Finance

Cleveland Federal Reserve President Beth Hammack said Friday she would be hesitant about lowering interest rates as long as inflation remains a threat.
In a CNBC interview, she said, “I don’t want to move us to a place where we’re being accommodative, because I worry that if we’re accommodative, we could reinvigorate the inflationary pressures.”

Cleveland Federal Reserve President Beth Hammack said Friday she would be hesitant about lowering interest rates as long as inflation remains a threat.
In a CNBC interview, the policymaker did not share the market’s enthusiasm for a cut, sparked after Chair Jerome Powell’s keynote speech earlier in the morning stating that current conditions “may warrant” policy easing.

“I heard that the chair is open-minded about what the right stance of policy is going to be and what the right decision is going to be in September,” Hammack said. “We’ve been above our [inflation] target for four years, and we need to get that under control. So to me, we need to maintain a modestly restrictive stance of policy to get inflation back to target.”
Hammack acknowledged that her idea of the “neutral” interest rate that neither boosts nor restricts activity is higher than most other Fed officials. The former Goldman Sachs executive is not a voter this year on the rate-setting Federal Open Market Committee but will be in 2026.
“So I don’t really think we have that far to go, which is why I want to make sure we’re maintaining that restrictive stance of policy to get inflation back to target,” she said. “I don’t want to move us to a place where we’re being accommodative, because I worry that if we’re accommodative, we could reinvigorate the inflationary pressures.”
The Fed has held its benchmark funds rate in a range between 4.25%-4.5% since December 2024. Following Powell’s speech, futures traders priced in a nearly 90% chance that the FOMC would cut in September, according to the CME Group’s FedWatch gauge.
In a separate CNBC interview Thursday, Kansas City Fed President Jeffrey Schmid also expressed skepticism about cutting. Schmid is an FOMC voter this year but won’t be again until 2028.

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Job “switchers” typically see their wages grow at a faster rate than workers who stay in their current roles.
However, that trend has reversed for the past six months, since February, data shows.
Such a reversal rarely occurs outside of periods of weakness in the labor market, economists said.

A “Now Hiring” sign hangs in the window of a hair salon in the Greater Boston town of Medford, Massachusetts, August 12, 2025.
Brian Snyder | Reuters

Wage growth is doing something odd these days.
Typically, wages grow at a faster clip each year for workers who switch jobs, compared to those who stay in their current role.

That makes sense: Workers generally leave a job when they find something better for them, which often includes a higher salary, according to labor economists.
But in 2025, the roles have reversed as workers, faced with a souring job market, shift from job-hopping to “job hugging” — that is, clinging to their current roles.
Annual wage growth for so-called “job stayers” has eclipsed that of “job switchers” for the past six months, since February, according to data tracked by the Federal Reserve Bank of Atlanta.

The margins aren’t huge: For example, in July, job stayers saw wages grow at a 4.1% annual pace, versus 4% for workers who switched jobs, according to the Atlanta Fed data.
However, that sustained reversal points to an underlying weakness in the labor market, economists said.

Since the late 1990s, a prolonged reversal in wage growth trends for job “switchers” versus “stayers” has only happened in periods around the Great Recession and the dot-com bust in the early 2000s, the Atlanta Fed data shows.
The last time a drawn-out reversal occurred was in and immediately following the Great Recession, during an 18-month period from February 2009 to July 2010, according to the data.
“We only tend to see it around other times when the labor market has been weak,” said Erica Groshen, a senior economics advisor at the Cornell University School of Industrial and Labor Relations and former commissioner of the U.S. Bureau of Labor Statistics from 2013 to 2017.
The Atlanta Fed computes a three-month moving average of median hourly wages using data from the Current Population Survey, reported by the U.S. Census Bureau and Bureau of Labor Statistics.
That said, aggregate data on the labor market suggests it’s still in “pretty strong” shape, Groshen said.

