To say that the July jobs report was weak — is putting it mildly. Data from the Bureau of Labor Statistics (BLS) not only shows that it’s a tough time to be looking for a job but also — that it has been a weak job market for several months now.
The U.S. economy added a paltry 73,000 non-farm jobs in July below even the most modest expectations, and the BLS also reported heavy downward revisions to the May and June numbers that show the economy adding a meager 33,000 jobs over the two-month period.[1]
The dismal report infuriated President Trump who subsequently fired the commissioner of the federal agency for “faking the numbers” for “political purposes.” But whether the data is rigged or not rigged, many experts are saying the economy is on the brink of recession and warning signs can be found in the consumer spending, construction and manufacturing data.
Consumers are Pulling Back
“American Consumers Are Getting Thrifty Again,” according to this week’s Wall Street Journal which cites that bulk buying is on the rise and the post-pandemic spending spree has all but dried up. Indeed, U.S. consumers are anxious, wary and counting their pennies in this “summer of uncertainty.”
“Consumers on both ends of the spectrum—low income and higher income—are reacting to the current volatility they are experiencing, P&G Chief Financial Officer Andre Schulten said. ‘We see consumption trends consistently decelerating.’ Even though people still need to do laundry, wash their hair and put diapers on their babies, Americans are using up the goods in their pantry and seeking value by buying in bulk to economize or purchasing smaller packs to spend less. This new behavior is driven by worries about the future.”[2]
American consumers are cutting back on discretionary items like cars, entertainment, dining out, clothes and other non-essential indulgences. According to a new Yahoo Finance/Marist poll, about 80% of us are worried about the economic fallout from tariffs and that’s now impacting our spending habits. As the WSJ states, “the ‘what the heck’ purchase is completely gone.”
A Construction Collapse
According to the U.S. Census Bureau, construction spending during June 2025 was estimated at a seasonally adjusted annual rate of $2,136.2 billion, 0.4 percent below the revised May estimate of $2,143.9 billion. The June figure is 2.9 percent below the June 2024 estimate of $2,199.8 billion. During the first six months of this year, construction spending amounted to $1,036.1 billion, 2.2 percent below the $1,058.9 billion for the same period in 2024.[3]
Construction spending is generally considered to be a barometer for economic weakness since it reflects reduced demand, dwindling capital, and less overall investment. This has a ripple effect on jobs across a broad swath of industries impacting everything from carpenters and electricians — to architects, engineers and even realtors.
“Spending on private construction projects slipped 0.5%. Investment in residential construction decreased 0.7%, with outlays on new single-family housing projects plunging 1.8%. Government data this week showed residential investment contracted in the second quarter at its fastest pace since the fourth quarter of 2022. Mortgage rates have remained elevated as tariffs on imported goods have raised economic uncertainty, prompting the Federal Reserve to pause its interest rate-cutting cycle. New housing inventory is at levels last seen in late 2007.”[4]
The construction industry has been plagued by tight lending, high borrowing rates, labor shortages, rising costs, sustainability demands and widespread uncertainty about the economy. These are significant obstacles that undermine the prospects of any potential rebound in construction spending and investment.
A Manufacturing Contraction
U.S. Manufacturing data also points to a frail economy as the ISM index (Institute for Supply Management) has contracted for the fifth, straight month. This index reflects the demand for products and tracks ordering activity at America’s factories.
“A closely watched index that measures U.S. manufacturing activity fell to 48 in July from 49 in the prior month, according to the Institute for Supply Management … Economists surveyed by the Wall Street Journal had forecast the index to inch higher to 49.5%. In the ISM index, a reading below 50 indicates contraction. This is the fifth straight month in contraction territory.”[5]
According to Bloomberg, U.S. Manufacturing has now contracted at the fastest pace in nine months. In addition, factory employment has slumped to the lowest level in five years and payrolls are at the smallest levels since the pandemic.[6]
U.S. manufacturing sector is grappling with everything from job losses, declining productivity and weak demand — along with concerns about trade, exchange rates, and tariffs. Some of the comments from purchasing and supply executives, provide insight into a complex and challenging business environment.
- “These tariff wars are beginning to wear us out. It’s been very difficult to forecast what we will pay in duties and calculate any cost savings we’ve had this year … There is zero clarity about the future.”
[Apparel, Leather & Allied Products]
- “Sales softening more than usual during the summer. Negotiations with non-U.S. manufacturers are strained as we are reluctant to issue POs for deliveries three or more months into the future with prices that include current tariffs.”
[Fabricated Metal Products]
- “In the health-care world we continue with ‘business as normal,’ but we are increasingly searching and assessing geopolitical risk mitigation options.”
[Miscellaneous Manufacturing][7]
Rigged or Reality?
With troubling signals from U.S. consumers, the construction industry, and the manufacturing sector, are early recession warnings being taken seriously enough? According to Moody’s Chief Economist — ignore them at your own peril. Just days ago, Marc Zandi posted on “X” that the United States is ‘on the precipice of a recession.’
“The economy is on the precipice of recession. That’s the clear takeaway from last week’s economic data dump. Consumer spending has flatlined, construction and manufacturing are contracting, and employment is set to fall. And with inflation on the rise, it is tough for the Fed to come to the rescue.”[8]
Zandi points the finger directly at tariffs, immigration policy, hiring freezes and a shrinking workforce.
So, while President Trump claims that the labor data is “fixed” or that jobs numbers are being “manipulated,” there’s simply no denying that consumers are spending less, construction activity has contracted, and U.S. manufacturing has experienced a significant pullback.
Author and philosopher Ayn Rand wisely stated that, “You can ignore reality, but you cannot avoid the consequences of ignoring reality.”
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[1] https://www.cnbc.com/2025/08/01/us-job-market-jobs-report-july-2025.html
[2] https://www.wsj.com/economy/consumers/consumer-spending-stagnant-uncertainty-c4e3d043?
[3] https://www.census.gov/construction/c30/current/index.html
[4] https://finance.yahoo.com/news/us-construction-spending-extends-decline-142501481.html
[5] https://www.morningstar.com/news/marketwatch/20250801168/us-factory-sector-contracts-for-5th-straight-month-in-july-ism-shows
[6] https://www.bloomberg.com/news/articles/2025-08-01/us-manufacturing-contracts-at-fastest-pace-in-nine-months
[7] https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/july/
[8] https://x.com/Markzandi/status/1952008077558858194
