...that won't help with economic pessimism
By Zack Fritz
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After a few weeks of soft economic data, will-they-won’t-they tariffs, and federal layoffs and spending cuts, the February jobs report was…pretty boring, actually.
U.S. employers added 151,000 jobs, roughly in line with expectations, and the unemployment rate inched up to a still low 4.1%.
Federal government employment fell by 10,000 for the month, but federal employees account for less than 2% of all jobs. We also lost about 5,000 state government education employees, which likely reflects hiring pauses at colleges and universities.
So no real issues from federal job and spending cuts in February, but these losses are going to ramp up over the next few months and will likely spill over into other industries.
We might have seen some early signs of that in February with layoffs in a number of white collar segments—the kind that could be federal contractors affected by spending freezes—like professional, scientific, and technical services, legal services, computer systems design, and a couple others.
Healthcare, which once again accounted for a large share of the monthly job growth (+52,000 for the month), is a noncyclical industry, meaning hiring tends to be steady and doesn’t reflect broader economic conditions. That’s good because it means the segment should continue to grow even if the economy slows, but it’s also bad because it means that a lot of the hiring we’ve seen the past few months isn’t due to broader economic momentum.
Finally, it was a good month for construction job growth. You can read what Anirban had to say on that over at ABC.
Does any of this matter?
The economy has averaged about 200,000 new jobs per month since December, and unemployment remains relatively subdued. That’s encouraging but doesn’t really address the reasons for emerging economic pessimism.
This week’s tariff shenanigans have shaken markets and economic decisionmakers. The fact that there are several looming implementation dates for new tariffs doesn’t help.
There’s a reason that major stock indices are now lower than they were on election day. As of this writing, today’s jobs report hasn’t really moved the needle for investors.
Does this mean recession is coming?
Easy, now! Let’s not get ahead of ourselves. Yes, the odds of a downturn in 2025 are higher than they were at the start of the year, but I still put them below 50%.
What’s Next?
Anirban is currently working on Week in Review, our every Friday post where we concisely cover everything you need to know about the economy, and we’ll have that out in the next few hours. That’s just for paying subscribers. If that’s not you and you want it to be, just click here to upgrade to paid.