‘Workers have lost some bargaining power’

But it has gradually cooled from a torrid pace in recent years.
Job openings had ballooned to historic highs in 2021 and 2022 as the U.S. economy awoke from its pandemic-era hibernation. Ample opportunity led workers to quit their jobs in record numbers for new employment, commanding big payouts from companies eager to attract talent.
Now, amid high interest rates and economic uncertainty, job openings have fallen and employers are hiring at their slowest pace in more than a decade.

“Maybe employers are not feeling that they need to offer their new workers higher wages in order to get them, and workers have lost some bargaining power in the labor market,” Groshen said.
The quits rate — the rate at which workers are voluntarily leaving their jobs — has also declined sharply. It has hovered around 2% since the start of the year, according to data from the U.S. Labor Department’s Job Openings and Labor Turnover Survey. Outside of the initial days of the Covid-19 pandemic, levels haven’t been that consistently low since early 2016.
This is the primary reason why wage growth for job stayers has eclipsed that for job switchers, said Allison Shrivastava, an economist at the job site Indeed.
A depressed quits rate suggests workers aren’t voluntarily leaving their jobs to find better ones because they don’t have confidence in doing so, Shrivastava said.
More from Personal Finance:Trump immigration policy may be shrinking labor forceWorking longer to afford retirement is a risky plan’Job hugging’ has replaced job-hopping
In this “frozen” labor market, in which there’s not a lot of voluntary job-hopping, workers who are forced to leave a job involuntarily are more likely to accept a new job that doesn’t pay as well, she said.
“They’re more in a situation of taking what they can get,” Shrivastava said.

Long-term unemployment is increasing

This is especially true for workers who are considered long-term unemployed, economists said. Long-term unemployment is a period of joblessness lasting at least six months.
About 25% of all jobless individuals in July were long-term unemployed, the highest share since February 2022, according to U.S. Bureau of Labor Statistics data.

Such people are generally no longer eligible for unemployment benefits, economists said.
“They may be willing to take a job for a lower wage than they were at the beginning,” Groshen said.
Overall, the best way for workers to improve their wages in aggregate is still probably by switching jobs, Shrivastava.
“But the opportunity to switch your job right now is not really there,” she said.
There are ways for jobseekers to set themselves up for success in a tough hiring market, career experts said.
Among them: Find creative networking opportunities — conferences, seminars, lectures or book signings where other attendees are likely to be in your profession. Jobseekers can look internally for a new job placement, which may be easier than seeking out something external. They can focus on upskilling and reskilling to land a new job more easily when the market rebounds. More

Walmart’s former U.S. CEO Bill Simon thinks Thursday’s stock drop is bizarre.
The big-box retailer lifted its full-year sales and earnings forecast, but the stock still slid 4.5%. Walmart ended Thursday as the Dow’s biggest loser.

“It was about as good of a quarter as any retailer could have in any environment,” he said on CNBC’s “Fast Money.” “I don’t get the decline in the market today at all.”
Simon, who ran Walmart U.S. from 2010 to 2014, cites Walmart’s ability to engage shoppers with lower prices while absorbing tariffs as a key advantage.
“If you liked them yesterday, I don’t know why you don’t love them today. Topline is growing. They’re expanding their margin,” he said. “They are really hitting it on all cylinders.”
Simon is still active in the consumer space —now serving on the Darden Restaurants board and as Hanesbrands chairman. When it comes to Walmart, he sees the decision to raise guidance despite tariffs as a key reason for optimism.
“As far as the tariffs go, there’s no tariff impact to that business,” Simon said.

He suggested investors may have been hung up on Walmart’s first earnings miss in more than three years — which was mostly driven by one-off expenses including restructuring costs and insurance claims.
“It’s a big number, but it’s a one-time adjustment,” said Simon. “It’s not a… systemic issue.”
Simon hasn’t always been bullish on Walmart’s business. In May 2024, he told “Fast Money” that high-income shoppers were creating a “bubble” at Walmart. His concern: They would return to premium retailers once inflation started to abate.
But that hasn’t happened. Simon now contends the pull of cheaper prices and convenience of having groceries and general merchandise in one place as magnetic.
“If they [Walmart] can keep those toplines going, and that’s their forecast, they’re going to be just a bear of a company,” Simon said.
Walmart shares are up 8% so far this year. However, they’re about 7% below the record high hit on Feb. 14.

