Trump's policies are dragging behind! Will America's unemployment rate hit a three-and-a-half-year high in June?

The Department of Labor in the United States will release the highly anticipated non-farm employment report on Thursday (ahead of the Independence Day holiday). Due to the economic uncertainty caused by the policies of the Trump administration, the labor market in the United States may continue to slow down in June, with the unemployment rate expected to slightly increase to 4.3%, the highest in three and a half years, while showing continued steady growth in wage levels for the past month. However, even with the expected slowdown in job growth, this trend may not be enough to prompt the Federal Reserve to restart rate cuts in July. Recent indicators (including initial and continuing unemployment claims) suggest that after strong performance to support the economy and avoid recession, the labor market is showing signs of weakness. Previously, the Federal Reserve had adopted aggressive monetary tightening policies to combat high inflation. Economists point out that the comprehensive import tariffs, mass deportation of immigrants, and significant government spending cuts implemented by the Trump administration are seen as "anti-growth" policies that have changed the public's perception of the economy. Following Trump's victory in November last year, business and consumer confidence soared due to expectations of tax cuts and deregulation, but plummeted sharply about two months later. Martha Gimbel, Executive Director of the Yale Budget Lab, said, "The current situation is filled with uncertainty, making it difficult for people to make decisions." A survey of economists shows that non-farm employment is expected to increase by 110,000 jobs in June, lower than the 139,000 jobs in May and the three-month average increase of 135,000 jobs. The forecast range is between 50,000 to 160,000. Hourly wage growth is expected to be 0.3%, with annual growth expected to remain at 3.9%. Economists estimate that the U.S. needs to create 100,000 to 170,000 jobs per month to match the growth of the working-age population. The market will closely monitor revisions to the data from April and May, as downward revisions have been common so far this year. Some economists speculate that this may be due to delays in responses from small businesses to institutional surveys (the source of non-farm data). Samuel Tombs, Chief U.S. Economist at Pantheon Macroeconomics, said, "Regardless of the reasons for the revisions, the established pattern suggests that the initial figures for June may need to be revised downwards by around 30,000 jobs. We should focus on the trend rather than a single month's data." The slowdown in employment mainly reflects weak hiring intentions, with layoffs remaining at low levels as employers continue to face difficulties in hiring workers after the pandemic. A wave of layoffs is emerging, however, as layoffs increase and a lack of hiring opportunities leads to a decrease in re-employment, explaining the expected rise in the unemployment rate. Data from the Conference Board shows that the percentage of consumers who believe that "jobs are plentiful" fell to the lowest level in over four years in June. If the unemployment rate rises as expected to the highest level since October 2021, it will end the three-month streak of stability at 4.2%. Most economists expect the unemployment rate to continue to rise in the second half of the year, potentially prompting the Fed to restart an easing cycle in September. The Federal Reserve kept its benchmark interest rates unchanged in the range of 4.25% to 4.50% in June. Chairman Powell emphasized the need to "wait and see" the impact of tariffs on inflation before cutting rates again. According to the CME FedWatch Tool, the market expects a 74.7% probability of rates remaining unchanged in July, while the probability of a 25 basis point rate cut in September is 71.5%. James Knightley, Chief International Economist at ING, said, "We are starting to see some significant shifts, and the labor market conditions may be more severe than commonly perceived. While the June report may not support a rate cut in July, the Fed may focus more on the trend in employment data." However, some economists believe that immigration control leading to a shrinking labor pool may limit the upward potential of the unemployment rate. With the White House canceling temporary legal status for hundreds of thousands of immigrants, the monthly job additions required to maintain stability in the unemployment rate may drop to less than 100,000. In terms of sectors, the healthcare industry may still be a major employer, but the leisure and hospitality industry may see a decrease in job seekers due to fears of deportation. Similar concerns may also affect employment in the construction industry, while tariffs continue to restrict labor utilization in the manufacturing sector. The trend of moderate reductions in federal government positions continues, but large-scale layoff plans are progressing slowly due to legal disputes. Michael Gapen, Chief U.S. Economist at Morgan Stanley, said, "The impact of federal layoffs and voluntary retirements may not be seen until October, and there are currently no signs of a significant slowdown in government hiring."