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Expand chart
Data: Bureau of Labor Statistics; Chart: Axios Visuals

The long jobs boom, a pillar of confidence in the U.S. economy, has hit what economists say is a self-inflicted hiccup: President's Trump's multiple trade wars.

What to watch: As Americans have done for a decade and longer, they — along with Trump himself, running for re-election next year — will likely rely on the Fed to come to the rescue.

Driving the news: In numbers released Friday, the Bureau of Labor Statistics said the economy created just 75,000 jobs last month, fewer than the 80,000-100,000 needed to absorb new entrants to the work force, like high school and college graduates.

  • In addition, the BLS revised down its March and April figures by 75,000 jobs — meaning that the May figures were a wash. The unemployment rate held at 3.6% — the lowest in almost a half-century — but it still was as though no jobs were created last month at all.

The big picture: Economists say the new figures, combined with other indications of economic deterioration, suggest that the economy is downshifting to slower growth. Beyond the impact on ordinary Americans and businesses, there are political ramifications:

  • Analysts blame Trump: "Whatever stress there is [to economic conditions] is largely man-made, and the man in question has an office on Pennsylvania Ave.," said Scott Clemons, chief investment strategist at Brown Brothers Harriman.
  • Despite the chaos, they think Trump is likely to keep up his trade fight through the November 2020 election, because it plays to his base. So to make sure there is no recession come Election Day next year, they think he will turn to the Fed to lower interest rates and stimulate the economy.
  • "There is significant and growing risk a recession will start in the second half of 2020 just in time for the election," said Joseph Brusuelas, chief economist at RSM. "One should anticipate a new White House offensive against the Fed to be imminent."

As we reported Thursday, the tension with China and Mexico is playing havoc with the U.S. and global economy. A report this week, for instance, said U.S. manufacturing for May was the weakest since October 2016 — before Trump won office. And in another report, LinkedIn said that overall hiring actually dropped last month by 0.9% year-on-year.

Against these winds, Wall Street has decided it is time for a buying spree: All three major U.S. indexes rose on Friday by more than 1%. What's that all about? At the FT, Gillian Tett writes that investors are convinced that, whether it is because of pressure from Trump or not, "the Fed will do whatever is needed to avoid a downturn."

Thought bubble from Axios markets editor Dion Rabouin: "Lost in much of the discussion about the jobs report and the Fed is the fact that globally central banks are still easing policy. That is, they continue pumping hundreds of billions of dollars into the economy. This has been going on for a decade. At some point, someone is going to have to raise the possibility that more easy money in the banking system may not be achieving the desired result."

What is that desired result: "A healthy economy that does not require stimulus and can stand on its own."

Go deeper

Dan Primack, author of Pro Rata
22 mins ago - Podcasts

Robert Downey Jr. launches VC funds to help save the planet

Robert Downey Jr. on Wednesday announced the launch of two venture capital funds focused on startups in the sustainability sector, the latest evolution of a project he launched two years ago called Footprint Collective.

Between the lines: This is a bit of life imitating art, as Downey Jr. spent 11 films portraying a character who sought to save the planet (or, in some cases, the universe).

DHS warns of "heightened threat" because of domestic extremism

Supporters of former President Trump protest inside the U.S. Capitol on Jan. 6. Photo: Roberto Schmidt/AFP via Getty Images

The Department of Homeland Security on Wednesday issued an advisory warning of a "heightened threat environment" in the U.S. because of "ideologically-motivated violent extremists."

Why it matters: DHS believes the threat of violence will persist for "weeks" following President Biden's inauguration. The extremists include those who opposed the presidential transition, people spurred by "grievances fueled by false narratives" and "anger over COVID-19 restrictions ... and police use of force[.]"

OIG: HHS misused millions of dollars intended for public health threats

Vaccine vials. Photo: Punit Paranjpe/AFP via Getty Images

The U.S. Office of Special Counsel alerted the White House and Congress on Wednesday of an investigation that found the Department of Health and Human Services misused millions of dollars that were budgeted for vaccine research and public health emergencies for Ebola, Zika and now the COVID-19 pandemic.

Why it matters: The more than 200-page investigation corroborated claims from a whistleblower, showing the agency's violation of the Purpose Statute spanned both the Obama and Trump administrations and paid for unrelated projects like salaries, news subscriptions and the removal of office furniture.