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It’s Jobs Day, which means another round of befuddlement over the state of the United States economy. Despite its rocky jobs report for the month of February, the Bureau of Labor Statistics came out Friday with better-than-expected employment projections for March: 178,000 new positions added—almost triple the amount non-government economists had anticipated. There was also a slight dent in the unemployment rate, from 4.4 percent to 4.3 percent. Even amid cataclysmic energy shocks and relentless spates of white-collar layoffs, the American economic engine appears to be humming along smoothly.
Or, maybe, not so much. As with all Labor Department reports, the rosy top-line numbers require the context of their underlying trends—and those aren’t looking so pretty. Future revisions will grant us a more thorough sense of what March was actually like, and the impact of the Iran war will soon be more broadly felt as the far-reaching Strait of Hormuz disruptions pile up. Still, a closer examination of Friday’s jobs report already reveals some concerning indicators that should give the bulls some pause.
What are the more worrying trends with the economy?
For March, concerns include low wage growth (only 0.2 percent from last month) and a small reduction in average working hours, resulting in lower paychecks. In addition, the factors contributing to the lower unemployment rate aren’t so cheery. The Black unemployment rate, typically a canary in the coal mine, is nearly twice as high as the white unemployment rate (7.1 percent versus 3.6 percent), and has persistently remained at some of the worst levels we’ve seen for Black workers since the post-pandemic reopening.
Among unemployed Americans of all races, many have been looking for work for a long while: About two-fifths have been on the job hunt for 15 weeks or more, while another 25 percent have been looking for over half a year. (If they’re not seeing much relief, that’s likely because March recorded the lowest hiring rate since the 2020 pandemic shutdown, at 3.1 percent.) Meanwhile, the slight dip in unemployment correlates with a decline in labor-force participation. There are far too many Americans who, frustrated with the frozen job market, have just noped out for the time being.
How does all that square with the boom in new jobs?
The upswing from February requires a little asterisk. A significant portion of that month’s net job reductions came from striking health care workers, whose work stoppages meant their employers could not include those jobs in the BLS’ surveys. Tens of thousands of nurses and unionized care workers from particularly populous states (California, New York, Hawaii, Washington) walked off for much of February, agitating for better wages and safer working conditions. Health care has been one of the nation’s few durable sources of employment throughout the past few years, thanks to demand from older Americans. That meant the lack of complete BLS records in February reflected an especially hard hit to the overall projections. The March surge in health care gigs includes those which have been added back into the broader count.
And remember: These March numbers are projections that will be overhauled in the not-so-distant future. More recent job-report revisions have given us better hints as to the employment situation under Trump 2.0: December saw a net loss of jobs, even though initial estimates projected a gain, and January’s strong job gains saw a slight downward adjustment after the fact. When you take all that into longer-term consideration, job growth does not look so robust.
So I shouldn’t trust any of these headline numbers?
It’s not that you shouldn’t trust them, but that you should always keep a few conditions in mind. The BLS remains understaffed thanks to the DOGE layoffs—and there may be more chaos to come for the broader Labor Department, if the rumors that Trump may fire Secretary Lori Chavez-DeRemer turn out to be true. There are fewer people in the bureau, which has offices dispersed across the country, and they’re trying to tackle the same scale of data as they do in normal times. Yet they have to correct for a yearslong decline in employer response rates to BLS surveys—which does not negate the data overall, but certainly makes preliminary calculations a bit more unsteady and speculative. But that’s more an issue of capacity over top-down interference. As long as BLS staffers aren’t leaking concerns to the financial press, and as long as the bureau is still led by an acting commissioner who’s willing to push back against the president in public, you can trust these public servants are doing the best they can with what they have, and that they’ll keep updating the data as they need to.
Some economists turn to payroll company ADP for a second opinion: Its research team does not have the same reach as BLS, but it has enough employment data of its own to make reasonable estimates about the private sector. Its March forecast only adds 62,000 new jobs.
So … what is the economy really like right now?
Looking at factors outside of the jobs report, it’s apparent that things will be sluggish, and are likely to slow even further. The Federal Reserve will see this report as a sign to keep interest rates elevated for a while yet—thus maintaining constraints around private investments, and preventing employers from hiring even more.
As for the geopolitical picture: The Strait of Hormuz, which transmits everything from oil to industrial metals to fertilizer, looks like it will be closed for a while, and the supply shock from that chokepoint, already hitting the Eastern Hemisphere hardest, is going to wreak havoc on future trade in food, energy, electronic and auto parts. (And yes, prices will go up accordingly.) The tech sector is already slamming the brakes on some of its more lavish spending, and private consumer debts are piling up. Things aren’t giving way just yet. But they’re getting shakier and shakier.
