISSOT), VS Tankers has smuggled oil for the benefit of the Iranian government and the Islamic Revolutionary Guard Corps, which is designated by Washington as a terrorist organization, it said.

The sanctions block U.S. assets of those designated and prevent Americans from doing business with them.

VS Tankers did not immediately respond to a request for comment. Iran's mission in New York did not immediately respond to a request for comment.

The U.S. also sanctioned several vessels that are accused of engaging in the covert delivery of Iranian oil, intensifying pressure on Iran's “shadow fleet,” it said.

The Treasury Department also issued sanctions against several senior officials and one entity associated with the Hezbollah-controlled financial institution Al-Qard Al-Hassan.

The officials, the department said, conducted millions of dollars in transactions that ultimately benefited, but obscured, Hezbollah.

Source: Reuters

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Warren Takunda

Cryptocurrency

Key points:

Bitcoin quickly reversed gains as US nonfarm payrolls data beat expectations and unemployment fell more than thought.

Analysis says that the Federal Reserve is now unlikely to lower interest rates at its July meeting.

BTC price action still has to break through final liquidity to the upside.

Bitcoin saw flash volatility into the Thursday Wall Street open as US employment data dealt a blow to hopes of interest-rate cuts. Bitcoin Dices With $110K as US Jobs Beat Takes Fed Rate Cut 'Off Table'_1

Bitcoin Dices With $110K as US Jobs Beat Takes Fed Rate Cut 'Off Table'_1

BTC/USD 1-hour chart. Source: Cointelegraph/TradingView

”Very hot” US jobs numbers trip up Bitcoin bulls

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD retracing much of the day’s gains, which had seen the pair reach nearly $110,300.

US nonfarm payrolls data showed that more jobs were added in June than expected, while unemployment exceeded estimates.

“The May jobs number was revised UP from 139,000 to 144,000. The headline numbers continue to crush expectations,” trading resource The Kobeissi Letter wrote in part of a response on X.

Kobeissi described the jobs numbers as “very hot,” warning that the Federal Reserve now had another reason to delay rate cuts, a blow to crypto and risk assets.

Business consulting firm Blacknox, cofounders of crypto trading resource Material Indicators, went further, stating that the unemployment drop “takes a FED Rate Cut in July off the table.”

“Fed Funds Futures now just price in 2 cuts in total until December 2025,” Andre Dragosch, European head of research at crypto asset manager Bitwise, noted.

Nonfarm payrolls contrasted considerably with the previous day’s private-sector jobs report, which conversely boosted the case for a July cut.

The latest data from CME Group’s FedWatch Tool confirmed that markets saw little chance of the Fed changing course before its September meeting. Bitcoin Dices With $110K as US Jobs Beat Takes Fed Rate Cut 'Off Table'_2

Bitcoin Dices With $110K as US Jobs Beat Takes Fed Rate Cut 'Off Table'_2

Fed target rate probabilities (screenshot). Source: CME Group

Liquidity guardrails still surround BTC price

Discussing market impact, Material Indicators co-founder Keith Alan was upbeat.

“A lower UNRATE means a stronger US economy,” he responded to the Blacknox commentary.

“The knee jerk reaction has knocked $BTC price down a bit, but IMO this is short term thinking. In the long run, a stronger economy will serve the market well.”

BTC liquidation heatmap. Source: CoinGlass

Market structure likewise remained intact on short timeframes, monitoring resource CoinGlass confirmed, with exchange order-book liquidity levels both above and below price firmly in place.

Among traders, the $108,000 level continued to play an essential role, with analysis demanding it now hold as support.

“As long as we stay above $108K, I’m aiming for $112K - maybe even $120K,” crypto YouTube trading channel Master of Crypto added, while reviewing the liquidity data.

Source: Cointelegraph

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Thomas

Economic

There were plenty of good details to report in today's jobs report: the unexpected surge in monthly jobs (which came almost above the top of the forecast range), the drop in unemployment, the moderation in hourly earnings, the continued loss of federal workers, the jump in full-time jobs and the drop in part-time jobs.

There were also several not so good aspects: first and foremost, the narrow breadth in hiring, with most job growth in June the result of Education and Health services (+51K), and Government (+73), which are government, or government-linked, sectors.

As Soutbay Research put it, the June Payrolls were derived from two sources: Healthcare (+59K) and Public Schools (+64K).

