President Trump's trade war introduces new inflationary risks that could potentially constrain the Federal Reserve if job market conditions continue to weaken. Job growth slowed considerably last year, marked by substantial downward revisions, indicating a reduction of 258,000 jobs added in May and June compared to earlier estimations. Currently, the unemployment rate remains stable at 4% to 4.2%, contrasting with last year's concurrent rise in unemployment during hiring slowdowns. Economists suggest ongoing uncertainties stem from labor supply shifts influenced by immigration policy changes under the Trump administration.
Goldman Sachs economists noted one distinction between this year and last: the unemployment rate was rising alongside slowing hiring rates last year, while this year has seen stability.
Revisions last summer shifted our understanding about jobs growth, revealing a significant downward revision of 258,000 fewer jobs in May and June than initially estimated.
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