WSJ What’s News - Is the U.S. Job Market Weaker Than It Looks?

Episode Date: July 2, 2025

P.M. Edition for July 2. The U.S. has been adding jobs at a respectable clip, though the pace has been slowing. But WSJ economics reporter Justin Lahart reports that the labor market is showing other signs of softness. Plus, Tesla reports disappointing second quarter numbers, following months of declining sales. WSJ reporter Becky Peterson discusses why investors are still optimistic about the company. And Sean “Diddy” Combs was found not guilty of racketeering and sex trafficking but was convicted of less serious offenses. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Why the U.S. job market may be weaker than it looks. Plus, Tesla posts disappointing sales numbers for the second quarter. There's a lot of commentary that this is a response to the politics and the brand damage after Musk spent time in Washington. But this quarter, we also saw that EV sales were falling across different brands. And music mogul Sean Diddy Combs is found not guilty of racketeering and sex trafficking. It's Wednesday, July 2nd. I'm Alex Sosaluf for The Wall Street Journal. It's Wednesday, July 2nd. I'm Alex Osoleff for The Wall Street Journal.

This is the PM edition of What's News, the top headlines and business stories that move the world today. New data from ADP showed that American employers cut 33,000 jobs last month. That undershot economists' expectations of job growth and was the first pullback since March 2023. That data comes ahead of the Labor Department's monthly jobs report, out tomorrow a day earlier than usual because Friday is a holiday. Economists expect that tomorrow's job numbers will show that the economy added 110,000 jobs in June. But WSJ Economics reporter Justin Layhart reports that this job market may be weaker

than it looks. Justin, do the ADP numbers out today change your expectations for tomorrow's Labor Department data? There are different surveys looking at different things. ADP is not trying to predict what the Labor Department's number is, but it does give a good reading on the state of the job market. And it's saying things have gotten softer. You write that the headline jobs number could be overstated. In fact, why is that? Every month, the Labor Department basically surveys a bunch of businesses, and that's where it gets its jobs number from. But we've seen some signs that there are problems.

One thing that we're seeing is just like each month when the jobs report comes out, the labor department is revising previous months lower. What happens is not everybody responds to the labor department survey in time for the job report. And if you think about who's going to respond the fastest, it's going to be big companies, well-run companies, and then you're going to respond the fastest, it's going to be big companies, well-run companies. And then you're going to have the stragglers are going to be sort of smaller companies, maybe less seasoned companies, less well-run companies.

Maybe those smaller companies, they don't have the deep pockets to deal with uncertainty or tariffs. So they may be ratcheting back hiring more than other companies are. The Labor Department also collects a household survey. Could this data be different, complementary from the other kinds of metrics that you just mentioned? It's sort of seeing the same thing. What the household survey is suggesting is again, that employment growth is

slower than what we're seeing in that establishment survey. One thing that's going on is we have had this real ratcheting back of immigration. There's joint work between the Brookings Institution and the American Enterprise Institute that shows that net immigration to the U.S. this year is going to be probably zero or negative, more people leaving than coming. So taken all together, what does that reflect about the economy? What it does ultimately mean is that GDP might not be able to grow as quickly as in the past. We have an aging population. It is harder to support with lower economic growth.

So it's not an ideal situation. That was Wall Street Journal reporter, Justin Layhart. Thanks Justin. All right. Thank you. Microsoft plans to cut about 9,000 workers in its latest round of layoffs, making up less than 4% of the tech giant's global workforce. A company spokesman said today that the cuts span levels,

geographies, tenure, and teams. The latest round of layoffs adds to about 6,000 roles that Microsoft eliminated in May across its product and software development teams. In US markets, the S&P 500 and NASDAQ reached fresh records today, reversing yesterday's declines. The S&P 500 and NASDAQ reached fresh records today, reversing yesterday's declines. The S&P 500 added about half a percent, the NASDAQ was up roughly.9 percent, and the Dow stayed flat.

[♪THEME MUSIC PLAYING》 After narrowly passing the Senate yesterday, President Trump's big, beautiful bill is back in the House, where a number of House Republicans have said they're going to oppose it. In fact, there's enough of them that they could block the bill's passage. Given Republicans' thin majority, the bill would fail if more than three House Republicans joined Democrats to vote against it. However, past standoffs within the GOP have been resolved after successful pressure campaigns by the president and party leaders.

