U.S. Shed Jobs in July, Lowering Expectations of a Fed Rate Hike

The U.S. economy unexpectedly lost 23,000 jobs in July, defying economists' expectations of a gain. The job losses were concentrated in the government sector, leisure and hospitality, retail, but there was some growth in manufacturing and construction, driven by AI investment. Revisions for May and June suggest a slowdown in the recent hiring momentum, casting doubt on a robust economic upswing. This uncertain labor data may influence Federal Reserve decisions on interest rate hikes, especially given ongoing inflation concerns. Although a weaker jobs report could temper expectations for rate increases at the September Fed meeting, more data is needed to determine the actual trajectory.

Following the jobs report, U.S. stock indexes rose, with the NASDAQ gaining 1.3% and the S&P 500 reaching a new high, as traders scaled back rate hike expectations. In Washington, a senator indicated support for President Trump’s Attorney General nominee despite some opposition, potentially clearing the way for confirmation. Meanwhile, a federal appeals court halted construction on Trump’s White House ballroom project, asserting that only Congress can approve such demolitions, a move President Trump intends to challenge at the Supreme Court. Additionally, Trump is considering firing Federal Reserve Governor Lisa Cook amid allegations of mortgage fraud, though legal obstacles remain.

In New York City, the rollout of the new pied-à-terre tax on homes over $5 million has faced resistance from wealthy homeowners. A lawsuit claims that the Department of Finance improperly executed the tax, leading to misidentifications of residents and attempts by some owners to evade it through legal and financial maneuvers, such as offshore corporations or changing residency status. These responses reflect a broader trend of wealthy residents and their advisors exploring ways to avoid higher taxes, which often results in opposition and potential relocations. The issue highlights tensions around efforts to tax the wealthy and the challenges in implementing wealth-based taxes.

Additional updates include the FAA ordering inspections of Boeing 737 MAX jets following findings of cracks, with no immediate safety threat. Ford plans to produce a new gas-powered four-door Mustang, signaling a shift in its product lineup. The valuation of live shopping app 'Whatnot' has nearly doubled to $20 billion, reflecting rapid growth. On the international front, US officials suspect Russian involvement in a drone incident in Germany, highlighting escalating geopolitical tensions, amidst Russia's increased threats to NATO and ongoing conflict in regions like Puerto Rico experiencing severe drought.