Oil Surge, Tariff Fears Threaten U.S. Jobs Rebound
The U.S. economy generated 172,000 jobs in May, with the unemployment rate holding at 4.3 percent, according to data released Friday by the Bureau of Labor Statistics — an unexpected rebound against the backdrop of soaring domestic fuel costs driven by joint United States-Israel military operations against Iran.
But economists were quick to temper optimism. "The job growth was a surprise. It was entirely in local government, leisure and hospitality and healthcare," said Dean Baker, co-founder of the Center for Economic and Policy Research.
Baker elaborated on the uneven nature of the gains. "The healthcare will continue, the local government job growth was an anomaly -- employment had been pretty stagnant. The leisure and hospitality is a big surprise. This is largely discretionary spending and is surprising that people feeling pinched would be spending more at hotels and restaurants," he said.
From a different vantage point, Gary Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics, suggested to media that "AI construction and the strong stock market are driving the economy and jobs."
The report was not without red flags. Financial services shed 22,000 positions, and the transportation and warehousing sector also recorded job losses — a harbinger of broader vulnerabilities lurking beneath the headline figures.
Many economists expect the positive momentum to evaporate when the next report lands. "My guess is that it (will be) largely reversed in June," Baker projected.
The trajectory of energy markets looms as the defining variable. "The big question is what happens to oil prices. If the Strait is reopened and prices continue to edge lower, we can still (be) on path of modest growth, as long as (U.S. President Donald) Trump doesn't hit us with a new round of tariffs," Baker warned.
The Strait of Hormuz — through which roughly 20 percent of the world's oil flows — has seen severe shipping disruptions, sending global energy prices into turbulence. Compounding the strain, economists are raising alarms over a 55 percent spike in diesel fuel costs, a critical input across construction, transportation, and shipping sectors that threatens to drive up consumer goods prices across the board, according to U.S. media reports.
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