Rising Unemployment Rates Witnessed Across America Under Trump's Presidency - Job market deteriorates under Trump's administration as unemployment increases in the United States
The US labor market, a crucial factor in the country's monetary policy, showed signs of weakness at the start of summer, according to recent data released by the Labor Department in Washington.
The number of employed people outside of agriculture increased by 73,000 in July, falling short of the expected 104,000 increase. This slowdown in job creation is raising concerns among economists who suggest that the US economy is feeling the chill.
The unemployment rate in the US also rose by 0.1 percentage points to 4.2 percent in July. This increase, though modest, is a cause for concern as it indicates a potential slowdown in the labor market recovery.
The average hourly wages in the US, however, rose by 0.3 percent compared to the previous month, and compared to the previous year, wages increased by 3.9 percent, which was slightly stronger than expected.
The Trump administration's policies have had a mixed impact on the US labor market and monetary policy. During Trump’s first term (2017–2021), the unemployment rate declined significantly, reflecting restored economic growth and private-sector job gains. However, the implementation of major tariffs and tax cuts shaped economic conditions in a way that contributed to notable inflation increases.
The 2017 Tax Cuts and Jobs Act reduced tax burdens and aimed to boost investment, but was set to expire in 2025. Trump also imposed significant tariffs on imported goods, which surged from 2.5% in early 2025 to around 27% mid-year—levels not seen since the Great Depression. This tariff increase raised inflation, pushing the US consumer inflation rate above the Federal Reserve’s 2% target, with core inflation holding at 2.8% year-over-year in mid-2025.
These inflation pressures complicated the Fed’s monetary policy environment, likely influencing interest rate decisions and tightening measures to counter inflation.
The Fed, in its recent decision, left interest rates unchanged, referring to a robust labor market in its decision. However, the ongoing slowdown in job creation and the rise in unemployment rate could potentially lead to further interest rate adjustments in the future.
The trade policy of the US government is weighing more heavily on economic development than previously thought, according to the chief economist of VP Bank. The potential job cuts, due to the administration's policies, are likely to affect the US labor market, experts warn. Cuts in the state budget have led to layoffs at universities and non-profit organizations, further exacerbating the situation.
The Trump administration's impact on the US labor market and monetary policy is complex, with stimulus measures like tax cuts initially helping to lower unemployment, but later tariffs contributing to notable inflation increases that affected monetary policy. The combination of stimulus and protectionism had complex effects on both employment and inflation trends in the US economy.
Sources: 1. Economic Policy Institute 2. Federal Reserve Bank of St. Louis 3. Congressional Budget Office 4. Tax Policy Center
- The slowdown in job creation and rise in unemployment rate observed in the US labor market, coupled with the impact of tariffs on imported goods, have raised concerns about potential policy changes in monetary policy by the Federal Reserve, as they affect the robustness of the labor market, a key factor in the country's monetary policy.
- The Trump administration's policies, including the Tax Cuts and Jobs Act and significant tariffs on imported goods, have demonstrated a complex impact on the US labor market and monetary policy, initially lowering unemployment, but later contributing to notable inflation increases that complicated the Fed's monetary policy environment.
- The ongoing debates surrounding the Trump administration's policies, particularly those relating to employment and finance, are subjects of discussion in the realm of policy-and-legislation, business, and general news, as their effects on the labor market and monetary policy are being closely monitored by economists and experts.
