Where Are the Jobs--Part II?

 Financial FAQs

“Job creation took a step back in 2025, with private employers adding 398,000 jobs, down from 771,000 in 2024. While we've seen a continuous and dramatic slowdown in job creation for the past three years, wage growth has remained stable.” ADP

FREDpayrolls

The FRED (St. Louis Federal Reserve) graph tells it all. Job formation has almost disappeared in the Trump economy. It’s not only the shutdowns, which have delayed the official U.S. unemployment report that was due for January, but past months as well, so private payroll data processors like ADP fill in the knowledge gap.

But we know from the latest FRED graph of private payroll hiring that private employers are barely hiring. Just 74,000 jobs were created in November 2025 and 22,000 in January, as reported by ADP.

So the GDP growth spurts last fall 2025 are from the $ trillions being invested in AI energy centers, not in corporations expanding their workforce. Corporations are laying off workers instead.

The best examples are Amazon and now the Washington Post. The NYTimes just reported that the Washington Post told employees on Wednesday that it was beginning a widespread round of layoffs “that are expected to decimate the organization’s sports, local news and international coverage.

“The company is laying off about 30 percent of all its employees, according to two people with knowledge of the decision. That includes people on the business side and more than 300 of the roughly 800 journalists in the newsroom, the people said,” said the NYTimes

CBS News reports that in 2025, companies directly pointed to their use of AI in announcing 55,000 job cuts — more than 12 times the number of layoffs attributed to AI just two years earlier, according to outplacement firm Challenger, Gray and Christmas. Of those job losses, 51,000 were in tech, with most of the cuts concentrated in tech-heavy states such as California and Washington.

The main culprit are the tariffs that Trump is using to coerce concessions from foreign governments, but it is doing the most damage to Americans. U.S. vehicle sales plunged in January, for example. Automobile sales increased at an annual rate of 14.9 million in January, down 7% from 16.1 million in the final month of 2025, according to Wards Intelligence and profit losses of $billions have already been reported by GM and Ford due to the higher tariffs on aluminum and steel.

Consumers above all are reacting to the sudden changes in the employment picture. The Conference Board voiced their concerns in the headlineConfidence collapsed to lowest point since 2014, surpassing pandemic depths: “The Conference Board Consumer Confidence Index® fell by 9.7 points in January to 84.5 (1985=100), from an upwardly revised 94.2 in December. A 5.1-point upward revision to December’s reading of the Index resulted in a slight increase last month, reversing the initially reported decline. However, January’s preliminary results showed confidence resumed declining after a one-month uptick.

So unemployed workers are now suffering under both the rising inflation from the tariffs and AI replacing many of their jobs.

It’s not a pretty picture, while we are still waiting for the Supreme Court to rule on whether most of Trump’s tariffs are even legal. It much safer to do nothing in such circumstances—consumers to hold on to their savings and employers to replace their workers with more technology.

Harlan Green © 2026

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Consumers Are Unhappy

 Financial FAQs

“Consumer confidence declined for a fifth consecutive month in April, falling to levels not seen since the onset of the COVID pandemic,” said Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board. “The decline was largely driven by consumers’ expectations. The three expectation components—business conditions, employment prospects, and future income—all deteriorated sharply, reflecting pervasive pessimism about the future.”

The University of Michigan’s Sentiment Survey Index has also declined for five consecutive months, from 74 to 50.8. It’s mainly about the growing inflation fears.

“Year-ahead inflation expectations surged from 6.5% last month to 7.3% this month. This month’s rise was seen among Democrats and Republicans alike. Long-run inflation expectations lifted from 4.4% in April to 4.6% in May, reflecting a particularly large monthly jump among Republicans.” Survey Director Joanne Hsu.

Why so much doom and gloom in surveys while consumers are still fully employed? Consumers don’t like uncertainty any more than businesses. and their lack of confidence could have an even larger impact on economic growth than uncertainty in the financial markets.