Public Schools: Summer break layoffs were understated in the June release. Either the July revision brings them down OR the July Public Education payrolls go deeply negative.
- July Best Case: June comes down ~40K and Public Education is flat in July
- July Worst Case: July Public Education payrolls are -40K

On the other end, private sector payrolls were soft: excluding healthcare, Southbay says to expect the Private Sector to be flat or possibly negative.

Meanwhile, even though it was not yet captured by the jobs report, there has been plenty of firing, with the best examples being Intel and Microsoft just announcing a combined 18K in layoffs.

As SouthBay concludes, "only another Hail Mary Seasonal Adjustment can prevent a negative print."

Another less then stellar aspect of today's report is that the number of multiple job holders actually soared by 282K, one of the biggest monthly increases on record, and one which pushed the total just shy of a new all time high.

But while no jobs report is without blemishes, the positives far outweighed the negatives, maybe not so much quantitatively then certainly qualitatively, because as we noted earlier, the most important metric of today's jobs report is arguably what got Trump elected in the first place.

Recall back in January 2024 we first asked how is it not the biggest political talking point that since 2019, the US had only added foreign-born workers (which as we subsequently showed were primarily illegal aliens) while native workers remained flat or declined.

Less than a year later, illegal immigration in general, and its impact on the labor market indeed had become the biggest political talking point and one which one can argue got Trump elected.

So in retrospect, we can report today that Trump has certainly been working hard to resolve the situation and according to today's job report, the number of native-born workers has taken a decisive step higher, rising to a new all time high while foreign-born workers have been plunging ever since the election.

Here are the details:

In June, the US added 830K native-born workers, pushing the total to a new record high of 132.652 million, hopefully ending the stagnant period which started in 2019 which saw zero native-born workers be added to the US labor force.
At the same time, the US saw 348K foreign-born workers leave, sending the total to a 2025 low of 31.231 million.

Extending the observation window since the start of Trump's admin (i.e., since March which covers the end of the first full month of the Trump admin), we find an even more impressive result: the number of native born workers has surged by 1.5 million while foreign-born (primarily illegals) have tumbled by 1 million.

So while one can certainly find warts in the broader jobs report - and with the economy 5 years into its post-covid expansion there better be weaknesses - the one thing that matters more than anything to most Americans, not having to compete with illegal aliens for jobs which not only pushes demand higher but also wages, is one where Trump can certainly say mission accomplished, for now.

Source: Zero Hedge

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Warren Takunda

Economic

The odds of a rate cut at the Federal Reserve's next meeting evaporated after a resilient jobs report for June alleviated concerns about a slowing US economy.

"You are not getting a July rate cut — that is now completely off the table," Joe Brusuelas, RSM chief economist, told Yahoo Finance.

Traders agree with that assessment. On Thursday morning, the odds of a cut at the Fed's July 28-29 meeting fell near 5% from nearly 25%, according to the CME FedWatch tool.

"The markets are speaking," Interactive Brokers chief strategist Steve Sosnick added. He told Yahoo Finance the likelihood of a Fed cut was "evaporating" in the aftermath of the latest labor market report from the Bureau of Labor Statistics.

The report showed the US economy added 147,000 nonfarm payrolls in June, more than the 106,000 expected by economists. The unemployment rate unexpectedly fell to 4.1%. Economists had expected the unemployment rate to move higher to 4.3%. July Rate Cut From Fed Is 'Now Completely Off the Table' Following Solid Jobs Report_1

July Rate Cut From Fed Is 'Now Completely Off the Table' Following Solid Jobs Report_1

Federal Reserve Chairman Jerome Powell has cited a resilient economy as he argues for a patient approach to rate cuts. The strength of the US economy, he has said, gives the Fed time to assess whether President Trump's tariffs will, in fact, push inflation higher over the summer.

Brusuelas of RSM said the jobs report "is feeding right into what Jerome Powell said," namely that the economy is "not in trouble right now."

Trump has repeatedly pressured Powell to stop waiting and start cutting again, making that case again this week.

The case for looser monetary policy being made by the White House is "a tough sell," Sosnick said. "'The economy is great but we need rate cuts at the same time.' That’s cognitive dissonance.'"

But Fed watchers expect the White House pressure campaign to continue. Brusuelas noted that the criticism is now being aimed not just at the Fed but at the entire Fed board.

