The Labor Department releases the February jobs report Friday morning, and to say it’ll be “closely watched” is an understatement.
It’s the first jobs report to fall fully under the new Trump administration, and a lot has happened since Trump took office a second time that could majorly impact the labor market: from mass federal-government layoffs and downsizing being pursued by DOGE, to new tariffs on Canada, Mexico and China, to big drops in consumer confidence and the stock market.
How much all that will show up in Friday’s report is an open question.
January was a weird month: bad winter weather and fires in California kept job creation low, while the unemployment rate actually fell. February could also be weird — or at least, packed with surprises — but not for the reasons one might expect, noted Dan North at credit insurer Allianz Trade North America.
“It’s not so much the DOGE firings or layings-off— that’s going to show up in the next couple of months,” he said.
Those happened too late to be captured in February’s jobs report. Rather, with tariffs and inflation and market volatility, “uncertainty has reached a magnificent scale under this administration. If corporations feel that much uncertainty, I think that’s going to cool the hiring process,” said North.
Dean Baker at the Center for Economic and Policy Research agrees.
“The two strongest sectors for job growth have been health care and state and local governments,” he said. “Think of someone operating a hospital or a city counting on government grants — they’re going to be very cautious. So I expect that a lot of hiring won’t show up in February.”
We already know one weak spot last month: small business employment, according to data from Intuit, crunched by University of Chicago economist Ufuk Akcigit.
“Businesses that employ at most nine workers — down by 0.99%, which is a substantial decline,” he said.
Akcigit said they’re suffering from inflation, high interest rates and — again — uncertainty.
“Businesses are forward-looking,” he said. “They would be more risk-averse in new hires. But at the same time, whenever they lose workers, they are not replacing them either.”
The gloom for February’s jobs report is not universal, however.
“We represent the largest health systems in the country, some of the largest tech organizations in the world attract talent, and we’re seeing a lot of investment right now,” said Adam Stafford at Recruitics says.
He said that private sector employers are getting ready for an influx of newly-unemployed but highly-skilled federal workers — like “talent that works in tech, in particular mathematical sciences and economics.”
Stafford worries most about federal clerical workers who could be laid off. The private sector has already offshored most of those jobs or replaced them with automation, he noted.
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