Kiplinger Jobs Outlook: Beneath the Surface, Signs of More Slowing
Total job growth in June looked good, but private-sector growth was weak.

Kiplinger’s Economic Outlooks are written by the staff of our weekly Kiplinger Letter and are unavailable elsewhere. Click here for a free issue of The Kiplinger Letter or to subscribe for the latest trends and forecasts from our highly experienced Kiplinger Letter team.
A better-than-expected increase of 147,000 jobs was reported for June, but half of these jobs were in state and local government. Private-sector jobs grew by a more modest 74,000. Other signs of slowing in the labor market:
- Little growth in the private sector outside health care and social assistance employers, which added 58,600 new positions.
- The surge in the state and local government sector will not be sustained, as almost all of it was the result of odd seasonal effects in public education hiring.
- The unemployment rate declined to 4.1%, but that was partly attributable to a drop in the labor force as fewer people looked for work.
- Hours worked dropped in June for the first time in five months. Normally, this shows an upward trend over time.
- Wage growth slowed modestly over the past four months to a 3.7% annual pace. Wage growth tends to lag other labor market indicators, so this is confirmation that the hiring slowdown is actually happening.
Consumer and business uncertainty about the economy will continue to delay hiring plans and to slow pay gains. Hiring is often deferred when consumers are concerned about losing their jobs, or when businesses don’t know whether there will be a positive return to investing in additional workers. Prior to the new administration’s tariffs, we expected monthly job growth of about 150,000 new positions to continue. Now, that could fall below 100,000 if enough employers decide to hold off on hiring while they sort out the effects of the tariffs on both their businesses and the economy as a whole. The uncertainty is also likely to ease annual wage growth to 3.5% by December.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The recent labor force declines were likely caused by the campaign to deport immigrants. The number of foreign-born workers in the labor force has dropped in each of the past three months. (The Bureau of Labor Statistics survey does not distinguish between legal and illegal immigrants.)
The signs of slowdown in the June jobs report make it more likely that the Federal Reserve will cut interest rates this fall. Our view is that the first cut will come in October, since the Fed is also waiting to see what impact the tariffs will have on inflation. The Fed would also like to see wage growth start to come down a little faster, since bigger pay gains make it harder to hit its goal of 2% inflation.
Related Content
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

David is both staff economist and reporter for The Kiplinger Letter, overseeing Kiplinger forecasts for the U.S. and world economies. Previously, he was senior principal economist in the Center for Forecasting and Modeling at IHS/GlobalInsight, and an economist in the Chief Economist's Office of the U.S. Department of Commerce. David has co-written weekly reports on economic conditions since 1992, and has forecasted GDP and its components since 1995, beating the Blue Chip Indicators forecasts two-thirds of the time. David is a Certified Business Economist as recognized by the National Association for Business Economics. He has two master's degrees and is ABD in economics from the University of North Carolina at Chapel Hill.
-
Electric Car Owners Can’t Avoid Road Taxes in 2025
New Taxes Hawaii launched its new EV road usage fee in July. Here’s why some states are implementing similar new electric vehicle taxes across the nation.
-
Social Security Email About 'Big Beautiful Bill' Tax Changes Sparks Confusion
Tax Changes Here’s what’s really happening with taxes on Social Security benefits under Trump’s new tax plan.
-
The 60-40 Portfolio Rule of Investing: Not Dead Yet?
Adding alternative investments to a balanced portfolio can smooth out returns.
-
The Hidden Costs of Caregiving: Crisis Goes Well Beyond Financial Issues
Many caregivers are drained emotionally as well as financially, leading to depression, burnout and depleted retirement prospects. What's to be done?
-
Cash Balance Plans: An Expert Guide to the High Earner's Secret Weapon for Retirement
Cash balance plans offer business owners and high-income professionals a powerful way to significantly boost retirement savings and reduce taxes.
-
Here's Why Walmart Deals is Better Than Amazon Prime Day
With sales for Walmart Deals and Amazon Prime Day running comparable on price, one factor separates them.
-
How to Get Rid of the Things Your Kids Don't Want While Downsizing
Whether moving by necessity or choice, downsizing means deciding what to do with your stuff. Here's what to do if the kids and grandkids don't want it all.
-
Five Things You Can Learn From Jimmy Buffett's Estate Dispute
The dispute over Jimmy Buffett's estate highlights crucial lessons for the rest of us on trust creation, including the importance of co-trustee selection, proactive communication and options for conflict resolution.
-
I'm a Financial Adviser: For True Diversification, Think Beyond the Basic Stock-Bond Portfolio
Amid rising uncertainty and inflation, effective portfolio diversification needs to extend beyond just stocks and bonds to truly manage risk.
-
I'm a Retirement Psychologist: Money Won't Buy You Happiness in Your Life After Work
While financial security is crucial for retirement, the true 'retirement crisis' is often an emotional, psychological and social one. You need a plan beyond just money that includes purpose, structure and social connection.