US Federal Workforce Shrinks 23,000 Amid Policy Cuts, Union Pushback

The U.S. labor market presents complex signals as private sector employment declined while wage growth continues, with the unemployment rate remaining low but slightly rising recently. President Trump’s administration has pursued a measured reduction of the federal workforce, with some sector-specific increases, particularly in immigration enforcement, amidst union resistance and legal challenges. The aggressive immigration crackdown under Trump is contributing to slower economic growth and higher inflation long term, as key sectors dependent on migrant labor experience labor shortages and reduced consumer activity in affected cities. Concurrently, the U.S. Dollar is near multi-year lows due to changing Federal Reserve interest rate expectations, slowing inflation, and improving foreign economies, which could influence market sentiment based on upcoming labor data. Recent labor market data reflects an anemic job growth environment influenced by tariffs, deportations, federal spending cuts, and government layoffs, with economists expecting modest job additions and a slight rise in unemployment. These intertwined labor market and policy dynamics are shaping the broader economic outlook and investor confidence heading into the mid-2025 period.