In the institute’s June briefing, Chief Economist Gerald Cohen reviewed the morning’s employment report for May and examined a number of economic indices for potential effects from recent policy changes.

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Key Takeaways from the June 2025 Economic Briefing
With Kenan Institute Chief Economist Gerald Cohen

Each month, experts from the Kenan Institute of Private Enterprise interpret the latest employment report from the Bureau of Labor Statistics and what it means for our economy. 

“In economics, things take longer to happen than you think they will, and then they happen faster than you thought they could.”
— Rudiger Dornbusch

If you looked only at the recent employment numbers, you might think we’d pulled off a soft landing. Job growth has been steady for five months, unemployment remains low, and wage gains are modest but healthy. During this month’s briefing, Kenan Institute Chief Economist Gerald Cohen opened with exactly that idea: “This is effectively what a soft landing would look like.”

But as Cohen quickly cautioned, labor market data doesn’t tell the whole story.

There are encouraging signs:

• Wage growth continues to slightly outpace inflation, supporting consumer spending.
• Capital investment in tech, software and R&D (key drivers of productivity) continues to support growth.
• Layoff announcements, which spiked earlier this year, have since come down; jobless claims, while ticking up, remain historically low.

But there are also some red flags:

• The household employment survey showed a drop of 696,000 jobs, in contrast to the payroll survey’s gain of 139,000. Cohen noted the household survey is more volatile, but called this divergence “a worrying sign,” especially since the household data often catches turning points earlier.
• Consumer expectations are sliding, especially on inflation.
• Tariffs are already raising costs in some sectors.

Meanwhile, fiscal policy remains murky. As Cohen noted, it’s unclear whether tariffs are intended to create jobs or raise revenue – because they can’t effectively do both. He also questioned the political focus on spending cuts without serious conversation about revenue, particularly if Americans want to maintain programs like Social Security and Medicare.

What Should We Expect Next?

During the Q&A, one listener asked the question on many minds: Will the Fed cut rates soon?

Cohen’s response was direct:

“I wouldn’t expect a lot of [rate] cuts at this moment – especially given the inflation risks.”

While the labor market may suggest calm, many underlying indicators don’t. Consumer expectations, policy contradictions and sector-specific stress could all become larger problems. In Cohen’s words, “We’re worried about the effects of policy, but we aren’t seeing them. Maybe we never will. But maybe they come fast.”

Join us for our next briefing Thursday, July 3, held early due to the holiday. Register now.

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