Hassett cites 100,000 adjusted job gains as payrolls fall 23,000

White House National Economic Council Director Kevin Hassett said US employment rose by roughly 100,000 in July after excluding government jobs and World Cup-related factors, even as headline nonfarm payrolls fell 23,000.

"I almost exclusively focus on unemployment, and it has declined," Hassett said, framing the report as evidence of labor market resilience.

The Labor Department's July report showed employers cut 23,000 jobs, with revisions shaving 103,000 off payrolls in May and June. The unemployment rate dipped to 4.1 percent, the lowest since June 2025, but only because 264,000 Americans left the labor force, pushing participation to 61.4 percent — the lowest since February 2021.

The administration's framing matters for the Federal Reserve's policy path. With the break-even hiring rate — the monthly payroll growth needed to keep unemployment stable — having fallen from 155,000 in 2023-2024 to near zero per a Federal Reserve study, even modest job creation can keep the labor market from deteriorating. Markets will parse whether the adjusted figure points to underlying strength or masks a broader slowdown as the Persian Gulf conflict pushes energy prices higher.

The July report marked a sharp reversal for the American labor market. Forecasters had expected job creation to approach 100,000 last month. Instead, local public schools cut 50,000 jobs, restaurants and bars shed 26,000, and retailers trimmed 19,000. Construction added 22,000 positions and factories 5,000, which the White House cited as evidence that its tariff-driven industrial policy is working.

"The Trump industrial resurgence is on schedule. Manufacturing and factory construction jobs grew again in July even as government payrolls continued to significantly shrink," White House spokesman Kush Desai said.

So far this year, employers are adding 61,000 jobs a month, up from 9,700 in 2025 — the weakest outside a recession since 2002. Economists have described the current conditions as a "no hire, no fire" labor market, where companies hold onto existing staff but are reluctant to expand headcount.

The Productivity Puzzle

The unusual dynamic stems from two forces. First, the immigration crackdown and baby-boomer retirements have reduced the pool of available workers. "There are just fewer people available to hire," said Sal Guatieri, senior economist at BMO Capital Markets. Second, companies have become more productive, using technology to do work humans used to do. "We are seeing companies produce more with their current staff, so there's less need to take on new workers," Guatieri said.

The tightening labor supply has translated into wage gains for those who switch jobs. ADP reported that workers who changed jobs last month pocketed a 7 percent raise, the biggest year-over-year gain in almost a year, versus a 4.4 percent increase for those who stayed.

Yet the pipeline into employment is narrowing. Researchers at the Federal Reserve Bank of San Francisco found that landing a job has gotten tougher in the past couple of years — even for prime-age workers with college educations who normally find work fastest. They cited the immigration crackdown, hiring slowdowns at tech companies and government contractors, and uncertainty over government policy as possible factors.

The outlook is clouded by the ongoing fighting in the Persian Gulf, which has pushed up energy prices and squeezed family budgets, and by the rise of artificial intelligence, which could either make workers more efficient and better-paid or eliminate jobs outright.

For the Fed, the data presents a mixed picture. The unemployment rate at 4.1 percent is historically low, but the shrinking labor force participation rate and the downward revisions to payrolls suggest the labor market is cooling more than the headline unemployment rate implies. If the adjusted figure of 100,000 reflects the true underlying pace of hiring, the economy may be growing fast enough to avoid aggressive rate cuts. If not, the Fed could face pressure to ease sooner as the Gulf conflict adds to cost pressures.

This article is for informational purposes only and does not constitute investment advice.