Waiting for Shoe to Drop in Jobs Market05/02 06:52

   Trouble may be coming for the American job market as President Donald Trump 
wages trade wars, purges federal workers and deports immigrants working in the 
United States illegally. But it's probably not here yet.

   WASHINGTON (AP) -- Trouble may be coming for the American job market as 
President Donald Trump wages trade wars, purges federal workers and deports 
immigrants working in the United States illegally. But it's probably not here 
yet.

   Economists expect the U.S. Labor Department on Friday will report that 
employers added 135,000 jobs last month. That's a healthy number, but it would 
be down sharply from the surprisingly strong 228,000 jobs added in March.

   The unemployment rate is forecast to remain at a low 4.2%, according to a 
survey of economists by the data firm FactSet.

   "We are not seeing right now any really adverse effects on the employment 
market,'' said Boston College economist Brian Bethune, who expects a 
"reasonably good'' 150,000 new jobs in April.

   But many economists worry the job market is likely to deteriorate.

   Trump's massive taxes on imports to the U.S. are likely to raise costs for 
Americans and American businesses that depend on supplies from overseas. They 
also threaten to slow economic growth. His immigration crackdown threatens to 
make it more difficult for hotels, restaurants and construction firms to fill 
job openings. By purging federal workers and cancelling federal contracts, Elon 
Musk's Department of Government Efficiency risks wiping out jobs inside the 
government and out.

   "Looking ahead, we expect the steep tariff increases and the surge in 
uncertainty and financial market volatility will result in a more pronounced 
labor market downshift than previously anticipated," Lydia Boussour, senior 
economist at the accounting and consulting giant EY, wrote this week. "Large 
cuts to the federal workforce and the cancellations of many government 
contracts will also be a drag on payroll growth in coming months.''

   A slowdown in immigration "will weigh on labor supply dynamics, further 
constraining job growth. We foresee the unemployment rate rising toward 5% in 
2025.''

   And Boussour is far less optimistic about April job growth than most other 
economists: She forecasts that employers added just 65,000 new jobs last month.

   There have been recent harbingers of a potential jolt to the strong U.S. 
jobs landscape, a bright spot even during the recovery from a global pandemic.

   Payroll provider ADP reported Wednesday that companies added just 62,000 
jobs in April, about half of what was expected and down from 147,000 in March. 
"Unease is the word of the day," said Nela Richardson, chief economist at ADP. 
"It can be difficult to make hiring decisions in such an environment."

   The ADP number often diverges from the government's monthly jobs data, but 
on Thursday the U.S. Labor Department reported that the number of Americans 
applying for unemployment benefits rose last week to the highest level since 
February. The 241,000 weekly claims reported Thursday are still historically 
low, but thousands more Americans sought help last week than economists had 
expected.

   Trump's policies have shaken financial markets and frightened consumers. The 
Conference Board, a business group, reported Tuesday that Americans' confidence 
in the economy fell for the fifth straight month to the lowest level since the 
onset of the COVID-19 pandemic.

   In the face of high interest rates engineered by the Federal Reserve in 2022 
and 2023 to fight inflation, hiring has clearly slowed -- to a solid but 
unspectacular average of 152,000 jobs a month this year. But it's down from 
168,000 in 2024, 216,000 in 2023, 380,000 in 2022 and a record 603,000 in 2021 
as the economy surged back from pandemic lockdowns.

   American workers have at least one thing going for them. Despite the 
uncertainty about fallout from Trump's policies, many employers don't want to 
risk letting employees go -- not after seeing how hard it was to bring people 
back from the massive but short-lived layoffs of the 2020 COVID-19 recession.

   "They laid millions of these people off, and they had a hell of a time 
getting them back to work,'' Boston College's Bethune said. "So for now, the 
unemployment rate and the number of people filing claims for jobless benefits 
every week remain low by historical standards.

   Bethune does not expect Musk's cuts to the federal workforce to show up much 
in the April jobs numbers. For one thing, job cuts orders by the billionaire's 
DOGE are still being challenged in court. For another, some of those leaving 
federal agencies were forced into early retirement -- and don't show up in the 
Labor Department's count of the unemployed.

   Samuel Tombs and Oliver Allen of Pantheon Macroeconomics see employers 
adding 150,000 jobs in April. But they expect job creation to slow to around 
100,000 a month in May and June as falling business confidence takes a toll on 
hiring. A slumping labor market, they reckon, will convince the Fed to cut 
interest rates in June or July.

   After cutting rates three times last year -- as inflation eased closer to 
its 2% target -- the Fed has been reluctant to cut any further until it has a 
better idea whether Trump's tariffs will push prices higher. A deterioration in 
the job market could persuade Fed officials to offer the economy some relief.