Consumer activity drives two-thirds of economic growth, and a recession begins when a majority begin to save more than they spend for a prolonged period. There are many ways to measure this, such as a growing cutback in retail sales.

Retail sales rose just 0.1% in April. That’s a big comedown from a 1.7% spike in March that marked the biggest increase in more than two years because consumers bought ahead of the April 2 tariff announcements that imports from all 180 countries in the world would be taxed at least 10 percent.

FREDretailsales

Retail sales account for one-third of consumer spending and and shoppers have been hunting for more bargains. Sales have declined in three of the past 13 months as portrayed in the FRED graph and were flat another three months, but are still 4.7 percent higher in a year.

Motor vehicle and parts dealers were up 9.4 percent (±1.8 percent) from last year because consumers knew that motor vehicle import taxes (i.e., tariffs) of at least 25 percent had already been announced, while food service and drinking places were up 7.8 percent (±1.8 percent) from April 2024.

The Conference Board’s Index of Leading Economic Indicators (LEI), another growth indicator that attempts to predict future growth, showed more weakness.

“The US LEI for March pointed to slowing economic activity ahead,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board. “March’s decline was concentrated among three components that weakened amid soaring economic uncertainty ahead of pending tariff announcements: 1) consumer expectations dropped further, 2) stock prices recorded their largest monthly decline since September 2022, and 3) new orders in manufacturing softened.

Manufacturing will be hardest hit, because Trump’s tariffs will bring higher inflation and interest rates, which especially hurts manufacturers because they need to borrow lots of money to build their factories. The LEI survey reported new manufacturing orders were already softening.

This will defeat what he says is the main reason for tariffs—bringing manufacturers home—as will the immigration crackdown, which reduces the working age population at a time of worker shortage. The Manufacturing Institute and Deloitte accounting firm have projected that manufacturing will need an additional 3.8 million workers by 2033. Where will they come from?

In fact, this tells us it’s not the real reason for his tariffs, since he is more concerned about cutting taxes and federal spending that would also disincentivize more domestic manufacturing investment.

No, it looks like Trump’s chaotic tariff war will create bottlenecks last seen during the COVID-19 pandemic or worse, unless he relents.

We know what those supply interruptions did to economic growth during the pandemic and why it took the succeeding Biden administration four years to fix with its bipartisan New, New Deal legislation.

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

What Happened to the Budget?

 Popular Economics Weekly

“The House Republican budget passed today calls for massive cuts in health coverage, food assistance, and help paying for college, among some other areas, to pay for huge tax giveaways for wealthy households and businesses.” CBPP.org

CBPP.org

President Trump had to know that devoting a large part of his State of the Union speech insulting Democrats would make it much more difficult to forge a budget for the fiscal year that ends September 30, when they will need Democrats’ support because of their thin majorities.

It will make it all but impossible to ratify an annual budget that significantly reduces the budget deficit. It’s not a great way to negotiate, in other words, unless Republicans don’t believe they need Democrats to fund their tax cuts.

House Republicans have passed a purely Republican budget resolution that relies on massive cuts to federal programs that the Center For Budget and Policy Priorities (CBPP), a nonpartisan research and policy organization, recently analyzed.

“The House budget would require the Energy and Commerce Committee to cut at least $880 billion; the Agriculture Committee to cut at least $230 billion; the Education and Workforce Committee to cut at least $330 billion; and other committees to also cut programs to reach a cumulative target of at least $1.5 trillion in cuts through 2034. The magnitude of these reductions would force congressional committees to make enormous cuts in Medicaid, SNAP, student loan assistance and other vital sources of support when they develop the “reconciliation” spending and tax bill that follows the budget resolution.” CBPP

Yet Republicans must compromise with Democrats to pass the annual budget that keeps the federal government open for business because of their paper-thin majorities in both the House and Senate, as I said. And the Democrats’ cooperation will require that some of their own budget priorities be included.

