Job losses in July reveal weakening U.S. labor market

[00:00:00] Speaker 1: The U.S. economy lost 23,000 jobs in the month of July, and the unemployment rate ticked down to 4.1 percent, but for the wrong reason. The number reflects Americans leaving the labor force. While this spells trouble for Main Street, Wall Street having a better reaction. All three major averages are pointing a little bit higher, and the Dow is up 101 points right now. Joining us now, NBC News business and data correspondent Brian Chung. Okay, Brian, you're at the big board. Break it down. We did see some hiring in health care, but otherwise a lackluster month. [00:00:34] Speaker 2: Yeah, that was a bright spot in this report, which quite frankly just fell short of estimates. Let's rehash the numbers. 23,000 jobs were lost in the month of July. That was the first contraction we had seen in the labor force since February, when the government reported that we lost over 150,000 in just that one month. And again, you can see the slowdown. Things looked good in the spring. We really slowed down, and now we're losing jobs. When it comes to the unemployment rate, it did tick down to 4.1%. That's not necessarily for good reasons. We can unpack that a little bit later. But when we take a look at wages versus inflation, this is what a lot of people were looking at, especially with the concerns about affordability in this country. Wages coming in at 3.2% on a yearly basis. The problem is the last read on inflation was 3.5%. So we are now back in the dynamic where inflation is eroding wages. If we take a look at the breakdown by category, we don't have it in this updated number quite right here. But as you point out, leisure and hospitality did add jobs. We saw a number of other sectors losing jobs. This is going to be a focus as we get into the other parts of this month as well. [00:01:39] Speaker 1: Yeah, and those revisions as well. I want to bring in Heather Long, Chief Economist for Navy Federal Credit Union. Heather, thanks for weighing in on this with us. You heard Brian talk about the wages versus inflation. That essentially means a family's buying power isn't going as far. [00:01:53] Heather Long: Exactly. And that's the number that many Americans are focused on right now. This is a real financial squeeze. And I'd point out 3.2% wage growth is the lowest in five years. So the wage growth is moving down. At the same time, inflation is heating back up again. We'll get that latest read next week, but it's probably going to be close to 4% again. And you don't have to be a PhD in economics to feel [00:02:20] Speaker 1: that squeeze. Heather, when we talk about that squeeze and that gap between high earners and lower earners, this K-shaped economy, the Treasury Secretary is saying the K is dead. Listen. [00:02:37] Speaker 4: I got sick of hearing about this K-shaped economy. I can say here definitively, the K-shaped economy is over. And we're seeing more of a C economy where the lower end of wage earners are finally calling it back, just like they did in President Trump's first term. [00:02:54] Speaker 1: What do you make of those comments, especially in light of what we saw today from this jobs report? [00:03:01] Heather Long: Well, I think what he's reflecting on is the past several months when many Americans did receive those bigger tax refunds. And that gave a little bit of extra cushion as the high gas prices and other costs continued to erode budgets. But the problem for the White House is the picture now and going forward is more bleak and that there's going to be belt tightening for we certainly see in our data for many lower income Americans. They already are belt tightening. They're relying on personal loans and credit cards more. What does look more stable is the middle class. So I know we love our letters here. I'd call it more of an E-shaped economy right now where the middle is hanging in there. But it's very [00:03:47] Speaker 1: frustrating going forward. Heather, you heard Brian talk about that 4.1% unemployment rate. That looks pretty darn good, 4.1%. But there's a caveat there. People appear to be leaving the job [00:04:00] Heather Long: market. Do we know what's happening there? It's pretty shocking, Christine. Over 2 million people have left the labor force since November. It's just been like a straight line down. Some of that is baby boomers retiring. A lot of the story appears to be lower immigration. We know that people are not coming to this country right now given the immigration situation and the White House policies. You also have a lot of people who were on that temporary protected status who could legally work here from Haiti and Venezuela and other countries. The White House is revoking a lot of that. And we are starting to dramatically see that in the jobs numbers. But what really worries me is that many Americans are also just becoming discouraged. As Brian was saying, health care is pretty much the only industry hiring. If you work in something other than health care or AI, it's really tough. It's almost like a job market on life [00:04:56] Speaker 1: support right now. I want to bring Brian back in here because there's more breaking news to talk to you about. A landmark verdict again against Meta for not protecting children enough on Instagram and Facebook. Meta was ordered to pay $567 million. That's on top of a big penalty it had already received in this New Mexico story. Bring us up to speed on this. Yeah, that would bring the total that Meta would [00:05:18] Speaker 2: have to pay here to almost a billion dollars. Meta does say they're going to appeal this. But this is a New Mexico court that argues that rather the New Mexico AG had argued to the court that Meta didn't do enough to protect specifically young children from getting addicted and developing mental health issues on Instagram as well as Facebook and then also not being protected enough from sexual exploitation on these platforms. Now, Meta, I should point out, is facing a number of other legal challenges as well. They're about to gear up for what could be the first of 29 states that are suing them. That is going to begin in a federal court in Oakland later on this month. And there are also all these states alleging that they didn't do enough to protect specifically younger children from developing mental health issues after we already saw that Los Angeles court just earlier in the year award one single person $6 million from both Meta and YouTube for not being properly protected for developing some of these mental health issues. So I think it has brought up a general question of what is the liability for these social media platforms because it's not just Meta. You have YouTube, Snapchat facing these types of lawsuits as well. I think a lot of parents are very much dialed into this very big issue. All right. And you'll be [00:06:24] Speaker 1: following it for us, Brian Chung and Heather. Thank you so much, Heather Long. Nice to see both of you. Big day. [00:06:29] Speaker 2: We thank you for watching and remember stay updated on breaking news and top stories on the NBC News app or watch live on our YouTube channel.