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Roborock this year launched the first cleaner with an AI-powered robotic arm, albeit at a hefty $2,600.
Within five years, the company expects to sell a mass-market version of that robot vacuum.
That’s according to an exclusive interview with CNBC.

In 2025, Roborock launched a vacuum cleaner with a robotic arm for moving socks and other obstructions out of the way.
Cfoto | Future Publishing | Getty Images

BEIJING — Household robots for cleaning are about to quickly become an affordable reality.
At least that’s what Quan Gang, president of Beijing-based robot vacuum cleaner company Roborock, has in mind as he strategizes for the next five years. The company ranks first among smart vacuums by global market share, according to IDC Research. Last week, it reported a nearly 79% revenue surge in the first half of this year. About half of sales came from outside China.

In an exclusive interview with CNBC on Wednesday, Quan predicted that human-like robots will become part of many households by 2030, thanks largely to advances in generative artificial intelligence.
And before then, he expects, Roborock can make its latest, high-end cleaner with an AI-powered robotic arm so cheap that the mass market will be able to buy it — for at most a few hundred U.S. dollars.
“If we only focus on the premium segment, in the end, other than being the best robotic vacuum cleaner company in the world, we will have nothing,” Quan said in Mandarin, translated by CNBC. He noted that robot vacuums still don’t have a very high household penetration rate.
China, the largest market for the robot vacuums by value, has a penetration rate of only 5.6%, while the United States, the second-largest market, has a 22% penetration rate, according to Euromonitor estimates for 2025. The firm predicts penetration in the U.S. will tick up to 24.1% over the next two years, and edge down to 5.5% in China.

Competition in the robotic vacuum + robotic arm category heated up earlier this year at the U.S. Consumer Electronics Show, with Roborock and at least two other Chinese competitors releasing demos. The AI-powered arm removes obstacles from the cleaner’s path as it rolls autonomously around the house.

So far, only Roborock has started selling one, called the Saros Z70 — but with a hefty price tag of around $2,600 on amazon.com. The site shows 141 reviews and a 4.6 rating. Roborock did not share specific sales figures.
Initial reviews of the Saros Z70 from U.S. tech sites such as Mashable and Wired weren’t impressed, especially given the price, but hoped for more capable versions in the near future. Both recommended that consumers stick with the more traditional Roborock Saros 10R — which retails for $1,600.
Robot vacuum cleaner companies should develop products that “bridge cutting-edge technologies and mainstream price points to accelerate adoption,” said Jin Liu, senior analyst of small appliances at Euromonitor International.
But even if the price comes down, it would only be a small step toward having a robot help with cooking and other household chores.
Vacuum cleaners are the “only successful application [of robots] in our homes to date,” said Jeff Burnstein, president of the Association for Advancing Automation (A3). “This is after four decades of talking about how we’re going to have robots in our home.”
“What made the [robot] vacuum cleaner so successful is it didn’t cost that much,” he said. For the same thing to happen for humanoids to enter homes, he said, there needs to be a compelling quality for the price.
Humanoids, such as those from Chinese startup Unitree, still cost tens of thousands of U.S. dollars and don’t have clear household use cases yet.

Navigating tariffs

Despite its mass market ambitions, Roborock said that because of tariffs, it had to raise the Saros Z70 price by $700 from the original $1,899.
Quan said Roborock started working with suppliers late last year in Vietnam, where he said the company can fulfill all its North American orders.
Looking ahead, he said the company is considering global supply chain partnerships, but not necessarily to invest in building its own factories. Roborock’s plans for a Hong Kong listing are primarily to raise capital for international expansion, Quan said, noting the company is also expanding beyond vacuums.
Despite Roborock’s 79% revenue surge, the company more than doubled its spending, largely on research and development, steepening the company’s losses in the first half of the year.
Quan said the company has hired nearly 100 AI experts this year and is still hiring — with an eye to add a total of nearly 200 AI experts this year. He said many of the new hires have overseas education or work experience.

