Increase in American economic concerns ahead of the April jobs report
According to Block Beats, economists worldwide are closely monitoring the release of the U.S. non-farm payroll report for April, scheduled for Friday. Concerns are increasing regarding potential disruptions in the U.S. labor market due to the tariff policies initiated by U.S. President Donald Trump, which could significantly increase the likelihood of the Federal Reserve implementing its first rate cut this year in June.
Apollo Global Management, a leading asset management firm on Wall Street, warned that escalating global trade tensions and the imposition of 145% tariffs on other countries in early April could lead to negative job growth and an increase in the unemployment rate to 4.5%, compared to the expected rate of 4.2%. During the survey period from April 7 to 13, the effective tariff rate in the U.S. reached 23%, the highest since 1900, resulting in a collapse in both business confidence and consumer expectations.
Expectations for a rate cut from the Federal Reserve are rapidly increasing. Board member Waller, a voting member in 2024, stated that layoffs due to tariffs will support a rate cut, while Cleveland Fed President Mester, a voting member in 2026, hinted at action if June's data aligns with expectations. Goldman Sachs models indicate that high-frequency indicators such as initial unemployment claims, currently at 222,000, and the ISM Services Index suggest a recession. The CME FedWatch tool shows a 12.7% probability of a 25 basis point rate cut in June.
Despite the current resilience in the labor market, with 228,000 jobs added in March, significantly exceeding expectations, the delayed impact of tariffs is beginning to show. New business orders have sharply declined, capital spending plans have frozen, and inventory levels have reached historic highs. Consumers are spending cautiously to avoid rising prices. A Bloomberg survey reveals that economists have raised the likelihood of a recession in the United States over the next 12 months from 30% to 45%, with JPMorgan and BCA Research warning of a probability exceeding 50%. The Apollo model suggests that disruptions in the supply chain caused by tariffs could lead to a recession by the summer of 2025, making non-farm payroll data a critical turning point in the logic sequence of "rate cuts - sharp economic downturn."
