May’s job report delivered a seemingly healthy 139,000 payroll gain and steady 4.2% unemployment, but the details suggest a cooling labor market. Revisions lowered prior months’ gains by 95,000, and the labor force shrank by over 600,000 people—pushing the employment-population ratio to its lowest level in over three years. Most new jobs came from healthcare and government-adjacent sectors, while cyclical industries lagged. Average hourly earnings rose 0.4%, pointing to continued wage pressure and potential inflation persistence.
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Still, President Trump hailed the numbers as proof of a “booming” economy—while simultaneously calling on the Federal Reserve to slash interest rates by a full percentage point. The contradiction is stark: a hot economy doesn’t typically warrant aggressive rate cuts. Trump’s push reflects political pressure, not economic consensus. The Fed, facing stubborn wage growth and uncertainty from immigration and trade policy, remains cautious. With core inflation still sticky and the job market showing only modest cracks, officials see little justification to ease.
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Markets agree—a June rate cut is off the table, and expectations for cuts later in the year have pulled back. Unless the labor market deteriorates further, the Fed is likely to keep rates on hold.

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