The U.S. job market is showing signs of strain.
Employers added just 73,000 jobs in May, while the three-month average has slowed to roughly 35,000 new positions a month. That’s a dramatic fall from the 168,000 per month pace of 2024, and a far cry from the 336,000 monthly average under Biden.
President Trump has rejected the figures, calling them “rigged,” and dismissed the official responsible for publishing the report. But economists argue the numbers reflect a labor market reshaped by Trump’s own immigration policies. By deporting workers and sharply restricting both temporary and permanent immigration, the administration is shrinking the labor force, which naturally slows job creation.
Goldman Sachs Warns of “New Normal”
Goldman Sachs (GS) economists David Mericle and Jessica Rindels warn that the hiring slowdown is not a blip but a trend. Their team now estimates the economy needs only 30,000 jobs a month to sustain full employment—less than a fifth of the average seen last year.
Goldman Sachs (GS) economists David Mericle and Jessica Rindels warn that the hiring slowdown is not a blip but a trend. Their team now estimates the economy needs only 30,000 jobs a month to sustain full employment—less than a fifth of the average seen last year.
Key industries that previously powered job growth, such as healthcare and education, are no longer adding workers at the same pace. Seasonal hiring has softened, new-business formation looks weaker, and revisions to earlier payroll data have mostly come in lower. Goldman expects further negative revisions ahead, raising the risk of a labor market “stall.”
Even though the unemployment rate remains near 4%, other warning signs are flashing: participation in the workforce has dipped, job openings are falling, and hiring momentum has faded outside a handful of sectors. For the Federal Reserve, that strengthens the case for interest rate cuts, with Goldman predicting three reductions before year-end.
Immigration Policy Becomes the Central Factor
The American Enterprise Institute estimates that U.S. net migration will plunge from 2.6 million in 2024 to zero in 2025, possibly tipping negative as more immigrants leave than arrive. By 2027, the group warns, the labor market could enter outright contraction, with the economy losing jobs each month.
Population growth has already halved since 2023, largely because of lower birth rates and Trump’s immigration clampdown. Economists stress that fewer migrants doesn’t mean more wealth for those who remain—it means less overall growth, fewer jobs, and smaller gains in output. Migrant workers, regardless of legal status, add to economic expansion by producing and consuming, a cycle now breaking down.
For Trump, the politics are tricky. Job growth was a signature bragging point during his campaign, but immigration policy remains his most popular issue with voters. Analysts suggest he is unlikely to loosen border restrictions even if they undercut employment. Instead, he is more likely to target scapegoats such as Federal Reserve Chair Jerome Powell or to question the credibility of government data.
A Fragile Balance Between Politics and Growth
The U.S. economy is navigating a contradiction. Stocks remain near record highs, powered by hopes for Fed rate cuts and productivity gains from artificial intelligence, even as the real economy shows signs of strain. The job market is slowing, and immigration restrictions are amplifying that weakness.
If job creation continues to languish at 30,000 or fewer per month, the political cost for Trump could be steep. But for investors, the bigger question is whether slowing labor force growth caps the nation’s long-term economic potential, regardless of near-term market optimism.
The U.S. economy is navigating a contradiction. Stocks remain near record highs, powered by hopes for Fed rate cuts and productivity gains from artificial intelligence, even as the real economy shows signs of strain. The job market is slowing, and immigration restrictions are amplifying that weakness.
If job creation continues to languish at 30,000 or fewer per month, the political cost for Trump could be steep. But for investors, the bigger question is whether slowing labor force growth caps the nation’s long-term economic potential, regardless of near-term market optimism.
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