Trump must know by insulting Democrats he won’t get much of what he wants. He must believe there is a better way to narrow the budget deficit. Of course, he and Elon Musk have said so out loud—find some $2 billion in savings in the current budget that totals more than $4.2 trillion at last count.

Instead, Trump/Musk are firing federal employees and closing whole agencies with abandon to make their case that it will eliminate enough fraud and waste to bring down the deficit to justify their tax cuts. But it can’t happen without cuts to the sacred third rails as well—social security, Medicare and Medicaid.

They will be slowed down in their haste to downsize government because most of the DOGE work to date seems to be illegal, according to the many lawsuits that have been filed to stop the DOGE efficiency drive.

It will end up being a failed “Shock and Awe” campaign, according to Thomas Friedman, since their real intent is to cut government “down to the size where one could drag it into the bathroom and drown it in the bathtub,” to quote Grover Norquist, a Republican  strategist.

AtlantaFed

And we might already be seeing evidence of the damage; such as predictions of negative first quarter economic growth for the first time since the COVID-19 pandemic. The Atlanta Fed’s GDPNow model of real GDP growth (seasonally adjusted annual rate) in the first quarter of 2025 is -2.4 percent on March 6, up from -2.8 percent on March 3.

Tariff fears are part of the problem, as importers are ordering as much as possible before tariffs kick in that will raise prices, and that subtracts from GDP growth. But consumer spending in the new year that powers 60 percent of economic growth has declined because of their exhausted savings.

Consumer spending could shrink even further as the federal job firings and layoffs accelerate. MarketWatch reports some 172,017 job cuts were unveiled in February by U.S.-based employers, according to the monthly report by the outplacement firm Challenger Gray & Christmas. That’s the highest total since July 2020.

“It was chiefly because of a large reduction in government employees from actions by Elon Musk and his so-called Department of Government Efficiency, or ”DOGE,” purportedly to reduce bureaucracy,” said MarketWatch’s Jeffry Bartash.

Challenger put the federal job cuts at 62,242 last month, up from just 151 in January and February combined in 2024. Historically, very few federal employees lose their jobs annually. Retail and tech companies also announced sizable layoffs in February.

Economist Claudia Sahm said in a CNBC interview that such a massive number of workers losing their jobs at once has never happened before and will be flooding the job market.

I can’t imagine what such a large loss of jobs will do to our economy this year, even though federal jobs are a small part of the US workforce.

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Consumers Keep Shopping

 Financial FAQs

It’s no secret why the US economy is still growing and fully employed. Consumers have kept spending, and such activity accounts for two-thirds of US economic activity these days. So, it’s extremely important to track how long consumers will continue to spend.

The best read on spending is how much they borrow, and they are borrowing less. It’s because the Fed has upped their borrowing costs with the Prime Rate now 8.5% and credit card borrowing rates above 20%.

FREDconsumercredit

The St Louis Fed’s consumer credit graph shows the sharp drop in borrowing since consumers’ post-pandemic spending splurge. It sends a warning signal that consumers are becoming tapped out and may begin to save more. Recessions begin when that happens.

Borrowing turned negative during the Great Recession of 2008-09 and after the brief two-month post-pandemic recession (gray bar) in the above graph, for instance.

FREDpersonalsavings

Consumers also began to save more during those recessions. This graph portrays the large uptick in personal savings in 2020 after the same post-pandemic recession. But it has returned to a post-pandemic low since. The question then becomes how much longer can consumers live with depleted savings and begin to save more in such uncertain times?

In fact, a British Lord JM Keynes was the first to identify the cause of modern recessions in 1936 during the Great Depression, when he wanted to understand what had caused it.

He said it was when citizens spirits were low; he called it their “animal spirits”; and they began to save more and spend less. It’s just an economic way of saying consumers were saving more of their income for the bad times; when the unemployment rate ultimately reached 25 percent.

Keynes said, “Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as a result of animal spirits — of a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities.”

