‘Can’t AFFORD to breathe’: What voters are saying about their finances and the K-shaped economy

[00:00:00] Speaker 1: Today, the White House is shrugging off a surprise jobs report showing the labor market is weaker than expected. The U.S. economy lost 23,000 jobs last month, falling far short of the 83,000 jobs economists projected would be added in July. The unemployment rate inched down slightly to 4.1 percent as fewer people seek jobs. Here's Trump's top economic advisor explaining the numbers. [00:00:26] Speaker 2: The weakness in this number were really just two things, government workers and a sort of rebound from all the employment we got from the World Cup because the World Cup was ending. If you throw out the World Cup of the government workers, we actually had a number that was about plus 100,000. [00:00:43] Speaker 1: Joining me now, Madison Mills, senior AI reporter for Axios. Now, Madison, earlier this week, Donald Trump said that he was presiding over, quote, the greatest economy maybe in the history of the world, end quote. Now, is that what these numbers are telling you? And does Hassett's explanation make sense? [00:01:01] Speaker 3: Well, it is true that seasonality played into this jobs report, but that is the case with every single jobs report. There's a lot of making fun of in the economist and analyst community about how this is the exact science of looking in the past. And that's exactly what people were telling all of us yesterday in our coverage of this murky labor market here. Obviously, that contraction in jobs is not something that you want to hear. But then you had, as you mentioned, the unemployment rate going down a tick. And so those two things at once just creating a lot of confusion for what the takeaway is. And I think that's a better word for the state of the economy right now is murkiness, is confusion. Because at the same time, we have this continued war in Iran. We have tariff policy. All of that is leading to more questions than answers about what inflation and the labor market are going to look like going forward. [00:01:54] Speaker 1: Yeah, certainly. And the labor report showed that hourly earnings grew 3.2 percent over the year, but the inflation was at 3.5 percent. So what happens when paychecks don't keep up with inflation? [00:02:08] Speaker 3: Yeah. So you basically get a pay cut, unfortunately, even if your company was to give you an annual raise of that average number, 3.2 percent. When inflation is beating it, you're actually somewhat making less because everything that you spend money on starts to cost more. And that's a dynamic that we have been seeing, unfortunately, for years. And as part of my AI coverage at Axios, I hear about a lot from sources that, you know, the employers are the ones with the power right now, given the economic backdrop. And, frankly, worker concerns about AI taking their jobs. They're just happy to have a position. They're not necessarily bargaining for higher salaries at the rate that they used to. All of that showing up in wage growth, not keeping pace or outpacing inflation, which, again, is something that leaves workers behind when it comes to their pocketbooks. [00:02:58] Speaker 1: It's really sad when you think about it. Poll numbers consistently show that Americans are having a bleak view of the economy. According to a recent Quinnipiac poll, 71 percent of voters describe the economy as either not good or poor. Here's what voters have been telling us this week. You just can't you can't afford to breathe at this point. [00:03:19] Speaker 4: Very stressful because you never know. You know, I can get laid off tomorrow and then I'm pretty much homeless because, you know, you can't save now. Every dollar you have has to go to gas, groceries, bills, rent. So there's no cushion for you to save now like he had back in the day where you could put money aside and say, OK, I got money for, you know, in case something happens. It's like paycheck to paycheck. You know, I'm getting paid Friday and Thursday I'll be broke. [00:03:43] Speaker 1: Are they experiencing a different economy than Donald Trump? [00:03:46] Speaker 3: Well, it's really interesting. Treasury Secretary Scott Bessent in the past week here talking about how this idea of a K-shaped economy or the widening gap between the rich and poor and the Treasury Secretary's view is not true. But when we look at the data, it's truer than ever. One of the stats I think about a lot came from Moody's and it showed that the top 90 percent or I'm sorry, the bottom 90 percent of Americans are making up an increasingly less amount of the spending. The top 10 percent of Americans, a small group, obviously, are making up half of corporate spending in the United States. And how consumers spend is such a critical part of the engine of our economy, of GDP growth, economic growth. And increasingly, the wealthiest people are the ones defining what that consumer spending looks like, which obviously is indicative of so many things that lower income workers are continuing to struggle just to keep pace. And also that how they're spending is continuing to make up and impact the economy less and less, which has broader implications for the type of companies we see or the broader stock market and, of course, economic growth as well. So that K-shaped economy, I continue to hear from sources, is really the defining factor of the divide that we're seeing between the wealthy and the poorer individuals in our country now. [00:05:02] Speaker 1: And Madison, there's been a lot of talk about AI's impact on jobs. What does this report suggest? Is that happening or is there hype there? [00:05:11] Speaker 3: The biggest thing that we are seeing is that AI is impacting that wage growth number that we talked about. We are not seeing evidence that AI is replacing jobs in droves. However, that is not true when you look at very specific parts of the labor market. For example, for anyone who's got kids in college about to graduate or young adults at home, that group is really struggling to find work in the AI era. In part because there's this idea that for the kind of novice assistant level intern style work that, you know, helped me get my first jobs, there's an idea that AI agents can do that kind of work. So it's really tough for those entry level workers to just get their first job in corporate America right now. So we're definitely seeing those numbers be impacted, but across the board, we're actually seeing a counter narrative. We thought that AI would replace a lot of software engineers or customer service representatives, and we're actually seeing jobs for those types of roles growing. So it's too early to say definitively yet that AI is replacing jobs or adding to a ton. It really depends on the exact type of work or a job that you're talking about. [00:06:19] Speaker 1: Okay. Madison Mills, we appreciate it.