Scott Gurvey's Public Offerings

The May Employment Situation Report released by the Bureau of Labor Statistics (BLS) handily beat expectations, with the U.S. economy adding 172,000 nonfarm payroll jobs. Economists had forecasted a much more modest gain of roughly 80,000 to 85,000 jobs, making this a significant upside surprise.

If the professionals were surprised, what are we average citizens supposed to make of it? Donald Trump celebrated the numbers, declaring that “it’s raining jobs” in America, while pushing back against Wall Street and Federal Reserve anxieties regarding inflation. Over the weekend, Trump focused his responses on celebrating the numbers as a massive administrative win while lecturing the financial markets for dropping on good news.

I spent three decades trying to figure out the gyrations of the U.S. economy as a reporter for public television’s Nightly Business Report. It got harder and harder as the years went on. I’ll admit to being as confused as anyone by the strength of the economy today. So, I called some of those professional economists and asked them to explain.

Many view Trump’s claim that this jobs report is a “big win” for his specific policies with a mix of validation and heavy skepticism. While his administration’s legislative actions are directly impacting specific sectors like private manufacturing and corporate investment, broader macroeconomic factors and long-term structural trends are also heavily driving the numbers. They seem to be ignoring tariffs and direct government investment. Too socialistic I presume.

National Economic Council Director ⁠Kevin Hassett and other administration officials point directly to tax provisions within recent legislation—such as the One Big Beautiful Bill Act—and aggressive deregulation. They argue tax incentives have given companies the financial breathing room to hire aggressively without passing high costs to consumers. They also highlight a major comeback in factory construction and data center investments, fueled by corporate tax cuts and protective trade policies.

While the job surge in May, and equally as important the upward adjustments adding 93,000 jobs to the March and April reports, is positive, there are signals which some economists cite to qualify the surge and caution about the road ahead.

• The “Low-Fire” Environment: After struggling to find staff in recent years, companies are hoarding talent and keeping layoffs at record lows. Because employers are reluctant to shed workers, unemployment numbers remain tight.
• Sector-Specific Demand: The bulk of net job creation remains heavily concentrated in non-cyclical, hands-on industries. Healthcare continues to expand to meet the needs of an aging population, while construction and public infrastructure remain heavily active.
• AI and Tech Investment: The massive, ongoing capital buildout in AI—projected to require over $200 billion in new spending—is driving intense demand for specialized tech and cybersecurity talent.
• Increased Productivity: Corporate profits are soaring because companies are becoming more efficient, often using new technology tools to do more with their existing workforces, which drives up stock valuations.
• “Optionality” via Job Openings: While hiring data looks robust on paper, economists note that many small and medium-sized firms are posting open roles to keep their options open, rather than bringing workers on board immediately.

This dynamic creates a somewhat paradoxical labor market where overall job security is high, but finding a new job can feel highly competitive due to automated screening and “one-click” application surges.

Analysts as SHRM, the Society for Human Resource Management, see what they brand a “low-hire, low-fire” narrative evolving. They note a surprise jump in job openings to 7.6 million. Paired with May’s payroll surge, they say employers are clearly demonstrating a renewed willingness to expand headcounts despite broader geopolitical headwinds and inflation anxieties.

I would have thought the Trump tariffs would be dragging down the economy by now. My economist friends tell me the fact that the courts have ruled most of them illegal may explain why they have had little effect. Most of the inflation we have seen, they note, can be blamed on the war with Iran and its effect on energy and petroleum derivatives.

What does it all mean? If you have a job, indications are you need not worry, yet. If you’re looking for one, you might take note that the hot job sectors are not those which require an advanced degree. That’s bad news for recent graduates. The surprising gains were driven by specific pockets of high demand:

• Leisure and Hospitality: Surged by 70,000 jobs, heavily outperforming its 12-month historical average.
• Local Government: Added 55,000 jobs, heavily fueled by non-education municipal sectors.
• Healthcare: Kept up its consistent growth pattern by adding 35,000 jobs.

Financial Activities experienced a decline in overall net employment for the month.

The Federal Reserve, even with a new chairman seen as pro-Trump, is going to have a hard time satisfying Trump’s demand for lower interest rates. With high inflation and the job market still doing well, higher rates may be indicated.

And the stock market? Trump complained that the market fell on the strong jobs news. That is further proof he doesn’t understand the financial markets. The markets are now mostly driven by speculative fever and speculators gamble with other people’s money. Interest rates are the cost of that money. What’s good for jobs is, in the markets’ perverse way of looking at things, bad for stocks because higher interest rates cost the speculators money.

To be continued.

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