A jobs report to be released on Thursday will show whether a hiring slowdown continued in June as businesses weathered uncertainty surrounding President Donald Trump’s tariffs.
Key measures of the economy have proven resilient in recent months, defying fears of resurgent inflation and a possible economic downturn. Hiring has kept up a solid, albeit slower pace, humming along with less disruption than some economists anticipated.
Forecasters expect the United States to have added 110,000 jobs in June, which would mark continued growth but a dropoff from 139,000 jobs added a month earlier. Such performance amounted to a downshift from nearly 180,000 jobs created in the month before that.
The fresh data is set to arrive less than a week before a deadline established by the Trump administration for the completion of dozens of trade deals with countries facing the threat of so-called “reciprocal tariffs.”
So far, the White House says it has reached trade agreements with the United Kingdom and Vietnam, as well as a preliminary accord with China.
In recent weeks, Trump has dialed back some of his steepest tariffs. Another batch of tariffs stands in legal limbo after a pair of federal court rulings in May, though the levies remain in place for now.
Prices accelerated slightly in May, the most recent month for which such data is available, but inflation remains near its lowest level since 2021.
Warning signs point to the possibility of elevated prices over the coming months, however. Nationwide retailers like Walmart and Best Buy have voiced alarm about the possibility they may raise prices as a result of the levies.
The Fed held its benchmark interest rate steady last month, continuing a wait-and-see approach adopted by the central bank in recent months as it observes potential effects of Trump’s tariff policy. Four meetings and six months have elapsed since the Fed last adjusted interest rates.
People eat at a Mexican restaurant in Los Angeles, June 17, 2025.
Pilar Olivares/Reuters
The Fed is guided by a dual mandate to keep inflation under control and maximize employment. In theory, a lowering of interest rates could help stimulate economic activity and boost employment, especially while inflation remains low.
Powell, in recent months, has warned about the possibility that tariffs may cause what economists call “stagflation,” which is when inflation rises and the economy slows.
Stagflation could put the central bank in a difficult position. If the Fed raises interest rates as a means of protecting against tariff-induced inflation under such a scenario, it risks stifling borrowing and slowing the economy further.
On the other hand, if the Fed lowers rates to stimulate the economy in the face of a potential slowdown, it threatens to boost spending and worsen inflation.
On Tuesday, Powell appeared to signal an openness to cutting interest rates as early as this month.
When asked about a possible interest rate cut at the Fed’s upcoming meeting, Powell said, “I wouldn’t take any meeting off the table or put any on the table. It depends on how the data evolves.”
Powell affirmed that a majority of members of the Fed’s policy-making board support additional interest cuts this year. The central bank will hold four rate-setting meetings over the remainder of 2025, and the first will happen on July 29 and 30.
“A majority of us do feel it will be appropriate in the remaining four settings of the year to begin reducing rates again,” Powell told the audience at the European Central Bank forum in Sintra, Portugal.
