U.S. labor markets are currently exhibiting signs of strain, a phenomenon closely linked to the series of tariffs enacted under the former Trump administration, according to economist Mark Zandi. These tariffs have had a pronounced impact on sectors like manufacturing, transportation, distribution, and agriculture-related businesses, contributing to an erosion in employment levels. Zandi's assessment was brought to public attention through his commentary on social media platforms where he explicitly attributed sluggish job market conditions to these tariffs.
The recent labor statistics provide quantitative backing for these claims. In December, payrolls experienced an increase of only 50,000 positions, with the unemployment rate decreasing marginally to 4.4%. On an annual basis, 2025 saw the addition of 584,000 jobs, a stark contraction compared to the 2 million positions added in 2024, and marking the slowest pace of job growth outside recession periods since the early 2000s.
Industry-specific data reveals that sectors vulnerable to international trade pressures have faced pronounced difficulty. Manufacturing has been particularly affected, shedding approximately 70,000 jobs since April. Similarly, the mining, logging, and warehousing fields have also experienced notable declines in employment. In contrast, the health care and social services sectors have managed to maintain relatively stable hiring trends, representing areas of ongoing employment growth.
Zandi recognizes that while other elements such as stringent immigration regulations, recent policy changes, and the rise of artificial intelligence are influencing the labor market, the defining factor remains the deleterious effect of the global trade conflicts initiated by tariff measures.
Supporting analysis from Joe Weisenthal indicates a broad weakening of job creation within manufacturing, evidenced by only 38.2% of manufacturing sub-sectors reporting job increases, a decline from 47.2% in the previous year. This suggests widespread deceleration in manufacturing employment growth. Joel Griffith corroborates this perspective, citing eight consecutive months of job losses in manufacturing, with Trump's tariffs exerting significant downward pressure on employment.
Despite the employment challenges, consumer confidence has shown incremental improvement at the outset of 2026. The preliminary University of Michigan sentiment index for January rose to 54, its highest reading since the previous September. This optimism is largely driven by lower-income consumer segments and easing apprehensions regarding accelerating job losses. However, ongoing worries about elevated prices, persistent tariffs, and a softening job market continue to suppress overall sentiment, which remains diminished relative to the previous year.