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The company built a dedicated AI lab in Shanghai and a research institute in Shenzhen, soon after Roborock’s founding in 2014. When asked about computing power, Quan said there are many solutions and that buying Nvidia chips aren’t the only option.
As for improving the AI-powered robotic arm and making it cheaper, “the challenge lies primarily with the algorithm and data,” he said, not the hardware.

Humanoid apps

As AI becomes more critical for household robots, Quan has an even bigger vision.
“If this robot in your home needs to clean, then it will have to integrate the cleaning knowledge that Roborock has accumulated over the years in algorithms, models, data and training,” he said. “Then it can be installed onto the robot like an app.”
“This robot may be Tesla’s, or Unitree’s, or someone else’s, … but in the area of cleaning, it will be inseparable from Roborock,” he said, claiming the company has the best data on cleaning tasks. Another company might have the best data for robots to cook, he said.
The humanoid market will likely reach $5 trillion by 2050, with $800 billion in China alone, according to Morgan Stanley estimates.
“With humanoids, if they can’t do more than one thing, then they’re competing against an existing form factor that can do one thing very well,” Burnstein said. But ne noted companies around the world expect there’s a big market for safe, affordable humanoids that can cook, clean, help the elderly and do other things.
“We’re not there yet with the technology, but maybe we’ll get there and maybe that multitasking would be the differentiator potentially,” he said. “So you wouldn’t need 5 robots. You might just need one.” More

Fed Chair Jerome Powell is set to deliver what almost certainly will be his last keynote address at the central bank’s annual conclave during one of the most tumultuous times in its history.
Amid several controversies, Powell could use the speech to at least take a sideswipe at the political distractions even if he holds to past practice of not taking direct aim.
The speech is billed as an “Economic Outlook and Framework Review,” indicating Powell will take time to provide his views on broad conditions as well as discuss the Fed’s long-term policy goals.

U.S. Federal Reserve Chair Jerome Powell attends the Federal Reserve’s Integrated Review of the Capital Framework for Large Banks Conference, in Washington, D.C., U.S., July 22, 2025.
Ken Cedeno | Reuters

Federal Reserve Chair Jerome Powell is set to deliver what almost certainly will be his last keynote address at the central bank’s annual conclave during one of the most tumultuous times in its history.
What’s at stake is the near-term sentiment for financial markets, the longer-term path of the Fed’s policy trajectory, and a not insignificant dose of trying to preserve vestiges of independence at a time when the normally sacrosanct institution is facing enormous political pressure.

If Friday’s speech at Jackson Hole, Wyoming, goes at all like Powell’s first seven-plus years in office, it will feature a calm and collected veneer even if masking the weight that he and his colleagues have been under all year.
“He’s done a good job in terms of keeping the Fed’s independence, ignoring the noise and some of the questions he gets, and keeping it focused on the data dependency and the Fed’s dual mandate,” said Michael Arone, chief investment strategist at State Street Global Advisors. “He’s taken the high road as it relates to the Fed’s independence and some of the pressure he’s clearly getting from the Trump administration. So I think that he’ll continue to kind of walk that line.”
Indeed, President Donald Trump has kept up a near constant drumbeat against Powell and his colleagues. As he did during much of his first term, Trump has badgered Powell to lower interest rate cuts. But in recent days the president’s attacks on the Fed have gone past mere monetary policy.
Earlier this summer, the White House lashed out at the Fed for a major reconstruction project at its Washington, D.C. headquarters. That coincided with a period when Trump toyed with removing Powell, though he later backed off the idea.
Then this week the administration trained its focus on Fed Governor Lisa Cook, accusing her of mortgage fraud regarding two federally backed loans she took.