Holdout lawmakers visited the White House this morning. Party leaders are planning an initial procedural vote on the floor, with full passage possible as soon as later today or tomorrow. Trump wants the bill on his desk this week to meet his self-imposed July 4th deadline, though there are no practical consequences to waiting. Coming up, why investors are still optimistic despite Tesla's disappointing sales numbers. That's after the break. with PC Express. Shop online and get $15 in PC Optimum Points on your first five orders. Shop now at NoFrails.ca.

Tesla's global vehicle sales fell 13.5% in the second quarter from a year ago, missing analysts' expectations and continuing a steep slide in automotive sales. I'm joined now by Becky Peterson, who covers Tesla for the Journal. Okay, Becky, is the company paying the price for Tesla CEO Elon Musk's role at the Department of Government Efficiency? What is behind this drop? Tesla sales have been falling since at least last year. There's a lot of commentary that this is a response to the politics and the brand damage after Musk spent time in Washington. But this quarter, we also saw that EV sales were falling across different

brands. Tesla is certainly suffering significantly as the market leader. Quarter after quarter, they tend to sell the most EVs in the US. But we are also seeing some of the other companies struggle. And yet despite these disappointing sales numbers, shares of Tesla were up following the announcement of the results. Why are investors so optimistic? An early read on that situation is that the sale numbers weren't as bad as some people thought they might be. Even Elon Musk has admitted this could be a tough year. The company is transitioning. He says they're going to become a robotics and AI company.

So these sales numbers just don't matter that much. That was WSJ Reporter Becky Peterson. Thank you, Becky. Thanks, Alex. In the latest trade war news, the United States has struck a tariff deal with Vietnam. American goods will now enter Vietnam duty-free. In return, the U.S. will charge 20 percent tariffs on Vietnamese goods.

The agreement marks the second trade pact President Trump has struck under the threat of his so-called reciprocal tariffs, which were imposed on nearly all U.S. trading partners in early April, before being put on pause for 90 days. That pause is set to expire next week. The U.S. previously struck a deal with the United Kingdom to lower some of its tariffs. Chinese artificial intelligence companies are challenging the U.S.'s global stranglehold on AI and setting the stage for a global arms race in the technology.

In Europe, the Middle East, Africa, and Asia, users ranging from multinational banks to public universities are turning to large language models from Chinese companies as a cheaper alternative to American models. Lisa Lin covers technology for WSJ and told our tech news briefing podcast, Why the Rise of Chinese AI is Worrisome for the West. The biggest concern is censorship. And the idea that the tech we use isn't agnostic, the tech we use actually carries the values of their founders or their developers. And in this case, Chinese generative AI might carry the viewpoints of the Chinese Communist

Party. We've tested DeepSeek's app at the journal, and it's shown that the answers do carry a certain bias. However, when you open source your models just the way that DeepSeek, Alibaba, and Bai do have, and developers are not just using the consumer product developed by these companies, then the censorship in theory should not exist. For more from Lisa, listen to tomorrow's episode of Tech News Briefing. The European Union is pushing ahead with an ambitious new target for cutting greenhouse gas emissions, signaling a growing divide between the US and the rest of the industrialized

world. The European Commission, the EU's executive arm, said today it wants emissions in the block to decrease 90% by the year 2040 compared with 1990 levels. The Commission's previous goal was a 55% decrease by 2030. The proposal comes as the Trump administration has embraced fossil fuels and is pushing Congress to pass legislation that would slash federal government support for wind farms, solar panels, hydrogen production, and other clean technologies. And Sean Combs, also known as Diddy, has been found not guilty of racketeering and sex trafficking, but was convicted of less serious offenses.

It's a blow for prosecutors who had targeted the music mogul in a sprawling case that alleged he ran a criminal enterprise for over two decades. After the verdict, Combs' defense lawyer asked the district judge who presided over the case to release his client from jail while he awaits sentencing. And that's what's news for this Wednesday afternoon. Today's show is produced by Pierre Bienamé and Anthony Bansi with with supervising producer Michael Kosmides. Additional support by Coleman Standifer. I'm Alex Osola for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.