US recession soon? Economists alarmed as 22,000 jobs added in Aug, unemployment at highest in nearly four years

The US hiring slowed further in August as US President Donald Trump's aggressive trade policies, immigration and federal layoff policies took a widening toll on the labor market. The US economy just added 22,000 jobs in August the Bureau of Labor Statistics reported Friday. The unemployment rate rose to 4.3% from 4.2%.

The unemployment rate rose to its highest level in nearly four years, indicating the US labor market is growing stagnant. August’s job report also included a downward revision to June, which showed the US economy lost 13,000 jobs that month. It’s the first negative employment month since December 2020, and it brings to an end what was the second-longest period of employment expansion on record.

The US added an average of about 28,000 jobs over three months ending in July, which marked a major cooldown from the roughly 196,000 jobs added on average over the previous three-month period, US Bureau of Labor Statistics (BLS) data showed.

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“The broader labor market is cooling. Fewer job openings, softer wage growth, and longer job searches are signs of a slowdown,” Ger Doyle, regional president at ManpowerGroup, said in a note, as per CNN. “The hiring momentum that kicked off the year has been tempered by uncertainty.”

Jeff Schulze, head of economic and market strategy at ClearBridge Investments, said the August jobs report, which showed employers hired just 22,000 workers, “did little to quell fears of a recessionary-esque labor backdrop with job creation remaining at stall speed.”

US jobs report out

What is worrisome that Payroll gains for June and July were revised down by a total 21,000 and now reveals that the economy shed 13,000 jobs in June - the first job losses since the depths of the pandemic in December 2020.

“The Great American jobs machine has stalled,” Christopher Rupkey, chief economist at FwdBonds, wrote in commentary issued Friday. July’s job gains were revised up slightly to 79,000 from 73,000, according to the report.

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There were warning signs for months now that the job market in the US is in a dire situation. That became starkly clearer in July, when weak job growth and larger-than-typical downward revisions spurred the unprecedented firing of BLS Commissioner Erika McEntarfer by President Donald Trump who claimed, without evidence, that the disappointing data must have been “rigged.” He has nominated as her replacement E.J. Antoni, a vocal BLS critic and chief economist of the conservative Heritage Foundation.

Hours after the release of the weak jobs report last month, Trump removed BLS Commissioner Erika McEntarfer. The jobs report featured downward revisions, prompting Trump to suggest without evidence that the job statistics had been "manipulated." The BLS routinely revises estimates of jobs added in previous months.

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How close is US to a recession?

According to USA Today, in July just 73,000 jobs were added to the US market and gains for the previous two months were revised down by a massive 258,000.

The weak results dragged payroll growth down to an average of just 35,000 jobs between May and July, sparking concerns among some economists that the nation may be edging closer to a recession.

While few businesses are firing workers, hiring has skidded below the pre-pandemic average, making it tough for employees who lose jobs to find new positions.

With Trump nominating E.J. Antoni, a vocal BLS critic and chief economist of the conservative Heritage Foundation, a replacement for Erika McEntarfer, questions are being raised about the accuracy of the jobs data in coming months. But most economists have voiced confidence in the integrity of the numbers, which are compiled by hundreds of researchers.