Modern economic theory has evolved into what is now termed behavioral economics, because consumers’ confidence in their future must be taken into account. And it is easily shaken, as Nobel Prize Laureates such as Robert Shiller have explicated in books such as Irrational Exuberance, where many actions to buy and sell—“the spontaneous urge to action”—are not dependent on research, or news that they may not be able to adequately access, but hearsay and rumors.

That is perhaps a harsh judgement on how consumers behave, and also why consumer confidence has been down of late, even though second quarter economic growth doubled to 2.8 percent from 1.4 percent in Q1 in its first reading.

It’s probably also why the Conference Board’s latest Consumer Confidence Index is showing growing pessimism, per Conference Board Chief Economist Dana Peterson, in its latest release:

“The proportion of consumers predicting a forthcoming recession ticked up in July but remains well below the 2023 peak. Consumers’ assessments of their Family’s Financial Situation—both currently and over the next six months—was less positive. Indeed, assessments of familial finances have deteriorated continuously since the beginning of 2024.”

Consumers shouldn’t be blamed for their pessimism, despite being fully employed. Prices are still 20 percent higher on average than before the pandemic. But their moods should considerably improve if and when the Fed finally begins to cut interest rates, and their fears of an upcoming recession lessen.

Harlan Green © 2024

Harlan Green on Twitter: https://twitter.com/HarlanGreen

Big Rise in Q1 Economic Greowth

 Popular Economics Weekly

BEA.gov

Economic growth in Q1 2023 was much better than pundits and economists predicted. First Quarter rose from its second estimate of 1.3 percent to 2.0 percent growth in the first quarter, largely because consumers spent more.

Exports were also higher, and consumer spending rose a whopping 4.2 percent annually from its second 3.8 percent guesstimate. Governments spent more as well, thanks to the recovery aid pouring into state coffers.

Why the consumer spending spree? Disposable personal income increased $587.9 billion, or 12.9 percent, in the first quarter, an upward revision of 0.5 percent from the previous estimate. And real (after inflation) disposable personal income increased 8.5 percent, an upward revision of 0.7 percentage point.

Also, personal saving was $840.9 billion in the first quarter, an upward revision of $11.6 billion from the previous estimate. The personal saving rate——personal saving as a percentage of disposable personal income—was 4.3 percent in the first quarter, an upward revision of 0.1 percentage point, said the BEA.

So consumers are still feeling flush, which is why consumer confidence is also soaring. The Conference Board’s survey of U.S. consumer confidence jumped to a 17-month high of 109.7 in June, reflecting a slowdown in inflation and fewer worries about a recession.

Now we must worry about a too-hawkish Fed spoiling the party by continuing to boost their interest rates. And that’s because conventional economists such as former Fed Chair Ben Bernanke (who once worried about too little inflation after the Great Recession) are saying even after the price of everything else returns to a 2 percent inflation target, high wages will keep the inflation fires burning.

In a just released working paper co-authored by former World Bank Chief Economist Olivier Blanchard, they said:

“We find that, contrary to early concerns that inflation would be spurred by overheated labor markets, most of the inflation surge that began in 2021 was the result of shocks to prices given wages, including sharp increases in commodity prices and sectoral shortages. However, although tight labor markets have thus far not been the primary driver of inflation, the effects of overheated labor markets on nominal wage growth and inflation are more persistent than the effects of product-market shocks. Controlling inflation will thus ultimately require achieving a better balance between labor demand and labor supply.”

This is once again looking in the rear-view mirror of the seventies when oil prices soared and unions had more negotiating power. But the US is no longer dependent on Saudi oil, since we developed our own oil supply, and renewable energy comprises a growing share of energy generation.

And where are inflation expectations, even if Bernanke, et. al. believe we have an overheated labor markets? Still anchored at 3 percent longer term.

For instance, the University of Michigan Consumer sentiment survey reported earlier its drop in year-ahead inflation expectations receded to 3.3 percent in June from 4.2 percent in May. The current reading is the lowest since March 2021. In contrast, long-run inflation expectations were little changed from May at 3.0 percent, again staying within the narrow 2.9-3.1 percent range for 22 of the last 23 months.

