March 11, 2025
The Administration has put their plans in place to eliminate tens of thousands of Federal employees. As the February jobs report was just released last week, we must start to ponder if these layoffs will affect the overall jobs market. If the private sector is strong enough, those unemployed could be absorbed into corporate positions. On the other hand, if the overall jobs market is already weakening, this could be adding fuel to the fire.
We did not expect that the January report would be affected greatly by the government layoffs. However, it does give us a picture of how strong the private jobs sector is at the present time, especially considering the weaker than expected report for January. Plus, the elimination of government contracts will also affect the private sector. So how did we do? In February, the economy added 151,000 jobs, slightly short of forecasts. In addition, the previous two months of reports showed almost no change after revisions. The unemployment rate rose slightly to 4.1% from 4.0% in January. Overall, this paints a picture of a slowing but steady jobs picture.
Also important is the measure of wage growth for the month, which is a significant ingredient of inflation. Wages grew by 3.0% on a monthly basis and 4.0% year-over year – right on target. These inflation numbers pick up even more significance because any evidence of an employment growth slowdown fueled by government layoffs would normally be accompanied by lower interest rates from the Federal Reserve. But the Fed is also worried about the reignition of inflation and thus may not react as strongly to a possible slowdown in hiring.
Source: Origination Pro
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