WASHINGTON (AP) — Last month, U.S. employers added 151,000 jobs, a solid gain but with a mix of uncertainties. President Donald Trump’s actions, like hinting at a trade war and cutting federal jobs, are casting a shadow over the economic landscape.
The Labor Department reported that hiring improved from a revised 125,000 jobs in January, although economists had anticipated an increase of around 160,000. The unemployment rate ticked up to 4.1%, seeing an increase of 203,000 jobless individuals.
Job growth was seen in sectors like healthcare, finance, and transportation. However, the federal government lost 10,000 jobs, the largest drop since June 2022. While these cuts might not have immediate effects, the impact may become clearer in the upcoming March jobs report. The restaurant and bar sector saw a significant decline, shedding nearly 28,000 jobs last month, adding to a loss of almost 30,000 in January.
Sarah House, a senior economist at Wells Fargo, pointed out that while the job market is holding strong, it’s not where it used to be. She predicts a slowdown in hiring as government spending cuts and tariffs on trade partners begin to take their toll.
House remarked that these spending reductions could ripple through the private sector, affecting contractors and nonprofits. Additionally, the ongoing trade war poses challenges that the job market will need to navigate in the coming months.
The economy has shown surprising strength after the pandemic recession of 2020, leading to an inflation spike that peaked at 9.1% in June 2022. To combat this, the Federal Reserve raised its benchmark interest rate 11 times over 2022 and 2023, bringing it to the highest levels seen in over 20 years. Despite higher borrowing costs, consumer spending and productivity have kept the economy resilient, helping to alleviate labor shortages.
While job growth has cooled compared to the robust hiring period of 2021 to 2023, the market remains relatively strong. Last year, an average of 168,000 jobs were added each month, down from 216,000 in 2023 and significantly lower than the record of 603,000 in 2021.
Inflation has eased, falling to 2.4% in September, allowing the Fed to cut rates three times in 2024. However, progress on inflation has stalled, which has kept the Fed from making further cuts recently. Average hourly earnings grew by 0.3% last month, slightly lower than January’s increase of 0.4%.
Federal Reserve officials are likely to adopt a cautious stance with their interest rate decisions. As long as hiring remains steady and the economy continues to grow, they can maintain their current course. However, if layoffs increase and unemployment rises, there might be renewed pressure to cut rates.
Recently, Fed governor Chris Waller indicated that a rate cut is unlikely in the near future, emphasizing the need for more data before making any significant moves.
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