On The Money: Economy adds 164K jobs in July | Trump signs two-year budget deal, but border showdown looms | US, EU strike deal on beef exports

Happy Friday and welcome back to On The Money, where we’re more than willing to test all 2020-themed ice cream flavors. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

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Programming note: On The Money won’t be taking a summer vacation, but we’ll only be running once a week throughout August. We’ll still have plenty of coverage of Trump’s trade war, the state of the economy, the battle over Trump’s tax returns and far more at TheHill.com though.

THE BIG DEAL–Positive July jobs report: The U.S. added 164,000 jobs in July, the Labor Department reported Friday, a positive sign amid concerns about the long term health of the economy.

The July jobs report largely met expectations, showing a resilient but slowing labor market. The unemployment rate held even at 3.7 percent, and the labor force participation rate was little changed at 63 percent.{mosads}

The jobs report comes one week after the Commerce Department released data showing a notable slowdown in U.S. growth and sharp declines in business activity. 

While the labor market has rallied through many of those obstacles, the July jobs report showed unmistakable signs of a cooling economy, a potential challenge for President Trump as he seeks reelection. I explain why here.

• May’s dismal jobs gain of 72,000 was revised down to just 62,000, while a stellar June jobs gain of 224,000 jobs was cut to a less impressive 192,000 jobs. The 41,000-job reduction dragged down the average monthly gain over the past three months to 140,000 jobs.

• The economy also leaned heavily on the service sector for expansion, creating roughly 130,000 jobs, while goods-producing and construction industries stayed largely stagnant.

• The manufacturing sector added just 16,000 jobs, remaining largely unchanged, and wage growth has stayed flat since notching 3.2 percent in 2018. The lackluster employment figures follow a decline in U.S. industrial activity since the start of 2019 and a 5.2 percent decline in exports in the second quarter.

LEADING THE DAY

Trump signs two-year budget deal: President Trump on Friday signed a sweeping budget deal that increases federal spending and lifts the nation’s borrowing limit, the White House said.

The new law suspends the debt ceiling through July 2021, removing the threat of a default during the 2020 elections, and raises domestic and military spending by more than $320 billion compared to existing law over the next two fiscal years.

Trump signed the measure without fanfare at the White House one day after the Senate voted 67-28 to send it to his desk. Last week, the House passed the budget package by a vote of 284-149 before starting its August recess. 

Fiscal hawks and some conservative Republicans decried the measure, which is projected to add nearly $2 trillion to the deficit over the next decade. 

Even so, Trump threw his support behind it in large part because it cleared the decks of a messy budget fight as the 2020 campaign kicks into high gear and because it boosts military spending.

…But a border fight is throwing a curveball: Lawmakers are bracing for a fierce fight over President Trump’s border wall as they work to prevent a shutdown showdown but with no plan on how to avoid it.

Government funding for Trump’s wall and agencies like Immigration and Customs Enforcement (ICE) has become a landmine in spending bill negotiations, with talks late last year leading to a 35-day partial closure that marked the longest shutdown in U.S. history.

Sen. Shelley Moore Capito (R-W.Va.), who chairs the Department of Homeland Security appropriations subcommittee, put her hand to her chin as though she were deep in thought when asked if there was a plan to avoid another battle over the wall and immigration-related issues.

“Hmm, that’s a good question. I think it’s going to be a problem,” she said. 

The issue: The Department of Homeland Security (DHS) is one of the 12 individual appropriations bills that need to pass Congress and be signed into law by Oct. 1 or be extended by way of a continuing resolution to buy lawmakers more time.

• Senators on both sides of the aisle say they have no appetite to repeat the knock-down, drag-out fight similar to last year’s funding bills.

• But appropriators responsible for moving funding legislation through Congress are struggling to find an offramp to avoid another high-stakes fight.

The Hill’s Jordain Carney tells us why here.

GOOD TO KNOW

• China threatened on Friday to levy retaliatory tariffs against the U.S. in response to President Trump’s announcement that the U.S. would place new tariffs on Chinese goods beginning next month.

• President Trump on Friday announced a deal with the European Union to increase market access for U.S. ranchers… and then scared the heck out of U.S. Trade Representative Bob Lighthizer with a joke about tariffs on European cars.

• “The American middle class is falling deeper into debt to maintain a middle-class lifestyle,” according to The Wall Street Journal. 

ODDS AND ENDS

• The merger of two major Kosher food brands is like General Motors buying Ford for some American Jews. 

RECAP THE WEEK WITH ON THE MONEY:

• Monday: Trump banks on Fed, China to fuel 2020 economy | Judge orders parties to try to reach deal in lawsuit over Trump tax returns | Warren targets corporate power with plan to overhaul trade policy

• Tuesday: Fed poised to give Trump boost with rate cut | Parties unable to reach deal in Trump tax return lawsuit | New York opens investigation into Capital One data breach

• Wednesday: Fed cuts rates for first time since financial crisis | Trump rips Fed after chief casts doubt on future cuts | Stocks slide | Senate kicks budget vote amid scramble for GOP support

• Thursday: Trump to hit China with new tariffs next month | Stocks plummet on latest trade threat | Senate sends budget deal to Trump | Judge orders NY not to share Trump’s tax returns for now