Amid the controversies, Powell could use the speech to at least take a swipe at the political distractions, even if he holds to past practice of not taking direct aim.
Politics and policy
“He’s going to take a jab and talk about fed independence, because what does he have to lose really at this point?” said Dan North, senior economist at Allianz Trade North America. “It seems pretty clear that Trump can’t legally fire him. He can certainly put all kinds of tremendous pressure on him. And I think it’s an opportunity for Powell to say the central bank’s got to stay independent, and that’s what we’re going to do.”
Beyond the politics there’s policy, and that also will be challenge.
The speech is billed as an “Economic Outlook and Framework Review,” indicating Powell will take time to provide his views on broad conditions as well as discuss the Fed’s long-term policy goals, a review that occurs every five years.
Markets are expecting Powell to tee up a September rate cut. At each of his previous Jackson Hole speeches, starting in 2018, he indicated significant policy shifts. From pushing for quarterly cuts in that first speech to a pivotal switch in how it would view inflation in 2020 to last year’s nod towards an aggressive September move, markets have taken their cues from the chair’s keynote.
Wall Street commentary reflects similar expectations this time around, if in somewhat subtler terms.
“We do not expect Powell to decisively signal a September cut, but the speech should make it clear to markets that he is likely to support one,” Goldman Sachs economist David Mericle said in a note.
Kansas City Fed President Jeffrey Schmid, whose district hosts the Jackson Hole event, told CNBC on Wednesday that he isn’t sold yet on a September cut and will need to see more data. In fact, only Governors Christopher Waller and Michelle Bowman have overtly signaled they favor a move next month.
“We suspect that most FOMC participants who have expressed mixed feelings about cutting in September will be willing to support a cut if Powell pushes for one, but that he will think it more reasonable to make that case to them closer to the meeting with more data in hand,” Mericle said.
Inflation vs. unemployment
Key points to watch will be how Powell characterizes the labor market and his view on the inflation pass-through from Trump’s tariffs.
Shortly after the July Fed meeting, the Bureau of Labor Statistics announced meager job growth for July and even weaker gains for May and June. However, multiple policymakers have used the word “solid” to describe the labor market, indicating they see less urgency for rate cuts.
Minutes from the July meeting indicated most FOMC members see a greater worry over inflation. Regional presidents Beth Hammack from Cleveland, Atlanta’s Raphael Bostic and Schmid in Kansas City have expressed skepticism about the need for a September cut, a position that could rile Trump and upset the market.
Powell “is likely to remain careful and not pre-commit in advance to a September cut, which could disappoint some investors,” wrote Krishna Guha, head of global policy and central bank strategy at Evercore ISI. “Much of his speech may try to provide a steady medium- to longer-term framing for policy strategy and inflation control.”
That framing could be critical as well, and is getting little attention from Wall Street so far.
Five years ago, against a backdrop of the Covid pandemic and protests over police brutality, the Fed adopted what it called “flexible average inflation targeting.” Essentially, the framework change would allow the Fed to let inflation run hot if unemployment was higher, particularly for underrepresented groups.
Over the next couple years, the Fed stood pat while inflation hit its highest level in more than 40 years. While most officials say the inflation targeting change did not play a role in the widely-held view that inflation was “transitory,” the policy is likely to get a retooling, with the Fed returning to its previous inflation stance that included preemptive action if inflation appeared to be rising.
“While the adoption of the new framework in 2020 was not the primary factor behind the Fed’s delay and the substantial inflation overshoot, it contributed to this outcome,” Matthew Luzzetti, Deutsche Bank chief U.S. economist, said in a note. “For this reason, we expect Powell’s speech in Jackson Hole to highlight changes to the Fed’s statement on longer-run goals that will reflect this reality. Specifically, we expect the speech to call for rolling back the 2020 modifications and restoring a primary role for preemption.”
Luzzetti added that the Friday speech “could arguably not come at a more important time” and he expects Powell to change his tone on the labor market.
Powell’s speech will be presented at 10 a.m. ET. The conference wraps up Saturday. More

Evidence suggests Trump administration immigration policies are shrinking the size of the immigrant labor force, and the broader U.S. labor pool in recent months, according to economists CNBC spoke with and research notes on the topic.
If sustained, which isn’t assured, it could pose challenges for the U.S. economy, those experts said.
The U.S. will increasingly rely on immigration into the future to grow the national population and labor force, given demographic trends.