This is in line with the big drop in the retail Consumer Price Index from 4.9 percent to 4.0 percent, the best news yet that the Fed is winning the inflation battle. It was the smallest 12-month increase since the period ending March 2021. The all items (core) less food and energy index rose 5.3 percent over the last 12 months.

In fact, the so-called labor demand and supply imbalance can only be cured over the longer term by creating smarter immigration policies and modern technologies that improve worker productivity, due to Americans’ lower birth rate.

The Fed has little reason to intervene in what is essentially a Big Business/Labor negotiation.

Harlan Green © 2023

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Retail Sales Still Healthy

 Financial FAQs

Calculated Risk/Census Bureau

Why do consumers keep spending when so much news warns of an impending recession? Well, because we’re not even close to a recession yet. NYTimes columnist and Nobel laureate Paul Krugman has been puzzling over it as well.

“America hasn’t yet brought inflation back to prepandemic levels, and we may yet have a hard landing. But so far, at least, we’ve had a stunningly successful recovery from the Covid shock.”

Retail sales are up 3.1 percent YoY, though slowing from its prior highs since the pandemic as shown in the above graph.

“Advance estimates of U.S. retail and food services sales for April 2023, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $686.1 billion, up 0.4 percent (±0.5 percent) from the previous month, and up 1.6 percent (±0.7 percent) above April 2022. Total sales for the February 2023 through April 2023 period were up 3.1 percent (±0.4 percent) from the same period a year ago.”

Consumers won’t let up their spending ways anytime soon with summer approaching, schools are out, and leisure activities still the favorite thing to do.

For instance, so-called nonstore retailers (Internet) were up 8.0 percent (±1.2 percent) from last year, while food services and drinking places were up 9.4 percent (±2.5 percent) from April 2022, a sign that consumers haven’t yet spent those excess savings accumulated during the pandemic.

I am also puzzled by the disconnect between perceptions and reality. Americans know employment is at a record high, even with the baby boomer retirement, and wage increases are keeping up with rising prices.

It could be the debt-ceiling debate and constant bickering between political parties are unnerving the average citizen. Or the Federal Reserve interest rate increases while hammering on the dangers of inflation.

And I believe we are still suffering a hangover from the COVID-19 pandemic that shut down the world economy, a multi-year shock to our collective psyche that will take years to recover from.

The hyper-partisanship and distrust of institutions, including the Federal Reserve, can’t be helping, either.

The uncertainty of a better future is also affecting public opinion—caused by a hot Russian war, a Chinese cold war, a broken border, supply disruptions; you name it.

This contrasts with economic reality. Industrial production increased a very large 1.0 percent in April with motor vehicle production surging 9.3 percent after declining 1.9 percent in March. And the Atlanta Federal Reserve's GDPNow model predicts 2.6 percent GDP growth in the second quarter after Q1 growth of 1.1 percent.

Manufacturing production has been in a 6-month slump, so maybe it is climbing out of its own recession? (There’s that word again.) So what should we make of the bumpy economy we are riding?

Above all, I believe there’s a general anxiety weighing on Americans over their future. Too much change is uncomfortable, but still bearable. What will happen in generations to come?

Harlan Green © 2022

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Consumer Incomes/Sentiment Still Rising

 Financial FAQs

BEA.gov

January consumer spending rose 1.8 percent (orange bar in graph) in a month, while personal incomes rose 0.6 percent in the BEA’s latest personal income (PCE) report out Friday.

This is one more headache for the Fed that wants lower incomes and spending to bring down inflation. But that ain’t happening in January, at least.

From the same month one year ago, the PCE price index for January increased 5.4 percent. Prices for goods increased 4.7 percent and prices for services increased 5.7 percent. Food prices increased 11.1 percent and energy prices increased 9.6 percent. Excluding food and energy, the PCE price index increased 4.7 percent from one year ago.

