Today, I had to toss up whether I’d write about the start of a new tax for spirits while beer prices are frozen (because Prime Minister Anthony Albanese promised this in the run up to the May election) or the US jobs report.

While the first is a hip pocket issue for spirits and cocktail drinkers, it won’t rock inflation and the likelihood of interest rate cuts from the RBA. No, the state of the US labour market under the black cloud of Donald Trump’s tariffs is a much bigger story. If those employment numbers are right, then there’ll be serious doubts about the strength of the US economy.

News services such as USA Today ran with the headline: “Shock jobs report stirs recession fears”.

Here are the reactions to the job statistics for July that USA Today reported:

1. Josh Bivens, chief economist of the left-leaning Economic Policy Institute: “To me, today’s jobs report is what entering a recession looks like. Could we pull up? Sure. But if we look back and end up dating an official recession that starts 3-6 months from now, this is what it would look like today – rapid softening/deterioration in the labour market”.
2. A recession now appears “very, very likely” unless Trump lowers the tariffs by Labor Day, said Mark Zandi, chief economist of Moody’s Analytics.

If the US goes into a Trump tariff-created recession, Fed chief Jerome Powell will have to give Donald Trump the rate cuts he’s been asking for. The likely impact on the global economy will force the hand of the RBA to cut maybe three times before Christmas!

Right now, CBA economists expect a cut in August, November and early next year but if the R-word is for real for the US economy, then these three cuts could be brought forward.

It now means every piece of economic data for the US will be poured over by economists and market players to work out whether these job numbers can be trusted. So, on that subject, just how bad were they? Consider these:

1. For July, the US created 73,000 jobs.
2. 100,000 were expected.
3. Unemployment rose from 4.1% to 4.2%.
4. The June jobs figures were revised down from 147,000 to a weirdly low 14,000!
5. The May result shrunk from 125,000 to 19,000.

These are big revisions down and it led CNN’s Alicia Wallace to tell us: “With those monumental, quarter-million-job downward revisions, the meagre job gains in June were the weakest since December 2020, the last time the labor market had monthly job losses. The pace of job creation seen so far this year is the weakest in decades, outside of recessions.”

And Joe Brusuelas, chief economist at RSM US, told CNN. “This is absolutely the worst major economic report since the end of the pandemic era.”

This news will hurt stock prices and escalate the expectations of lower interest rates. Ultimately, it will hurt confidence, leading to more job cuts in the US. And we won’t be spared some real economic pain.

Only a quick response from the Fed could shorten the expected pain period. You’re set to see the Trump-versus-Powell clash over interest rates get very public and nasty.

In case you missed it, after looking at these big number revisions from the Bureau of Labor Statistics, Trump sacked the boss, Erika McEntarfer, on the spot and announced it on his Truth Social, his social media platform.

As you can see, this is a bigger story than a higher tax on spirits in Australia! However, given the threat of ill economic winds blowing in from Trumpland, there could be a greater reason to want a stiff drink!

And on that subject:

1. Alcohol taxes rise twice a year in February and August.
2. Tax on each 50-litre keg of full strength beer will stay at $43.39 for the next two years.
3. Bottled beer will be tax affected.
4. The rise in spirits tax is likely to hurt small bars.
5. The Night Time Industries Association research shows “…people on salaries between $80,000 to $150,000 were staying in, while people being paid more than $150,000 were going out more and more.”

To be brutally honest, this booze tax story is small beer compared to this US jobs report. While it could deliver us more rate cuts, it could also mean our economy could have some Trump-created problems, such as job losses!