U.S. Economy: Trade Narrows, Confidence Rises, Labor Holds

The latest round of economic data suggests a mixed but steady picture heading into the back half of 2025, as the U.S. continues navigating global trade tensions, shifting consumer sentiment, and a moderating labor market.

Goods Trade Deficit Narrows Sharply

In June, the international trade deficit in goods shrank to $86.0 billion, a notable improvement from May’s revised figure of $96.4 billion. The reading came in well below forecasts, which expected a shortfall near $99.0 billion, signaling a moderation in trade imbalances amid ongoing tariff volatility.

Goods exports dipped 0.6% month-over-month, largely driven by an 8.1% drop in industrial supplies, even as most other categories saw modest gains. Imports fell more sharply—down 4.2%—with consumer goods imports plunging 12.4%. A small 0.6% rise in capital goods imports was the lone bright spot.

This data reflects the ebbing urgency among U.S. importers to front-load shipments ahead of expected tariff escalations and indicates that foreign buyers are taking advantage of gaps between tariff announcements and implementation.

Consumer Confidence Edges Higher Despite Job Concerns

The Conference Board’s consumer confidence index rose to 97.2 in July, surpassing expectations of 95.8 and improving from June’s revised 95.2. This increase was fueled by an uptick in forward-looking sentiment, even as assessments of current conditions worsened.

The expectations index climbed 4.5 points to 74.4, still below the recessionary threshold of 80. Meanwhile, the present situation index slipped to 131.5, reflecting growing concerns over the labor market. The percentage of consumers who said jobs are hard to get rose to 18.9%, up from 14.5% in January.

While the mood around current employment may be cooling, Americans seem slightly more optimistic about the road ahead, helped in part by stable inflation and interest rate expectations.

JOLTS Report Confirms Softer but Stable Labor Market

The June Job Openings and Labor Turnover Survey (JOLTS) showed job openings declining to 7.437 million, down from 7.712 million in May but in line with expectations. While openings are down on the month, they remain 25,000 higher than a year ago.

Hiring activity softened, with 5.204 million hires in June versus 5.465 million in May. Separations also declined to 5.060 million, with quits at 3.142 million and layoffs steady at 1.604 million. The data confirms the ongoing cooling trend in the labor market but also supports the Federal Reserve’s view that conditions remain broadly balanced—not overheating, but not collapsing.

With no signs of severe labor dislocation, today’s JOLTS data should allow the Fed to maintain its current policy stance when it meets later this week.

---