U.S. Job Growth Remains Steady, but Economic Uncertainty Looms
WASHINGTON (AP) — US employers added 151,000 jobs in the past month, indicating steady growth, though economic uncertainty persists as President Donald Trump pushes forward with federal workforce reductions, spending cuts, and trade policies that could disrupt markets.
According to Friday’s report from the Labor Department, hiring increased from a revised 125,000 in January. However, economists had anticipated a stronger gain of 160,000 jobs. Meanwhile, the unemployment rate ticked up slightly to unemployment up to 4.1% as the number of unemployed Americans grew by 203,000.
Sectors such as healthcare, finance, and transportation and warehousing saw job gains, while the federal government shed 10,000 positions—the largest decline since June 2022. Although economists predict that Trump’s workforce reductions may not significantly impact the labor market until March, restaurants and bars have already been affected, cutting nearly 28,000 jobs last month after a similar decline in January.
Concerns Over Future Job Growth
“The labor market remains resilient, but we’re not at the levels we saw a year or two ago,” said Sarah House, senior economist at Wells Fargo.
House anticipates that hiring will continue to slow while unemployment edges upward, largely due to Trump’s budget cuts and federal workforce reductions, along with the uncertainty surrounding potential trade conflicts.
“These spending cuts are likely to spill over into the private sector, particularly affecting contractors and nonprofits,” she explained. “At the same time, the trade war is intensifying, presenting additional challenges for the job market in the months ahead.”
The U.S. economy rebounded strongly from the 2020 pandemic recession, leading to an inflation surge that peaked at 9.1% in June 2022. In response, the Federal Reserve raised interest rates 11 times between 2022 and 2023, bringing borrowing costs to their highest level in over 20 years. Despite predictions of a slowdown, the economy remained strong due to consumer spending, business productivity gains, and an influx of immigrant workers alleviating labor shortages.
Still, job growth has cooled significantly from the rapid pace seen in recent years. Employers averaged 168,000 new jobs per month in 2024, down from 216,000 in 2023, 380,000 in 2022, and a record-breaking 603,000 in 2021, when the economy was recovering from COVID-19 shutdowns.
Fed Holds Steady on Interest Rates
Inflation dropped to 2.4% by September 2024, allowing the Federal Reserve to cut interest rates three times. However, with inflation progress stalling since the summer, the Fed has since paused further cuts.
Average hourly earnings grew by 0.3% last month, slightly lower than January’s 0.4% increase. The Fed is expected to maintain its cautious stance on rate cuts, with officials emphasizing the need for further inflation improvements before making any policy shifts.
Chris Waller, a Federal Reserve governor, signaled on Thursday that a rate cut is unlikely in March, stressing that policymakers want to review additional economic data before making decisions.
Businesses Weigh Economic Risks
Despite economic uncertainties, some businesses remain optimistic. Rick Gillespie, chief commercial officer at Revive Environmental Technology LLC in Columbus, Ohio, said his company remains confident in its future.
Revive, which specializes in environmental contamination mitigation and water treatment, plans to expand its workforce by 10 to 20 employees in Ohio and Michigan. The company has developed a process to eliminate PFAS, a toxic chemical found in common consumer goods and industrial waste.
Others, however, are noticing shifts in the job market. Sheela Mohan-Peterson, who owns a Patrice & Associates recruiting firm franchise, said she has recently received an increase in resumes from high-level executives in the biotech and tech industries.
“We’re seeing C-suite executives—chief financial officers, chief technology officers, and even a couple of CEOs—applying for jobs,” she said.
Previously, she received only one such resume per month, but now she sees one or two weekly. She attributes this trend to federal spending cuts, particularly impacting startups that rely on government grants.
“Startups depend on federal funding to get off the ground, and with that support disappearing, they’re having to cut high-salary positions,” she said.
Mohan-Peterson, a former biotech lawyer, acquired her recruiting franchise in 2023 and has observed a job market slowdown since then.
“2023 was strong—there were plenty of job opportunities,” she said. “But in 2024, I started to see a gradual slowdown. Toward the end of the year, it became increasingly difficult to place highly skilled workers.”
As businesses and workers navigate this evolving economic landscape, all eyes remain on the Federal Reserve and policymakers to determine the next phase of economic strategy.
