Commerce Secretary Howard Lutnick blamed a Democrat government shutdown and mass deportations for November’s surprise jobs decline, not President Trump’s tariff policies.
Quick Take
- November private payrolls dropped 32,000 workers, marking a sharp reversal from October’s gains, with small businesses hit hardest
- Commerce Secretary Lutnick attributed the decline to the Democrat shutdown and deportation efforts, explicitly ruling out tariffs as the cause
- Small businesses with fewer than 50 workers saw payroll numbers sink by 120,000, while larger employers gained 90,000 workers
- The administration projects a strong economic recovery in 2026, with GDP growth exceeding 4% despite current challenges
Shutdown and Deportations Drive Job Market Slowdown
The November jobs report revealed an unexpected 32,000-worker drop in private payrolls, a stark contrast to October’s performance. Commerce Secretary Howard Lutnick addressed the decline on CNBC, emphasizing two primary culprits: the Democrat government shutdown and ongoing mass deportation efforts.
Lutnick explained that government contractors and small businesses dependent on federal payments slowed project activity when payment uncertainty arose, directly impacting hiring decisions and payroll expansion during the shutdown period.
The employment decline hit small businesses disproportionately, with firms employing fewer than 50 workers experiencing a 120,000-worker payroll drop. Conversely, larger employers reported a net gain of 90,000 workers, suggesting that established corporations weathered the disruption better than their smaller counterparts.
This disparity underscores how federal policy disruptions cascade through the economy, affecting job-creation capacity differently across business sizes.
Bad jobs report caused by shutdown, deportations — not tariffs, Lutnick says https://t.co/siOycVMXiD
— CNBC (@CNBC) December 3, 2025
Deportations and Labor Market Adjustments
Lutnick acknowledged that mass deportation efforts, a cornerstone of the Trump administration’s immigration policy, suppressed private job numbers among small businesses.
The administration’s commitment to removing undocumented immigrants from the labor force creates temporary workforce adjustments as businesses adapt to reduced labor availability and recalibrate hiring strategies.
While this reflects the administration’s prioritization of border security and legal immigration enforcement, it contributes to near-term employment volatility that critics cite as evidence of economic disruption.
Tariffs Not the Culprit, Says Commerce Secretary
When directly questioned whether Trump’s tariff policies explained the jobs decline, Lutnick firmly rejected the premise. His defense of the administration’s protectionist agenda reflects confidence that tariffs, while economically complex, are not the primary driver of current labor market weakness.
However, corporate executives and economic forecasters have warned that Trump’s aggressive and unpredictable tariff strategy could trigger domestic job cuts in the coming months, creating tension between short-term policy impacts and long-term economic projections.
Recovery Projected for 2026
Despite November’s disappointing numbers, Lutnick expressed confidence in near-term recovery, characterizing the slowdown as temporary. He predicted that employment figures will “rebalance and regrow,” with GDP growth exceeding 4% in 2026.
This projection reflects the administration’s belief that current disruptions—the shutdown and deportation implementation—are transitory obstacles rather than structural economic problems requiring policy reversal or adjustment.
ADP’s chief economist, Nela Richardson, offered a more cautious assessment, noting that “hiring has been choppy of late as employers weather cautious consumers and an uncertain macroeconomic environment,” suggesting broader economic uncertainty beyond the specific factors Lutnick highlighted.
The divergence between administration optimism and economist caution highlights ongoing debate about the sustainability of Trump’s economic policies and their impact on American job creation in 2026.
