On The Money: Economy adds 75K jobs in May | GOP senator warns tariffs will wipe out tax cuts | Trump says ‘good chance’ of deal with Mexico

Happy Friday and welcome back to On The Money, where we’re more than ready for the Women’s World Cup (#USWNT). I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

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THE BIG DEAL—Economy adds 75K jobs in May, well below expectations: The U.S economy added 75,000 jobs in May, the Labor Department reported Friday.

Economists had expected the U.S. to add roughly 185,000 jobs in May after a massive gain of more than 200,000 the previous month.

But employment growth fell well short of that mark, though the unemployment rate and labor force participation rate stayed even at 3.6 percent and 62.8 percent, respectively.

• The Labor Department also revised down March’s gain from 189,000 to 153,000 jobs, and April’s from 263,000 to 224,000 jobs. The revisions shave 75,000 jobs off the books for 2019.

• Average monthly job gains have slowed to 164,000 in 2019 from 223,000 in 2018, while wage growth was effectively flat in May.

 

What it means: One jobs report doesn’t reflect the full picture of the economy, and a big June number could keep the U.S. on track for solid employment gains. Still, Friday’s report is the latest sign of concern about the health of the U.S. economy as it nears a decade of recovery from the 2008 recession.

• The ADP National Employment report released Wednesday found that private payrolls increased by just 27,000 jobs in May, another foreboding sign of easing growth.

• The economy also faces headwinds from President Trump’s proposed 5 percent tariff on Mexican goods and 25 percent tariff on $300 billion more in Chinese products.

 

Economists say the combination of slowing employment growth and fiscal pressures from tariffs could prompt the Federal Reserve to hike interest rates.

• Analysts and investors have steadily raised the odds of a Fed rate cut as inflation remains below the central bank’s target and economic growth appears to be easing.

• Fed Chairman Jerome Powell said Tuesday that the bank will “act as appropriate to sustain the expansion” as it monitors the impact of Trump’s trade policies. Investors took his comments as a hint toward a future rate hike, and stocks rallied throughout the day.

 

What comes next: The Fed’s rate-setting panel, the Federal Open Markets Committee (FOMC), will start its next monthly two-day meeting on June 18. Powell will hold a press conference after the Fed announces its rate decision June 19.

LEADING THE DAY

Tariff countdown—Trump says there’s ‘good chance’ of deal with Mexico: President Trump said Friday there is a “good chance” the U.S. and Mexico can reach an agreement to avert tariffs over a surge in illegal migration, but said they would go into place Monday as scheduled if the two sides cannot make a deal.

The president said that increased purchases of U.S. agricultural products would be a part of a possible agreement, even though the impetus for the tariffs is immigration and not a trade dispute.

“If we are able to make the deal with Mexico, & there is a good chance that we will, they will begin purchasing Farm & Agricultural products at very high levels, starting immediately. If we are unable to make the deal, Mexico will begin paying Tariffs at the 5% level on Monday!” he tweeted. Here’s more from The Hill’s Jordan Fabian.

• Mexican officials have been in Washington all week trying to persuade the Trump administration to hold off on the tariffs, which would have wide-ranging effects on the economies of the U.S. and Mexico. Mexican Foreign Secretary Marcelo Ebrard spent much of Friday in meetings at the State Department.

• White House officials have said the talks have yielded progress, but that Mexico needed to do more to satisfy Trump’s demands. The White House was planning to post a legal notification of the tariffs on Friday, but one top aide said the notice could be withdrawn or tabled if a deal is reached before Monday.

 

If not, Trump intends to declare a new national emergency to impose the tariffs under the 1977 International Emergency Economic Powers Act, according to a draft document obtained by The Hill.

• The president announced suddenly last week that he wanted to impose tariffs on Mexico amid mounting frustration over the administration’s inability to curb illegal immigration, one of Trump’s core promises during the 2016 campaign.

• The tariffs would begin at 5 percent and increase to 25 percent by October if the Trump administration deems Mexico is not doing enough to crack down on illegal migration.

 

ON TAP NEXT WEEK

 

Monday:

• The U.S. Chamber Center for Capital Markets Competitiveness and the Bipartisan Policy Center host an event entitled “Transitioning from LIBOR: What it Means for Main Street & Wall Street,” 9:20 a.m.

 

Tuesday:

• The Peter G. Peterson Foundation hosts its 10th Fiscal Summit, featuring House Speaker Nancy Pelosi, White House acting chief of staff Mick Mulvaney and other top officials, 8 a.m.

• The House Financial Services Committee holds a hearing on oversight of student loan servicers, 10 a.m.

• The House Budget Committee holds a hearing entitled “The Costs of Climate Change: Risks to the U.S. Economy and the Federal Budget,” 10 a.m.

• The Senate Banking Committee holds a hearing entitled “Data Brokers and the Impact on Financial Data Privacy, Credit, Insurance, Employment and Housing,” 10 a.m.

• The House Appropriations Committee holds a markup of the fiscal 2020 Homeland Security and Financial Services and General Government spending bills, 10:30 a.m.

• The House Financial Services Committee holds a markup of eight bills, including flood insurance reauthorization and reform measures, 2 p.m.

 

Wednesday:

• The House Financial Services Committee continues its markup, 10 a.m.

• A House Education and Labor subcommittee holds a hearing on Department of Labor overtime protections, 10:30 a.m.

• A Senate Finance subcommittee holds a hearing on China’s Belt and Road initiative, 2:30 p.m.

 

The Hill event: On Tuesday, June 11, The Hill will host Affordable Housing & the American Dream at the Newseum in Washington, D.C. The Hill’s Editor-at-Large Steve Clemons and staff writer Rafael Bernal will sit down with Reps. Emanuel Cleaver (D-Mo.), Steve Stivers (R-Ohio) and an expert panel for a discussion on how leaders in Washington and the private sector can help ensure that every American has an equal chance of owning a home. RSVP here.

 

GOOD TO KNOW

• The Trump administration on Friday announced new sanctions against Iran, targeting the country’s largest petrochemical company for giving financial support to the Islamic Revolutionary Guard Corps.

• Sen. Cory Gardner (Colo.), one of the Senate’s most vulnerable Republicans in 2020, is sounding the alarm to his colleagues that President Trump’s tariffs will wipe out the economic benefit of the 2017 tax-reform law, which Republicans have touted as their biggest legislative accomplishment.

• The Treasury Department is pushing back on a Congressional Research Service (CRS) report finding that President Trump’s 2017 tax law had little to no effect on the economy in its first year, calling the methodology of the report “flawed.”

• Reuters: “Wells Fargo & Co will pay customers at least $386 million to settle class-action claims that the bank signed them up for auto insurance they did not want or need when they took out car loans.”

• Top Trump economist adviser Kevin Hassett told the Washington Examiner he remains hopeful job growth will pick up in June after the dismal May jobs report.

ODDS AND ENDS

• Maine Sens. Angus King (I) and Susan Collins (R) are asking President Trump to extend trade war-related agricultural aid to the lobster industry, according to The Washington Post.