On the May Jobs Report: Immigration in Reverse while the Fed Hallucinates

Payrolls at 139,000 beat expectations for 126,000. The whisper-number must have been far lower, with stocks making new recovery highs and futures markets reducing expectations for Fed rate cuts. The Fed is worried about inflationary effects of tariffs, despite lack of historical precedent or theoretical support. Officials are literally hallucinating that they see it already, when by all the numbers it simply is not. The seeming beat was arguably enabled by sharp downward revisions to the prior two months. The unemployment rate rose, but it didn’t show in the unrounded published reports. Since Trump took office, immigration is running in reverse. Immigrants added only 10,000 jobs, in contrast to a Biden-era norm of 98,000. Native-born employment has risen sharply since Trump took office, more than underlying population growth. Unless we want to imagine that, with immigration halted, native-born Americans will suddenly take jobs previously taken by immigrants, we can look forward to jobs growth of only 74,000 per month.