Tariffs and/or artificial intelligence (AI) will hit U.S. employment. Soon, the monthly jobs additions, put out by the Bureau of Labor Statistics (BLS) as the Employment Situation Summary, will show additions of zero, or even a loss. It could be that the economy actually added no jobs net in July. Two downward revisions for previous months cost IRS Commissioner Erika McEntarfer her job.
24/7 Wall St. Key Points:
The effects of tariffs and artificial intelligence will soon have an enormous impact on U.S. employment.
That in turn will have an enormous impact on GDP and the economy.
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The economy added 73,000 jobs last month. In addition, May was revised down by 125,000, from +144,000 to +19,000, and the change for June was revised down by 133,000, from +147,000 to +14,000. Do the math. A downward revision of the July figures at a similar magnitude would make the month’s figure negative, with as many as 50,000 jobs lost.
Aside from revisions, tariffs will bite the economy at some point. Whatever argument is made against this is spurious. Large companies from Walmart to GM have said the tariffs will cost them billions of dollars. They will try to pass costs on to consumers, which will almost certainly result in lower unit sales. Lower margins or lower unit sales means a sacrifice of jobs, if history is any indication.
The “tax” of tariffs also undermines household income. One estimate is that tariffs will add $2,400 to the annual average cost of living, according to the Yale Budget Lab. This hits consumer spending, and consumer spending is the engine of gross domestic product (GDP).
Soon enough, advances in AI will hit jobs. Based on the pace of growth of the technology, it will be soon. There are already stories about college graduates who hoped to make $125,000 their first year out of school. Instead, they are working at Wendy’s. AI will race through the job market, knocking out software programming jobs, entry-level lawyers, and human resources staff. That is only the beginning. There is a theory that AI will eventually add jobs to the economy. There is little proof of that, and the process will not happen this month or next.
Many economists think the economy is slowing down and that GDP improvement will be only 1% for the third quarter. If the job market has already dropped, that number is too high.
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