People in Tijuana, Mexico, look though the U.S.-Mexico border wall at Border Field State Park on Aug. 17, 2025 in Imperial Beach, California.
Kevin Carter | Getty Images News | Getty Images

Early evidence suggests that White House policy is reducing the size of the immigrant labor force, in turn contributing to a recent drawdown in the overall U.S. labor pool, according to several economists.
CNBC spoke with a range of economists from financial firms, economic research institutions and think tanks, and also reviewed recent research notes and analyses that economists have published on immigration and the job market.

If a reduction in the immigrant labor force is sustained, such a trend would be a concern for the U.S. economy, those experts have said or written.
That’s because the economy will increasingly rely on immigrants to fuel population and labor force growth given demographic trends among the U.S.-born populace, like retirements among baby boomers and lower fertility rates, they said.
The downward shift in the immigrant labor force in recent months is “definitive,” said Mark Zandi, chief economist at Moody’s.
“There’s no debate what’s going on there,” Zandi said.

‘Signs are mounting’

President Donald Trump has pursued an immigration agenda that he’s referred to as “very aggressive.”

The White House has sought to expand and expedite deportations, end birthright citizenship and restrict access to asylum, among other actions, for example. Many measures are being challenged in court.
The Trump administration is also readying a rule to end the lottery for H-1B visas — temporary work visas for college graduates in “specialty” fields like architecture, law and tech — and adopt a selection process that favors higher-wage earners.
Available data makes it hard to track what’s happening to immigration flows and the immigrant labor pool in real time, economists said.
Some point to Bureau of Labor Statistics data as one signal.
The size of the foreign-born labor force has declined by about 1.2 million people since January, to 32.1 million total people in July, BLS data shows. (Some government data distinguishes between “foreign-born” and “native-born” workers — or, immigrants versus those born in the U.S.)
Nancy Vanden Houten, lead economist at Oxford Economics, cited the data in an Aug. 1 research note.
“[S]igns are mounting that the foreign-born labor force is shrinking due to the Trump administration’s immigration policies,” she wrote.

The U.S. labor force includes all people age 16 and older who are actively working or looking for work.
The BLS’ reported decline in the foreign-born labor force has been “very dramatic” and larger than expected, said Stephen Brown, deputy chief North America economist at Capital Economics.
In July, the labor force participation rate had declined 0.3 percentage point for native-born workers compared with a year earlier, but had fallen by a much larger 1.2 percentage points for foreign-born workers, according to a J.P. Morgan analysis.

“[M]any immigrants appear to be leaving the labor force, wrote David Kelly, chief global strategist at J.P. Morgan Asset Management.
White House spokesperson Abigail Jackson said in an emailed statement that the Trump administration is committed to helping U.S. employers “ensure they have the legal workforce they need to be successful.”
“There is no shortage of American minds and hands to grow our labor force, and President Trump’s agenda to create jobs for American workers represents this Administration’s commitment to capitalizing on that untapped potential while delivering on our mandate to enforce our immigration laws,” Jackson wrote.

‘Significantly weaker’ job growth

Some economists say the BLS data on the foreign-born and native-born labor force segments isn’t a reliable gauge of near-term trends, due to various quirks in how it’s collected and reported.
Trump questioned the accuracy of BLS statistics and fired the bureau’s chief in August after a monthly report showed unexpectedly weak job growth.
But there’s other evidence that economists point to that also suggests the immigrant labor pool is shrinking.
For example, job growth among industries that rely more heavily on undocumented immigrants has been “significantly weaker” than in the rest of the private sector, said Jed Kolko, a senior fellow at the Peterson Institute for International Economics and former undersecretary for economic affairs at the U.S. Department of Commerce during the Biden administration.

Job growth in those industries — such as hotels, restaurants, construction and home health aides — has been flat since the start of 2025, said Kolko. In July, jobs grew at a 0% rate in immigrant-heavy industries, he found.
Meanwhile, job growth has slowed in the rest of the private sector — a roughly 0.6% pace in July — but the deceleration wasn’t as stark, he said.
Kolko analyzed federal data to calculate the three-month average annualized rate of employment growth in respective industries.

