Weekly Economic & Business Outlook

Tariff Uncertainty Is Depressing the Job Market, But for How Much Longer?

The permeation of tariffs is now starting to show in the economic data, demonstrating impact not just on business but consumer costs as well. Core inflation, for example, experienced an uptick in July according to the Bureau of Labor Statistics. Importantly for staffing firms: Tariffs are in large part helping keep employment costs elevated, which disincentivizes hiring. With employment costs high, continuous uncertainty around trade policy itself is helping keep investment low. The result has been an abrupt drop-off in job creation. 

While job growth has been positive, a great proportion of this growth has affected the health care sector. If you discount this sector, total job growth has actually been negative in both May and June, with an initial estimate of a mere 5,000 jobs added in July (a number which will likely be revised further in the future.) With the labor market in worse shape than expected, the overriding question becomes: How long will this uncertainty hold job growth hostage?

According to the Survey of Business Uncertainty from the Atlanta Federal Reserve, business executives are split between either believing a resolution is close at hand, or that trade uncertainty will be a persistent fog for the coming years. The average surveyed firm anticipates trade-related uncertainty to be largely resolved by November of this year. Another, albeit smaller, camp sees uncertainty continuing to be a salient feature of the economic landscape for the better part of the next three years. Whether uncertainty is resolved by the end of the year or remains a persistent fixture will greatly influence the direction of the labor market toward good or ill health.

While seven out of 10 respondents claim to be facing uncertainty related to trade policy, some certainty is starting to get hammered out. Emerging trade deals with major partners such as the European Union will help build this, but certainty over trade policy is not itself a silver bullet for restoring the labor market. Many of these deals set tariff rates far above what they once were, and with tariffs already triggering some inflationary pressure it is likely that employment costs will continue to be elevated, and inversely, employment growth will be constrained.

Bridging the Candidate–Employer Gap in the Age of AI

Artificial intelligence (AI) developments continue to make headlines, and it remains a top-of-mind issue in the workplace as candidates and employers navigate how to leverage this groundbreaking technology. New research from Gartner reveals that the hiring process is one place where AI can potentially cause pain points for both candidates and employers.

Some candidates harbor concerns about the role AI could play in evaluating them and potentially screening them out of consideration for a role. Just over half of candidates believe AI is used in screening applicant information, and only a quarter trust the technology to do so fairly. A third of candidates were concerned about AI failing their applications, and a quarter place less trust in employers who use AI to evaluate job applications.

On the other hand, four in 10 candidates are using AI in the job search to generate text for

• Résumé (54%)
• Cover letter (50%)
• Writing sample (36%)
• Answers to assessment questions (29%)

Job seekers using AI in this manner can contribute to the growing challenge for employers of discerning a candidate’s true capabilities, or if they are who they claim to be. Gartner found in a recent survey that 6% of candidates admitted to posing as someone else in an interview or having someone else pose as them, and by 2028 Gartner estimates that one in four job seeker profiles worldwide will be fake.

For staffing companies these trends represent an opportunity to deliver for clients. Keeping abreast of trends in candidate fraud can help firms retain their position as trusted partners in the hiring process—and maintaining a positive and personal candidate experience will be a differentiator among job seekers.