WSJ What’s News - Why a Hot U.S. Job Market Cooled in June

Episode Date: July 2, 2026

P.M. Edition for July 2. The U.S. economy added fewer jobs than expected in June, changing investors’ expectations for a July interest-rate hike. We hear from Journal economics reporter Harriet Torry about a missing World Cup bump in hospitality jobs. Plus, WSJ energy reporter Jennifer Hiller explains how heat waves are taxing the U.S. electric grid. But at least we have AC. High temperatures across the Atlantic are making some Europeans reconsider their longstanding rejection of air conditioning. And after months of sluggish performance, Tesla sales jumped in the second quarter. Alex Ossola hosts. Video: Trump Loyalty Demands Set Stage for Tense NATO Summit   Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

The U.S. labor market slowed last month, complicating the Fed's calculus for its next rate decision. And Tesla sales are surging again. Plus, how hot is it where you live right now? High temperatures this summer are going to challenge America's electric grid. There should be a lower risk for blackouts this summer. So that is the good news. But there is always a risk, and there are just myriad problems kind of all over the place.

It's Thursday, July 2nd. I'm Alex O'Sillov 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 out from the Labor Department today showed that the U.S. economy added 57,000 new jobs last month. That's fewer than economists expected and a slowdown from the spring's hiring hot streak. Today's report also revised down the big job gains from May and April. One interesting tidbit, the unemployment rate dipped to 4.2%. From May to June, we saw this very big drop in the labor force.

It decreased by about 700,000, which is a surprise. When the unemployment rate goes down, it means that people are finding jobs. But in this case, it kind of went down for the wrong reasons, which is that there were fewer people available for work. That's Journal Economics reporter Harriet Torrey. She says the share of people either working or looking for work, what's known as a labor force participation rate, fell to 61.5%. Harriet says that reflects the fact that more baby boomers are retiring and there's

fewer immigrants working because of President Trump's crackdown on immigration. Also worth noting is where jobs were coming from. The health care and social assistance sector continued to add jobs, as it has for several months. But Harriet says some experts were surprised that the leisure and hospitality sector lost more than 60,000 jobs. They thought there might be more hiring because of the World Cup. Some economists are saying this could also be a warning sign for the economy, that actually hiring was not as strong for the World Cup as everybody was hoping for, and that maybe the lower income consumers who are really feeling the strain from inflation are starting to pull back and that perhaps demand this summer is not going to be necessarily that strong. The softer June jobs report made investors think that the Fed is less likely to raise interest rates at its meeting later this month. They now put the odds of a July rate hike at about 20 percent. Before the report came out,

that number was higher at 30%. Stock trading was mixed. The Dow rose more than 1% and closed at its latest record, while the NASDAQ fell a bit less than 1%. And the S&P was flat. All three indexes closed up more than 1.5% for the week. There's no trading tomorrow because of the July 4th holiday. There's been a recovery at Tesla.

Sales at Elon Musk's car company jumped in the second quarter after months of sluggish sales. The EV maker sold about. 25% more vehicles than it did in the same period last year. Tesla's sales jump comes even though there's a wider downturn in the U.S. EV market, with most other automakers reporting sharp sales declines for EVs. And Tesla's also in the middle of a pivot, trying to focus the company on robot taxis and humanoid robots, but neither of those are currently for sale. However, Tesla's stock tumbled 7.5% today, its biggest one-day decline in a year. It's still up more than 3% for the week.

Tesla will report its full earnings for the quarter later this month. And the CDC says that the death rate in the U.S. fell last year to its lowest level on record. That translates to about 689 deaths per 100,000 people. The death rate declined across every age group and nearly every demographic group. A CDC health scientist says the drop was because of a continuing decline in drug overdose deaths, as well as COVID-19 not contributing to as many deaths. But deaths from the flu and pneumonia grew, and the catarrow. is now among the nation's top 10 causes of death for the first time since 2020.

Coming up, what's the biggest challenge for NATO's Secretary General ahead of the Alliance's summit next week? The journal sat down with him and asked. We'll get into it after the break. Next week, leaders from NATO countries will meet in Turkey for a high-stakes summit. Our world coverage chief Gordon Fairclough recently interviewed NATO Secretary General Mark Ruta about what to expect from that meeting, which could be a test for the alliance. Anxieties about U.S. military drawdowns and President Trump's frustration with allies over the war in Iran threatened to overshadow the official agenda. This is an alliance of democracies.

It would be a bad sign if we all come together, have vanilla meetings, basically not disagreeing at all, because this is what the Chinese and the Russians do. This is what dictatorships do. In our case, we are democracies. We are working together. Europe has promised to spend tens of billions of new dollars on defense. Ruta told the journal that the key issue was now how to use the money coming in to accelerate weapons production and build stronger militaries.

The Hague a year ago was about promises. This summit, when it comes to the money, when it comes to the defense's output, when it comes to support for Ukraine, it's about delivery. And the shift in mindset taking place now is that defense has to be core and central of what we are doing, because this is about the first time. of a government, which is to keep our part of the world and our countries, save one billion people living in NATO territory. We'll leave a link to the full interview with Ruta in our show notes.

