The July jobs report has confirmed that the US economic engine is sputtering, with nonfarm payrolls rising by just 73,000 and a three-month average job gain of 35,000 – less than one-third the pace of last year. This weakness in job growth points to an economy that may be slowing more than traditional metrics.
Several economists warn that this slowdown could lead to recession risks, with White House officials disputing these concerns. Goldman Sachs forecasts 1% growth in the final two quarters due to slower consumer spending and “sharp slowdowns” in real income growth.
Luke Tilley, chief economist at Wilmington Trust, notes that the labor market is key to gauge what’s happening, and there are concerns over the longer-term hit from tariffs. He cites a 50% chance the US may slide into recession.
However, some economists, like Gus Faucher, suggest that while recession risks are elevated, weaker job growth and higher tariffs could cause consumers to cut back on spending, pushing the economy into recession.
Despite these concerns, White House officials insist the economy is sound and will get better once President Trump’s One Big Beautiful Bill Act kicks in. Markets have been resilient, with stocks falling but not dramatically, amid hopes of a long-term tariff agreement between the US and European Union.
Key takeaways include:
– A 50% chance the US may slide into recession.
– Weaker job growth and higher tariffs could cause consumers to cut back on spending.
– Recession risks are elevated despite some economists’ optimism about the economy’s potential for growth in the second half of the year.
Source: https://www.cnbc.com/2025/08/04/contentious-july-jobs-report-confirms-the-us-economy-is-slowing-sharply.html