Are Trump's tariffs finally starting to rock the job market?
Private-sector companies added just 37,000 jobs in May, the payroll company ADP announced on Wednesday, coming in far lower than economists' expectations and painting a worrying picture for where the economy is headed.
Economists expected that the monthly ADP jobs report would show private payrolls rising by 110,000 jobs. Instead, the number was roughly a third of that, which marked the lowest monthly jobs number ADP collected since March 2023.
In fact, ADP's report showed that small companies—those with one to 49 employees—shed 13,000 jobs, and companies with 250 or more employees lost 5,000 jobs. The saving grace was mid-sized companies with between 50 and 249 employees, which saw a 51,000 increase in their payrolls.
"After a strong start to the year, hiring is losing momentum," ADP Chief Economist Nela Richardson said in the company's monthly jobs report.
All eyes will now be on the U.S. Bureau of Labor Statistics, which will release its monthly jobs report on Friday morning. Economists expect the BLS report to show that between about 95,000 and 175,000 jobs were added to nonfarm payrolls in May, according to Kathy Jones, the chief fixed income economist at the Schwab Center for Financial Research.
Ultimately, however, economists had been warning that President Donald Trump's tariffs would start to affect the economy in May and June, as the tariffs he placed on nearly every imported good and excess tariffs on steel and aluminum would start to impact companies' profit margins.
Of course, Trump and the nitwits he put in his Cabinet have wrongly claimed the tariffs would bring manufacturing jobs—which Americans don’t even want—back to the United States.
"Jobs and factories will come roaring back into our country," Trump said in April when he announced his “Liberation Day” tariffs.
However, ADP’s report found that manufacturing jobs decreased in May by 3,000 jobs.
After ADP released its report, Trump fired off a panicked Truth Social post that Federal Reserve Chair Jerome Powell needs to lower interest rates.
"ADP NUMBER OUT!!! 'Too Late' Powell must now LOWER THE RATE. He is unbelievable!!! Europe has lowered NINE TIMES!" Trump wrote.
But Powell has been unmoved by Trump's demands that he lower rates. Powell fears stagflation—a terrible economic debacle in which inflation and unemployment rise at the same time, and which is difficult for economists to solve since fixing one of those problems exacerbates the other.
“If the large increases in tariffs that have been announced are sustained, they're likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment,” Powell said during a press conference in May, in which he said the Federal Reserve was waiting to see the true impact of tariffs before it made any decisions on interest rates.
ADP’s jobs report is a bad sign for America’s economic future. And if the BLS report shows something similar, then the alarm bells that economists have been loudly ringing about Trump’s idiotic trade policy will be proven correct.
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