Sticking with Europe, the German government today unveiled a broad economic overhaul. The country is trying to revive its economy, which has taken a hit from China's manufacturing might and President Trump's tariffs, as well as from problems at home, like red tape and high costs for labor and energy. The 34 measures include tax and welfare benefit cuts, relaxation of labor market rules and steps to encourage investment in fast-growing sectors. The changes are a political gamble for a government that's been on the defensive since it took office a year ago. Now it's trying to bring Germany's economy back to life and boost its own

approval ratings before this falls elections. America's electric grid is not in peak condition. A lot of it is old, built in the post-war boom of the 50s and 60s. It's in need of repair, which is expensive. And these days, there's new pressure on the grid. especially as the country gets into one of its most challenging seasons, summer. I'm certainly feeling it sitting here in New York, where a heat wave prompted the electric company to send us all requests to limit our energy use this week. And we can expect a whole lot more of the same in the next few months. Forecasts say it's going to be hot.

And that could make for a tricky season for the electric grid. For more, I'm joined now by a journal energy reporter, Jennifer Hiller. Jennifer, let's start with the good news here. You report that there are all these new energy sources that will help support our need for electricity. What are those sources? So we've got a lot more solar and battery that have come online in the last year and some natural gas plants as well. Almost 60 gigawatts, 58 and a half. How much is that? That's a lot. That is about 50-something nuclear reactors worth of power. Of course, it's not all available all the time the way a nuclear reactor is. Solar and battery

are available for certain hours during the day. But the risk of blackouts has actually been reduced a little bit from what it was a few years ago. Okay, that sounds good. Now let's get onto the harder parts. So temperatures are supposed to be over 100 degrees along the eastern seaboard this week. Can you explain why heat in particular poses a challenge for the electric grid? Sure. I mean, first of all, just the hot weather can stress equipment. And then air conditioning demand goes up so much that you want to be generating enough power. And it sort of compresses the amount of wiggle room that you have on the grid when you have these very hot days. One more complicating factor to add to the mix.

We've heard a lot about the power needs of AI data centers lately. Is that expected to affect the power grid's resiliency this summer? It could. I mean, they push up overall demand on the system. We should have enough power under normal circumstances, but we are having a very hot summer. And AI data centers behave in ways that are a little bit different. They can use power in a very kind of spiky way. And a few issues have popped up where there's been maybe a problem with a transmission line somewhere.

So you have had a few instances where you've had data centers suddenly exit. the power grid. And then that can create a supply demand imbalance that the grid operators have to try to solve. What does this mean for customers? I mean, should people prepare for more disruptions or higher bills this summer? I would say higher bills for sure. Electricity costs have been getting higher. And now we've got a very hot season on our hands. And so most people are going to be using more air conditioning that is going to drive bills higher. That was WSJ Energy Reporter, Jennifer Hiller. Thanks, Jennifer. Thank you. Many Americans are going to be dealing with these super high temperatures for the July 4th festivities. But after the barbecues are done and the last fireworks have burst,

we can retreat to our AC. That tends not to be the case in Europe. In Italy, just over half of households have air conditioning. In France, it's about a quarter and in the UK, just 5%. And it's part of the reason Europe's recent heat wave felt so brutal. It is hot here on the streets of the Hague. It's almost suffocating. Right now, here in Paris, it's... I live in the UK and I was born and raised in south of Italy. I know hot weather. I know summer 35 degrees. Here feels like hell. Hell. Europeans have long shunned air conditioning. They think it's noisy, bad for the environment, a blight on their architectural heritage, and above all, unnecessary since the summers have

tended to be mild. Except that's not true. anymore. Years of record-breaking heat waves have placed strains on the continent's economy, closing schools and businesses and rail lines. Plus, they're deadly. Europe's summer heat waves often claim tens of thousands of lives, far more than in the U.S. Journal reporter Matt Dalton is in Paris, where last week it topped 104 degrees Fahrenheit. And he says these heat waves are making some Europeans rethink their approach to AC. There's relatively little air conditioning in schools, hospitals, nursing homes. Those are places where the lack of air conditioning is a big problem.

And with every heat wave, there's more and more people that want to install the systems. And because of local regulations around noise, architecture, energy consumption, that is very difficult. A lot of cities in Europe are going to have to reconsider the restrictions they put, particularly as temperatures keep rising. I mean, unfortunately, the weather is going to get hotter. A lot of people feel like we shouldn't be adding to the problem by using more electricity to deal with the consequences of climate change, particularly in Europe. I think, though, that there's going to be a point where the heat is going to be so much that everybody's going to realize that a lot more people need it than have it now. For those in the U.S., where 90% of households have AC, make sure you're staying cool this holiday weekend.

And that's what's news for this Thursday afternoon. We'll be dark tomorrow and the rest of the weekend for the 4th of July holiday. Today's show was produced by Anthony Bansy and Alexis Moore with supervising producer Tali Arbell. Michael LaValle wrote our theme music. Aisha L. Muslim is our development producer. Chris Zinsley is our deputy editor. And I'm Alex O'Sulloch for the Wall Street Journal.

We'll be back with our regular show on Monday morning. Have a great weekend and thanks for listening.