Friday’s jobs report made all kinds of headlines for all kinds of reasons. President Donald Trump’s subsequent firing of the BLS commissioner, yes. But also the major downward revisions in how many jobs this economy produced in recent months.
That perhaps came as a huge surprise to economists. Emphasis on “perhaps.” I called back some folks I spoke to just before the report came out to see if it changed how experts are thinking about this economy.
On Thursday, RSM economist Tuan Nguyen said he didn’t seem too concerned about the labor market. But then, came Friday’s bombshell jobs report, and that changed everything, right?
“Not really,” he said.
Nguyen said sure, the report showed the labor market was weaker than he’d thought. But, he said, “the data actually reaffirms ours and most people’s views that immigration policies, DOGE and tariffs would become a drag on the economy and the labor market.”
After the report, RSM modestly raised its probability of a recession in the next year, from 40% to 45%.
Ron Hetrick, a labor economist at Lightcast, said he was unsurprised about the crummy jobs report. Before, he said, there seemed to be too many new jobs.
“When we were seeing the numbers we were seeing, that didn’t make any sense to me,” Hetrick said.
That’s because President Trump’s immigration policy was pushing so many people out of the workforce.
“We’re seeing the labor force declining very rapidly due to the drop in foreign-born workers,” he said.
Hetrick said it makes sense that the drop took time to show up in the official statistics, which are based on surveys. Employers with stable payrolls generally respond quickly.
“Hey, it’s pretty much the same payroll we had last month. They go in there. And then what’s happening is the people who are experiencing a lot of changes are getting their information in at a delay, as you would expect,” he said.
Now, Hetrick said the data matches the vibes: “We’re getting a much clearer picture of what I think we all kind of feel is happening. And that is complete stagnation.”
Pavlina Tcherneva, an economist at Bard College, is also among the not surprised. “We’d been watching for some time that the labor market had been losing steam,” she said.
The jobs report showed that loss was more widespread than before. Half of sectors lost jobs, she said.
Unsurprisingly, Tcherneva said the course of the labor market will depend a lot on the engine of this economy — which is the consumer.
“You know, 60-70% of growth is consumption,” she said.
If tariffs and higher prices cause a big consumer pullback, she said that could send a cooling market into much worse territory.