The jobs numbers were bad. July’s 79,000 gave way to predictions of 75,000 in August. Payroll giant ADP, which works off its own data, estimated that August numbers would be 54,000. The official figures: 22,000 new jobs. The unemployment rate rose to 4.3%. It seems that the July job figures weren’t quite a fake anomaly.
The number of long-term unemployed — those without jobs for at least 27 weeks, or just over half a year — has increased by 385,000 over the year, reaching a non-seasonally adjusted 25.0% of all without a job. In August 2024, it was 20.9%.
Where Jobs Are Shrinking
Whole job areas are starting to show the strain of the economy. Federal government job reductions were 15,000 in August and are now down by 97,000 since January. (As the Bureau of Labor Statistics notes, employees on paid leave or receiving ongoing severance pay are counted as employed.)
Mining, quarrying, and oil and gas extraction employment changed by -6,000 after little change over the previous 12 months. Wholesale trade was down 12,000 in August and by 32,000 since May. Manufacturing employment, something that was supposed to improve because of tariffs, dropped 12,000 in August and 78,000 during the year. There were some increases: 31,000 jobs in healthcare (the average monthly gain over the previous 12 months being 42,000) and social assistance (up 16,000).
Revisions were surprising. July was revised up from 73,000 to 79,000, but June crashed from +14,000 to -13,000.
Productivity was up 3.3% versus the projected 2.8%, meaning, in one interpretation, more work out of fewer people. The trade deficit in July increased to $78.3 billion from $59.1 billion, a measure that tariffs were supposed to reduce.
Impact Of Job Reductions
The jobs numbers have significant repercussions. At 2:30 p.m. Eastern time on Friday, September 5, 2025, the yield on the 10-year Treasury Note, a critical base measurement for many types of loans, including home mortgages, was at 4.09%. It had been 4.26% on September 6.
That might seem like good news for those who want to buy a house. The national 30-year mortgage rate at the time of writing is 6.58%, according to Bankrate.com.
But a sudden drop of the 10-year Treasury Note yield is a classically bad sign that investors are expecting an economic downturn, if not a recession. Yields and bond prices move in opposite directions. If yields go down, prices go up, and prices rise when there is increased interest (more demand) in buying bonds. Those 10-year Notes are considered safe investments, and when the seas look rough, the smart want a sturdy vessel with stabilization.
“There are certain things you can only read one way,” Giacomo Santangelo, a senior lecturer of economics at Fordham University, told me. “There’s no other way to interpret it.”
Oxford Economics wrote that the “August jobs report leaves no doubt about a Federal Reserve rate cut.” This has been broadly accepted among many economists. But the choice for the Fed is complicated. President Trump has been pushing for lower interest rates to boost business, using tactics that included previously threatening to remove Fed Chair Jerome Powell, which didn’t seem to be a legal option, and has now claimed to have fired Fed Governor Lisa Cook for alleged mortgage fraud that hasn’t been proven.
Rates Up Or Down, A Tough Decision
But in a complicated economy, the Fed’s tools are overly simplistic. “They literally have one lever, and it’s a question of when they pull the lever,” Santangelo said. The lever is short-term interest rates that are heavily influential. They can reduce, increase, or leave the rate where it is. Unfortunately, while reducing rates might be necessary to stimulate the economy when jobs face pressure, that is the opposite of what to do when inflation could increase.
Inflation, measured by Consumer Price Index, had been heading down starting at the beginning of the year from 3.0% in January to 2.8% in February, 2.4% in March, 2.3% in April, and then started to turn upward again to 2.4% in May and 2.7% in both June and July.
“What we do know is that consumers are responding to the tariffs by going into debt,” Santangelo said. “It would be foolish to be aggressive with this because it will be inflationary and we’re still in the process of getting the beginnings of the tariffs inflation and the deportation inflation.”