[S]igns are mounting that the foreign-born labor force is shrinking due to the Trump administration’s immigration policies.

Nancy Vanden Houten
lead economist at Oxford Economics

Matthew Martin, senior U.S. economist at Oxford Economics, found an additional link between immigration policy and its impact on the labor force.
Labor force growth has been “stagnant” in states like Texas and Florida with high immigrant arrests per capita, he wrote in an Aug. 4 research note, citing Immigration and Customs Enforcement data.
“States such as Texas and Florida have seen more intense crackdowns than California, New York, and New Jersey,” Martin wrote. The “low-arrest” states have seen positive labor force growth in 2025, by contrast, he wrote.
“The data show that while the foreign-born labor force in low arrest-to-population states has increased since the beginning of the year, the labor force in high-arrest states flatlined,” he wrote.

Labor force growth is ‘a great deal slower’

Vans leave an agricultural facility where U.S. federal agents and immigration officers carried out an operation, as U.S. federal agents stand guard , in Camarillo, California, U.S., July 10, 2025.
Daniel Cole | Reuters

Nationwide, immigrant arrests have more than tripled since 2024, to more than 1,100 per day through mid-June, wrote Martin, citing ICE data.
Last month, Jerome Powell, chair of the Federal Reserve, cited immigration policy as a factor behind the slowdown in the labor supply.
“[B]ecause of immigration policy really, the flow into our labor forces is just a great deal slower,” Powell said during a news conference on July 30.
The total U.S. labor force — including immigrants and native-born workers — has fallen for three consecutive months, according to BLS data. It has declined by 402,000 people from January to July, to about 170.3 million, the BLS reported.
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Arrests and deportations, fear of showing up to the workplace, and fewer flows of immigrants into the U.S. may be playing a role, economists said.
Two programs that have given roughly 1.8 million immigrants from troubled countries the temporary right to live and work in the U.S. are being phased out this year, wrote Kelly of J.P. Morgan. This change in status may reduce labor supply by more than 1 million workers, he wrote, citing J.P. Morgan research.
Of course, a decline in the labor supply isn’t only a function of immigration.

For example, unemployed people discouraged by the difficulty of finding a job right now may opt to sit on the sidelines instead of looking for work, meaning they wouldn’t be counted in the labor force, said Brown of Capital Economics.
The White House has also taken steps that it says will boost employment among immigrants who are in the U.S. legally.
The Department of Labor established the Office of Immigration Policy in June, which the administration has said will streamline the process to secure temporary and permanent work visas, for example. Trump also signed an executive order in April seeking to support high-paid, skilled trade jobs.

Why a shrinking labor force is a concern

A U.S. Customs and Border Protection (CBP) Border Patrol agent stands at Border Field State Park with the U.S.-Mexico border wall in the background on Aug. 17, 2025 in Imperial Beach, California.
Kevin Carter | Getty Images News | Getty Images

Growth in the labor force is one of the “key” things determining how fast the U.S. economy can expand and how productive companies are, for example, Vanden Houten of Oxford Economics said in an interview.
A sustained decline in the size of the labor force — which is far from being assured — would be a concern, said Michael Strain, director of economic policy studies at the American Enterprise Institute, a right-leaning think tank.
“If we want the type of economic growth that we historically consider successful, then the demographic reality is that we’re going to have to increase inflows of immigrants,” Strain said. “There’s no real way around that.”
Without immigration, the population would shrink starting in 2033, partly because fertility rates are projected to remain low, according to the nonpartisan Congressional Budget Office.

[B]ecause of immigration policy really, the flow into our labor forces is just a great deal slower.

Jerome Powell
chair of the Federal Reserve

Additionally, a smaller labor pool might put pressure on employers to raise wages to attract talent, potentially exacerbating inflation, and would bring in less tax revenue to fund programs like Social Security, economists said.
The construction industry, which already suffers from labor shortages, is at risk of wage inflation, for example, according to a Bank of America Institute report published Tuesday.
Average wage growth in July approached 8% in the construction industry, nearly double the national average, according to the report.
“Immigration actions could potentially deepen workforce shortages, drive up costs and create serious financial risks for contractors,” the Bank of America report said.

