The U.S. economy unexpectedly shed 23,000 jobs in July, the Bureau of Labor Statistics reported Friday, reversing months of modest gains and reviving doubts about the durability of the labor market. The unemployment rate ticked down to 4.1% from 4.2%, but the drop reflected a shrinking labor force rather than stronger hiring: the labor force participation rate fell to 61.4%, its lowest level since February 2021. A hotter-than-expected inflation reading, she said, could keep hike calls alive despite the cooling labor market. Prediction markets have continued to signal an outright rate cut remains unlikely this year, with the Fed under new Chair Kevin Warsh maintaining a comparatively hawkish stance since he took over in June. Nicole Bachaud, a labor economist at ZipRecruiter, said the data confirms "the labor market is not out of the woods quite yet."