Inflation is declining, but it still caused financial markets to panic for no real reason. Such a spike in spending (orange bar in the above graph) after two negative months and the concomitant inflation rate is temporary because of the huge 8 percent SocSec inflation adjustment in January.

No wonder consumer sentiments are on the rise. The University of Michigan final monthly survey for February confirmed the preliminary February reading, rising 3 percent above January. They don’t see much of a drop in employment, either, per their graph.

UMich

“After lifting for the third consecutive month, sentiment is now 17 index points above the all-time low from June 2022 but remains almost 20 points below its historical average,” said Survey Director Joanne Hsu.

Long-run inflation expectations remained firmly anchored at 2.9 percent for the third straight month and stayed within the narrow 2.9-3.1 percent range for 18 of the last 19 months, per the U. Michigan study.

So much for Fed fears that higher inflation expectations may become imbedded and cause consumers to sustain the high inflation by shopping until they exhaust their savings.

More studies by Federal Reserve economists are showing the Fed’s unrealistic expectations to achieve a 2 percent inflation target, no matter the loss of jobs, economic growth, etc.

Progressive economist Robert Kuttner has just highlighted a Cleveland Fed study by its own staff economists that highlights the consequences of holding to a 2 percent inflation target.

The study, by Randal Verbrugge and Saeed Zaman of the Cleveland Fed, says Kuttner, found that, using the Fed’s own projections, inflation would still be at 2.75 percent by the end of 2025—moderate by historic standards—and reducing it all the way to 2.0 percent would require an unemployment rate of 7.4 percent, more than double the current rate.

Who doesn’t believe that would be disastrous at a time of geopolitical unrest, economic sanctions, and the Ukraine war?

Harlan Green © 2023

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Higher Retail Sales Herald Better New Year

 Popular Economics Weekly

FREDretailsales

Now we have retail sales also surging in January, on the heels of a terrific unemployment report and Atlanta Fed’s GDPNow estimate of higher first quarter economic growth.

Retail sales that make up half of consumer spending rose more than 3 percent in January, almost double early estimates. Consumers are going out more than ever with most of the US freezing, ignoring predictions of an oncoming recession, or calls by the Federal Reserve for businesses to cut back on hiring.

It’s as if the public is listening to a different song, a more optimistic tune that trumpets the U.S. economy and their finances are just fine.

Sales rose in every major category, led by department stores. Receipts leapt almost 18 percent, the biggest jump since the reopening of the U.S. economy in May 2020 after the early onslaught of the coronavirus.

One closely watched category is bars and restaurants, the only service sector in the retail report. Restaurant sales soared 7.2 percent last month after falling slightly in the last two months of 2022.

Sales of new vehicles and parts, a volatile category, jumped 5.9 percent last month. That’s the biggest increase in 22 months, and signals Americans want to travel more than ever.

Since retail sales aren’t adjusted for inflation, it also means consumers have enough cash and savings to keep up with inflation, while it is declining.

Retail CPI inflation is 6.3 percent higher YoY in January, down from its 9 percent high in June 2022. And it has risen just 2 percent since last June. The cost of gasoline rose 2.4 percent in January and gave a boost to the headline CPI reading.

Prices have subsided in February, however, as more refineries that were shut down for maintenance are coming back on line.

Grocery prices have risen 11.3 percent in the past year, but have come off their peak. They rose 0.4 percent in the first month of the new year. That was the smallest increase in 17 months, however, and a good sign for the prospects of slowing, even while inflation is falling.

And that is the real conundrum puzzling economists. What is the real cause of inflation? How can it be falling while consumers buy more than ever? The increased demand isn’t pushing up prices, in other words.

Instead, it looks like supplies are catching up in a big way. Asian economies like China are pumping out more products than ever, revitalizing the supply chains that were cut short by the pandemic.

So instead of focusing on suppressing the demand for goods and services by attacking employers and workers’ rising wages with higher interest rates, why not listen to the music in consumers’ ears heralding a rising abundance and better New Year?

Harlan Green © 2023

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen