U.S. employers added 151,000 jobs in February, a solid increase, although the outlook remains uncertain as President Donald Trump threatens a trade war, cuts the federal workforce, and vows to deport millions of immigrants.
The Labor Department’s report on Friday showed an improvement from January’s revised increase of 125,000 jobs. Economists had anticipated a larger jump of 160,000 new jobs.
The unemployment rate ticked up slightly to 4.1% as 203,000 more Americans became unemployed. Hiring increased in healthcare, finance, and transportation sectors, while the federal government cut 10,000 jobs, the largest decrease since June 2022. However, economists don’t expect these federal layoffs to significantly affect the March jobs report. The restaurant and bar industries, on the other hand, lost nearly 28,000 jobs in February, adding to January’s loss of almost 30,000.
“The labor market remains steady, but we’re still far from where we were a year or two ago,” said Sarah House, a senior economist at Wells Fargo.
House predicts that job growth will slow down and unemployment may rise as President Trump continues to cut spending on various programs, reduce the federal workforce, and impose tariffs on America’s trade partners.
House warned that the ongoing spending cuts could affect the private sector, particularly contractors and nonprofits, and the escalating trade war could further strain the labor market. She emphasized that there are multiple challenges ahead for the economy to navigate in the coming months.
The economy’s surprising rebound from the 2020 pandemic recession led to a surge in inflation, which peaked at 9.1% in June 2022 compared to the previous year. In response, the Federal Reserve raised interest rates 11 times in 2022 and 2023, bringing them to their highest level in over two decades. Despite these higher borrowing costs, the economy remained resilient, supported by strong consumer spending, increased business productivity, and an influx of immigrants that helped alleviate labor shortages.
The American job market has remained strong, but its growth has slowed from the rapid hiring seen in 2021-2023. Last year, employers added an average of 168,000 jobs per month, a decrease from 216,000 in 2023, 380,000 in 2022, and a record 603,000 in 2021 as the economy rebounded from the COVID-19 pandemic.
Inflation decreased to 2.4% in September, allowing the Federal Reserve to reverse course and lower interest rates three times in 2024. While further rate cuts were anticipated for this year, progress on reducing inflation has stalled since the summer, prompting the Fed to hold off on any additional reductions.
Average hourly wages rose by 0.3% last month, a slight decrease from the 0.4% increase in January.
Fed officials are likely to view these figures as a reason to maintain their cautious approach on interest rates. With inflation still slightly above their 2% target, several officials have indicated they want to see further progress before making additional cuts to the benchmark rate.
Continued steady hiring and a growing economy make it easier for the Fed to stay on the sidelines. However, if companies begin laying off workers and the unemployment rate increases, there could be growing pressure on the Fed to cut rates.
On Thursday, Federal Reserve governor Chris Waller indicated that a rate cut was unlikely at the central bank’s March meeting, emphasizing that officials would need more data before making any further decisions.
Rick Gillespie, the chief commercial officer at Revive Environmental Technology LLC, based in Columbus, Ohio, expressed confidence in the company’s future prospects despite the uncertain economic climate.
Revive, which currently employs 34 full-time workers, plans to expand by hiring an additional 10 to 20 employees in Columbus, Ohio, and Grand Rapids, Michigan, over the next few months. The company specializes in mitigating environmental contamination, specifically targeting PFAS, a toxic chemical commonly found in everyday products such as nonstick cookware, waterproof jackets, and cell phones. These chemicals can end up in landfills, drinking water, and industrial wastewater.
Some are noticing a shift in the economy.
Sheela Mohan-Peterson, owner of a Patrice & Associates recruiting franchise, has reported an increase in resumes from high-level executives, particularly from the biotech and tech industries. “We’re talking C-suite level,” she said, mentioning chief financial officers, chief technology officers, and even a few CEOs.
Previously, she might receive one such resume a month, but since the end of last year, she’s been getting one or two a week. “It’s definitely accelerated over the past month,” she noted. Mohan-Peterson attributes this trend to the effects of the uncertain federal spending cuts.
“Startups, in particular, rely heavily on federal grants to get started, and now they’re facing the loss or reduction of these funds,” she explained. “As a result, they’re cutting back on their high-paid executives to save money, since they can’t depend on these grants anymore.”
Mohan-Peterson, a former biotech lawyer who purchased her recruiting franchise in 2023, has noticed a shift in the job market since then. “2023 was fantastic. There were plenty of job opportunities,” she shared. “But in 2024, I began noticing a slight slowdown. Towards the end of the year, it became increasingly difficult to place highly skilled workers.”