Voters think President Donald Trump’s economy is the pits. The labor market is telling a very different story.

The Labor Department on Friday reported that U.S. payrolls grew by 172,000 in May, a sign of strong economic momentum ahead of a midterm election campaign season that’s certain to be dominated by questions about affordability and the cost of living. The department’s Bureau of Labor Statistics also upwardly revised its estimates for payroll growth in March and April, tacking another 93,000 positions onto blockbuster tallies that had been reported earlier this spring.

The closely watched report represents a clear sign that the economy remains on solid footing despite turmoil around the war with Iran. The employment surge was heavily concentrated in leisure and hospitality — which often climbs in the summer — as well as the health care sector, which has been a major driver of payroll growth since the pandemic. The jobless rate remained unchanged at 4.3 percent.

The report follows a string of economic releases earlier this week that suggest the U.S. manufacturing sector has started to rebound, even as gas and energy prices surge due to dwindling global inventories of oil and gas. BLS also reported on Tuesday that the number of job openings had ballooned in April.

“Despite everything going on in the world around us, America’s employers are regaining their confidence,” Guy Berger, a labor market specialist and the chief economist at Homebase, wrote Friday morning. “And that confidence is leading to the rising turnover we see in our data.”

The White House trumpeted the “OUTSTANDING JOBS NUMBERS!” in a post on X shortly after the report’s release. And the Labor Department framed the blowout tally as a sign that Trump’s “economy is ON FIRE!”

Kevin Hassett, the director of Trump’s National Economic Council, told reporters Friday morning that he was a little surprised by the strength of the report, “but not too much.”

The president’s deregulatory policies, along with tax provisions in the One Big Beautiful Bill Act, are having “a big positive supply side effect, and that's something that’s surprising most of the economists over and over,” he added.

But while the labor market may be humming, inflation worries have crept back to the fore. Even setting aside the volatile spikes in food and energy prices, the Federal Reserve’s preferred inflation gauge now stands at 3.3 percent — well above its annual 2 percent target. If there were any expectations that newly confirmed Fed Chair Kevin Warsh could quickly bring down interest rates — a major priority for Trump, and the root of his fury at former Chair Jerome Powell — the employment surge should put those on hold.

The jobs report “reduces any urgency for the Fed to act on the employment side of its mandate,” Jason Pride, chief of investment strategy and research at Glenmede, said in a note on Friday morning — a reference to the central bank’s charge to maximize employment. “Investors should expect the Fed to hold at its next meeting and focus attention on whether post-ceasefire energy relief begins to pull headline inflation lower.”

Yields on government debt rose on the news and stocks fell. Trump expressed displeasure with the market's response on Friday morning, saying on Truth Social that "stocks should go up, not down" after a strong jobs report.

"Growth does not mean inflation! How else can a Country attain GREATNESS???" he added.

Measures of economic growth have also signaled a slowdown, and many economists expect high prices at the pump to eat away at consumer spending in the months ahead. Consumer sentiment is at a record low, according to a closely watched University of Michigan survey, and nearly two-thirds of Americans disapprove of the president’s performance, according to CNN’s polling tracker.

Furthermore, while health care, leisure and hospitality, and local government employers are expanding headcount, other private sector industries that are major forces in the U.S. economy are paring back. Financial services firms have shed 107,000 positions since payrolls in the industry peaked a year ago. Employment in information-related fields — including the film industry, publishing and the tech sector — has also fallen over the last 12 months.

Prices are expected to rise further in the coming months as businesses contend with higher energy prices and shrinking inventories from supply chain bottlenecks at the Strait of Hormuz. If inflation continues to climb, the gains in wages reported by BLS will not go as far. Average hourly earnings have climbed by 3.4 percent since last year.

A similar dynamic seriously wounded the political outlook for Democrats during Joe Biden’s presidency. And key members of the minority party have identified slowing real wage growth as a vulnerability for the GOP in the midterms.

“Wage growth isn't keeping up with inflation,” Sen. Elizabeth Warren (D-Mass.) said Friday. “Trump’s failing economic agenda is shrinking families’ paychecks. Instead of fixing the economic pain he’s caused, Trump is doubling down on his reckless tariffs and his war in Iran.”

Megan Messerly contributed to this report.



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