Trump's policies are holding back! The unemployment rate in the U.S. is expected to hit a three-and-a-half-year high in June?

According to the Zhitong Finance APP, the U.S. Department of Labor will release the highly anticipated non-farm payroll report on Thursday (moved up due to the Independence Day holiday). Due to economic uncertainties triggered by the Trump administration's policies, the U.S. labor market may continue to slow down in June, with the unemployment rate expected to rise slightly to 4.3%, reaching a new high in three and a half years, while also showing that wage levels remained robust last month. However, even if employment growth expectations slow down, this trend may not be sufficient to prompt the Federal Reserve to restart the interest rate cut cycle in July. A recent series of indicators (including initial and continuing unemployment claims) suggest that after a strong performance that helped avoid recession, the labor market is showing signs of fatigue. Previously, the Federal Reserve had adopted aggressive monetary tightening policies to combat high inflation. Economists point out that comprehensive import tariffs, large-scale immigration deportations, and significant cuts in government spending, which are seen as "anti-growth" policies promoted by Trump, have changed public perceptions of the economy. After Trump's victory in November last year, business and consumer confidence soared due to expectations of tax cuts and deregulation, but sharply declined about two months later. Martha Gimbel, executive director of the Budget Lab at Yale University, stated, "There is a lot of uncertainty right now, making it difficult for people to make decisions." A survey of economists shows that non-farm payrolls are expected to increase by 110,000 in June, down from 139,000 in May and a three-month average increase of 135,000. The forecast range is between 50,000 and 160,000. Hourly wage growth is expected to be 0.3%, with an annualized increase remaining at 3.9%. Economists estimate that the U.S. needs to create 100,000 to 170,000 jobs per month to match the growth of the working-age population. The market will closely monitor the revisions of April and May data—revisions this year have generally shown a downward trend. Some economists speculate that this may be due to small businesses' delayed responses to institutional surveys (the source of non-farm data). Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, stated, "Regardless of the reasons for the revisions, the established pattern suggests that the initial value for June may need to be adjusted down by about 30,000, and we should focus more on trends rather than single-month data." The slowdown in employment mainly reflects weak hiring intentions, while layoffs remain low as employers still face difficulties in hiring post-pandemic. Layoff Wave is Rising However, a wave of layoffs is rising, coupled with weak hiring leading to fewer reemployment opportunities, which explains the expected increase in the unemployment rate. Data from the Conference Board shows that the proportion of consumers who believe "job opportunities are plentiful" fell to its lowest level in over four years in June. If the unemployment rate rises as expected to its highest level since October 2021, it will end the previous three-month stability at 4.2%. Most economists expect the unemployment rate to continue to climb in the second half of the year, which may prompt the Federal Reserve to restart the easing cycle in September. The Federal Reserve maintained the benchmark interest rate in the range of 4.25%-4.50% in June. Chairman Powell emphasized the need to "wait and see" the impact of tariffs on inflation before cutting rates again. According to the CME FedWatch Tool, the market expects a 74.7% probability of maintaining interest rates in July, while the probability of a 25 basis point rate cut in September is 71.5% James Knightley, Chief International Economist at ING, stated: "We are beginning to see some significant shifts, and the state of the labor market may be more severe than commonly perceived. The June report, while not sufficient to support a rate cut in July, may lead the Federal Reserve to pay closer attention to the trends in employment data." However, some economists believe that immigration controls leading to a shrinking labor pool may limit the potential rise in the unemployment rate. With the White House canceling the temporary legal status of hundreds of thousands of immigrants, the monthly job additions needed to maintain a stable unemployment rate may drop to less than 100,000. In detail, the healthcare sector may still be a major source of employment, but the leisure and hospitality industry may see a decrease in job seekers due to immigrants fearing deportation. Similar concerns may also affect employment in the construction industry, while tariffs continue to constrain labor in manufacturing. The trend of moderate reductions in federal government jobs is still ongoing, but large-scale layoff plans are progressing slowly due to legal disputes. Michael Gapen, Chief U.S. Economist at Morgan Stanley, stated: "The impact of federal layoffs and voluntary retirements may not become apparent until October, and there are currently no clear signs of a significant slowdown in government hiring."