Minnesota’s labor market is slowing in what state officials said is likely an indication President Donald Trump’s federal policy is trickling down to the local economy.
The state lost 4,400 jobs across most sectors in July, and the unemployment rate ticked up to 3.5%, according to data the Department of Employment and Economic Development (DEED) released Thursday. Commissioner Matt Varilek cited on-again, off-again tariffs, the immigration crackdown, mass layoffs of government workers and widespread federal funding cuts among policies putting pressure on Minnesota’s economy.
“Over the course of months, we’ve been talking about a number of actions at the federal level that we have feared could eventually filter their way into the data and into a broader economic slowdown,” Varilek said, “and it seems plausible that that may be the early signs of what we’re having here.”
Minnesota’s diverse economy is still stable, officials said, and continues to outperform the U.S. as a whole on unemployment, wage growth and labor force participation. The state gained more than 35,000 jobs year-over-year, a 1.2% increase.
In July, two “supersectors” DEED measures — education and health services as well as construction — gained jobs, while eight lost jobs. Government experienced the greatest monthly losses, with declines in local and state jobs. Federal jobs were mostly flat through the month but have declined since July of last year.
Big revisions to the national May and June jobs numbers, which raised alarms that tariffs might have weakened the labor market more than previously thought, also appeared in the state-level data. The state gained more jobs than initially reported in May but lost more than initially reported in June, according to DEED.
After claiming without evidence the Aug. 1 July jobs report was “rigged,” Trump fired Bureau of Labor Statistics Commissioner and labor economist Erika McEntarfer. His pick to replace her, conservative economist Erwin John “E.J.” Antoni, has criticized the agency and proposed ending the jobs report.
Varilek said Thursday that McEntarfer’s firing “flummoxed” him and noted officials across the political spectrum agree there’s no proof the revised data was inaccurate.