Construction workers build a new home in Altadena, California on August 15, 2025.
Mario Tama | Getty Images

About 34% of construction workers are immigrants, versus the 20% average across all sectors, the report said. In trades like drywall installers or plasterers, the share is closer to 60%, it said.
A shortage of skilled labor already costs the U.S. economy about $10.8 billion per year due to longer construction times and raises the price of new single-family homes by about $2,600, on average, according to a joint analysis published in June by the Home Builders Institute, the National Association of Home Builders and the University of Denver.
However, some economists are skeptical that the U.S. will suffer a prolonged reduction in the immigrant labor force.
The Trump administration’s plan likely isn’t to have “net-out migration,” Strain said.
“We didn’t see net-out migration in [Trump’s] first term,” Strain said. “That’d cause all sorts of problems for businesses, for key sectors of the economy the president cares about, like construction, and I’d be surprised if that’s where we end up.”
“But who knows?” he added.

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Kansas City Federal Reserve President Jeffrey Schmid in a CNBC interview Thursday expressed doubt about lowering interest rates in September, saying there’s more work to do on inflation.
Schmid is a voter this year on the rate-setting FOMC.

Kansas City Federal Reserve President Jeffrey Schmid expressed doubt about lowering interest rates in September, saying policymakers still have more work to do on inflation.
Speaking to CNBC from the Fed’s annual symposium in Jackson Hole, Wyo., Schmid pushed back on market pricing that points strongly to the Federal Open Market Committee lowering its key borrowing rate next month.

“We’re in a really good spot, and I think we really have to have very definitive data to be moving that policy rate right now,” he said during a “Squawk Box” interview that aired Thursday. “In September, we’ll get around tables and we’ll collaborate and we’ll figure it out, but yeah, I think there’s a lot to be said between now and September.”
Schmid is a voter this year on the rate-setting FOMC. The Kansas City Fed each year hosts the Jackson Hole gathering, which on Friday will feature Chair Jerome Powell’s closely watched keynote speech.
The comments come with markets pricing in a nearly 80% chance of a quarter percentage point reduction at the Sept. 16-17 meeting, according to the CME Group’s FedWatch.
President Donald Trump and other White House officials have been applying aggressive pressure on the Fed to cut, maintaining that tariffs are not aggravating inflation and lower interest rates are needed to spark the housing market and lower government borrowing costs.
However, Schmid said he’s not convinced that the Fed is making enough progress toward its 2% inflation goal.

“It seems like that last mile is pretty hard, and I’m one of a lot of folks that believe that there is a real, hard, true cost to that last percent of inflation that’s in the system,” he said. “We might see a tick up. I would say that the inflation number’s probably closer to three than it is two, and I think we’ve got some work to do.”
Normally outside the political fray, the Fed has found itself at the center of multiple controversies lately, from Trump’s push for lower rates to questions raised over the massive renovation project at two of its Washington, D.C. buildings.
A new wrinkle emerged Wednesday when Trump and Federal Housing Finance Agency Director William Pulte accused Fed Governor Lisa Cook of mortgage fraud. Pulte alleged on social media and a CNBC interview Wednesday that Cook illegally took out federally backed loans on properties in Michigan and Georgia. Trump demanded that Cook resign, but she said she won’t be “bullied” into leaving her post.
“We have responsibilities as professionals, inside the Federal Reserve. I’m sure she’ll handle matters as she needs to handle them,” Schmid said of the case.
Asked about the pressure generally being applied to central bank policy makers, he said: “Great steel is tested by fire. So, so let’s have the conversation. It’s more important, actually, that the American public has an understanding what the Fed is and what it does, and that they have a value proposition about what we do.”
Minutes from the July meeting released Wednesday showed officials concerned about both inflation and unemployment. Schmid said he thinks the labor market is in “solid” shape. More