US Jobs Market Resilience Amidst Tariff Uncertainty: Macro Matters

US Jobs Growth in May

• 🇺🇸 The US economy added 139,000 jobs in May, exceeding forecasts despite trade policy uncertainties.
• 🎯 While the headline number appears healthy, the majority of job gains were concentrated in health care and leisure/hospitality.

Impact of Tariffs on Businesses

• ⚠️ Uncertainty surrounding tariffs is making business planning difficult, but this sentiment has not yet significantly translated into widespread layoffs.
• 📉 Job losses are being observed in retail, wholesale trade, and logistics, sectors that had previously front-loaded hiring in anticipation of tariffs.
• 🌐 Tariffs primarily impact the goods sectors of the economy, while the US economy is largely services-based.

Federal Reserve Policy Outlook

• ⏸️ The Federal Reserve is likely to adopt a "wait and see" approach, with no immediate incentive to cut interest rates based on the May jobs report.
• 📈 Expectations point towards potential rate cuts later in the year, which could be driven by falling inflation or, conversely, by significant economic and labor market weakness.

Stagflation Concerns

• ⚖️ While tariffs technically slow growth and increase inflation, the more likely scenario is slow growth with modest, temporary inflationary pressures, rather than full-blown stagflation.

Interest Rates and Real Estate

• 📊 Elevated but stable long-term US Treasury yields are pushing up borrowing costs, suggesting mortgage rates are unlikely to decrease soon.
• 🏠 The real estate market is seeing increased inventory, shifting towards a buyer's market in many areas, offering some relief.