I was originally going to headline this, “We need to stop proving the Gold Bugs right”, since many economists who champion gold are pessimistic about government spending and the economy, and in the last five years, they’ve been more right than wrong. The recent ADP report looked like they were right again, but thankfully, the labor market isn’t as bad as ADP makes it out to be, yet.
In this article, I am going to go over both the ADP report and the official Bureau of Labor Statistics (BLS) data, and what it tells us about our economic future.
The ADP Report
When the June ADP Job Report came this week, many independent voices I listened to feared the worst. The private sector lost 33,000 net jobs in June, thanks to massive losses in the Financial and Business services sectors, as well as private education and healthcare.
This is a concerning sign for the US economy. The US is an economy dominated by services, so significant drops in the service sector are a nightmare for economic growth. The losers in the US in June were:
Small companies (less than 50 employees), lost a net of 47,000 jobs
Medium-sized companies (between 250 and 499 employees), lost 27,000 jobs.
The Mountain Region (Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming) lost 20,000 jobs.
The biggest loser by numbers was the West North Central region of the US (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota), which lost a total of 28,000 jobs, thanks to inflation, droughts, and USDA cuts among other factors. When I originally planned to write about this, I was going to spend the rest of the article talking about how we knew this was coming, etc. However, Seeking Alpha taught me something that changed my tone: The ADP report doesn’t correlate with actual job losses.
Seeking Alpha revealed that the ADP report often differs wildly from the actual data released by the BLS because of the methods each group uses to collect data. MorningStar mentions the same idea in their article from July 2nd, with Jeffry Bartash (Marketwatch economics reporter) saying:
“Through the first five months of 2025, the difference between the two reports [ADP and BLS] has averaged a whopping 63,000 a month.” - Jeffery Bartash, Be very skeptical of ADP report showing economy lost jobs for the first time in years, MorningStar
June’s BLS data report seems to confirm that idea, reporting a total nonfarm payroll number of 147,000 jobs added in June. That makes it sound like the ADP report is useless, but there’s a little more nuance to it than first appears.
The BLS Numbers
As we mentioned earlier, the BLS numbers and the ADP differ by a lot, with one of the biggest differences: BLS includes government employment.
"Government employment rose by 73,000 in June." - Employment Situation Summary, Bureau of Labor Statistics, USDL-25-1089
In the BLS Report, 73,000 new government jobs were reported, around half of the reported jobs. The US added 74,000 private, non-farm jobs in June, which is far better than ADP’s numbers, but below the 100,000 expected by analysts. So, where does that leave us?
The Future Of The Economy
“I don’t put much faith in probabilities…Your either in a recession, or your not.” - David Rosenberg, The Julia La Roche Show
I believe there are two main insights we can pull from this month’s release. The first is the momentum of jobs. MorningStar brought this up in their article:
“Other economists are more charitable. While they downplay ADP month to month, they point out the two job reports trend in the same direction over time.” - Jeffery Bartash, Be very skeptical of ADP report showing economy lost jobs for the first time in years, MorningStar
I heard this same sentiment from Jeff Snider in his video released yesterday. When both ADP and BLS point in the same direction, it’s reasonable to assume that the market is coming down with it. Referring back to MorningStar:
“Both reports point to a slowdown in the U.S. labor market - companies are hiring fewer workers and it's taking longer for people to find jobs.” - Jeffery Bartash, Be very skeptical of ADP report showing economy lost jobs for the first time in years, MorningStar
If that’s true, though, why aren’t we seeing more layoffs? That brings me to the second insight: layoffs come last. That is one of the biggest lessons I’ve learned in my deep study of economics so far is that consumers only spend when they feel like they can get more money later (i.e., stable employment). That’s why most of the COVID stimulus money was saved or used to pay off debt. Researchers at Stanford, UCLA, and the University of Southern California found the same behavior in a 2020 research paper. When you add that to the fact that consumer spending makes up a majority of spending in the economy, you quickly realize that mass layoffs cause recessions.
No one wants to trigger a recession, not even companies, so they have to find other ways to cut costs when revenues are down, like reducing money spent on new equipment (called capital expenditures or CapEx), increasing efficiency, or not hiring new talent. It’s this last piece that we saw clearly in the ADP report:
“Though layoffs continue to be rare, a hesitancy to hire and a reluctance to replace departing workers led to job losses last month. Still, the slowdown in hiring has yet to disrupt pay growth.” - Nela Richardson, Chief Economist, ADP, July 2025
Companies haven’t been hiring for a while now, and they haven’t been filling positions when employees leave. That, I believe, is the truth behind June’s jobs reports: the economy is slowing down, which isn’t good for the rest of 2025.
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Tyler Kreiling, WealthNWisdom, Founder and Head Editor
The information in this article is for educational and informational purposes only and should not be considered financial advice. Readers should conduct their research or consult with a licensed financial advisor before making any investment decisions.