Trump said Powell "should resign immediately" in a Truth Social post Wednesday night. On Monday, he posted a note he sent to Powell telling the Fed chair, "Jerome—You are, as usual, 'Too Late,'" and arguing that he has "cost the USA a fortune."

Trump on Truth Social also widened his criticism to the entire Fed board: "The Board just sits there and watches, so they are equally to blame."

Fed governors Christoper Waller and Michelle Bowman have both made a case for rate cuts in July since the last Fed meeting, arguing that any inflation from tariffs will not linger.

But others have urged more patience. Atlanta Fed president Raphael Bostic said in a speech Thursday in the UK that he “fully supports” the Fed’s wait-and-see policy prescription.

“I believe the Committee must await more clarity rather than move in a policy direction that it might need to quickly reverse,” Bostic said.

For now, job market conditions remain broadly healthy, he added, even as signs point to softening, pointing out that the pace of hiring has slowed but that layoffs and unemployment remain at low levels.

“I don’t yet see signs of serious labor market deterioration,” he said.

He said if not for the potential impact of tariffs on prices—as well as the consequences of the current turmoil in the Middle East—he would be “pretty comfortable” with the inflation outlook.

“For me, the main punchline is that the adjustment of prices and the broader economy to changes in trade and other forthcoming policies in the United States, along with geopolitical developments, is not going to be a short and simple one-time shift in prices, as standard textbook models would suggest,” he said.

“Instead, this increasingly looks like a process that may take a year or more to fully play out.”

Earlier this week, Powell didn't rule out an interest rate reduction at the Fed's next meeting on July 28-29, but he noted the central bank would have cut rates by now if not for the tariffs introduced by the Trump administration.

"We went on hold when we saw the size of the tariffs and essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs," he said.

The Fed lowered rates by a full percentage point in 2024 but has held rates steady so far in 2025.

"I wouldn't take any meeting off the table or put it directly on the table," Powell said when asked about the possibility of a cut in July. "It's going to depend on how the data evolved."

Source: Yahoofinance

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Daniel Carter

Economic

Central Bank

In prepared remarks for an economic conference in Germany, Bostic explained that adjustments to changes in trade policies, other U.S. policies, and geopolitical developments would not result in a simple one-time shift in prices as standard economic models might suggest.

"Instead, this increasingly looks like a process that may take a year or more to fully play out," Bostic said.

He warned that this extended inflation period could potentially influence consumer psychology and inflation expectations, creating more significant challenges for the Federal Reserve.

Bostic noted that new economic data released Thursday showed stronger-than-expected job creation and a slight decrease in the unemployment rate to 4.1%, indicating "labor market conditions remain broadly healthy." He added that the job market is not yet showing signs of deterioration that would justify preemptive interest rate cuts.

Given the high level of uncertainty surrounding jobs, economic growth, and inflation, Bostic argued that "this is no time for significant shifts in monetary policy." He endorsed the Federal Open Market Committee’s current "wait and see" approach.

The Federal Reserve has maintained its policy interest rate unchanged since December, despite calls from President Donald Trump for immediate and substantial rate reductions.

Source: Investing

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Damon

Political

Crude oil prices fell to a low of $66.54 on Friday, down over 1%, following an Axios report that a White House envoy plans to meet with Iran’s foreign minister in Oslo next week to restart nuclear talks.

The potential diplomatic engagement comes after President Trump ordered military strikes on Iran’s nuclear facilities last month. According to the report, White House envoy Steve Witkoff is expected to meet with Iranian Foreign Minister Abbas Araghchi, though neither country has publicly confirmed the meeting.

Oil markets reacted to the news as renewed nuclear negotiations could eventually lead to the lifting of sanctions on Iranian oil exports, potentially increasing global supply. Iran holds some of the world’s largest proven oil reserves, and any return of Iranian crude to international markets would likely pressure prices.

The reported talks would mark the first direct engagement between the two countries since the recent 12-day conflict between Israel and Iran that ended in a U.S.-brokered ceasefire. Sources cited by Axios indicate that Witkoff and Araghchi have maintained direct contact during and after this conflict.

A key focus of any future negotiations would be Iran’s stockpile of highly enriched uranium, which reportedly includes 400 kilograms enriched to 60% purity. This level of enrichment is close to weapons-grade material, which requires 90% enrichment.

Omani and Qatari officials have reportedly been involved in mediating between the U.S. and Iran, with Iranian officials initially reluctant to engage with the U.S. following the military strikes but gradually softening their position.