The labor market is abused, but you don’t know how to look at the data
Over the past few weeks, there has been massive disruption in the labor market as President Donald Trump’s administration freezes federal aid and moves to fire tens of thousands of federal workers. It adds to the surge in executive orders, the threat of a trade war, the beginning of a massive deportation and stock market volatility.
But on Friday, Labor Statistics Bureau We released what investors and market watchers considered their January “positive” employment report. I scratch my head for the cutting.
One explanation is that economic data appears backwards. Friday’s report reflects the state of the labor market in January, when relative disruption begins. Still, I thought it would have an impact from at least. Destructive LA wildfireI saw it Hundreds of thousands Apply for unemployment benefits for Californians.
Instead, the most Recent labor data It shows low unemployment and stable, trapped at 4%. Furthermore, employment growth appears to be still moving at a healthy pace.
Perhaps official labor data is not a reliable narrator of what is actually happening or what is coming.
Lisa Countryman CirosThe CEO of JVS Bay Area, a nonprofit for workforce development, said there is no doubt that the actions of the new administration will cause instability for both workers and employers, causing ripples across the industry in 2025. It will bring about results.
Potentially unstable employment market
Job market indicators draw broad pictures and reflect past trends, but do not accurately reflect the economic realities of various sectors, groups and industries.
As someone who writes about the relationship between Labor data, Housing Market and Federal Reserve Systemnot surprised to see the economists actively spinning Friday’s labor report. News reports declared that the economy is “resilient” and “strong” and that the job market is “not good.”
But when you ask the average person about finding a stable salary employment, you probably get a very different answer. In 2024, Pathrise’s job market data shows that Jobseekers averaged their average 8 months He then got a job on 294 applications.
It’s not an exaggeration to say The economy feels like a free fall. Immediate State Department order 90-day suspension of foreign aiddefending Elon Musk, leaving many government contractors and world organisations struggling to run and pay workers. On the other hand, some 65,000 The federal workers accepted an offer to resign in exchange for their salary until September 30th. The White House said it hopes that as many as 200,000 workers will be involved. Buy outwas recently temporarily suspended by a federal judge.
Additionally, Trump is taking proactive action to strengthen the deportation of undocumented immigrants. 1 in 20 workersthere are even greater expressions in construction, agriculture, and hospitality. Forced removal of the masses of workers who donate billions of dollars to state and federal taxes can lead to lower wage employment, higher labor costs, disruption in the supply chain and increased inflation.
“The president has changed policy directions several times,” said Gene Ludwig, former director of currency and founder. Ludwig Institute for the Prosperity of a Shared Economy.
“It’s too early to measure the net effect of his policy on employment,” Ludwig told me via email.
Interest rate reductions will not come later
Economic data, such as Friday’s employment report, also affects key financial decisions. Interest rate adjustment. The Federal Reserve must balance inflation and unemployment, and will look at official statistics to determine the next move.
First, central banks hope that inflation will slow down before they cut interest rates again. But considering that, it doesn’t seem to be anytime soon The threat of tariffsis expected to raise prices.
Second, the Fed is looking for signs of weakness in the labour market. The Fed doesn’t want unemployment to plummet to recession levels, but the “sound” labor market tells central banks that the economy can pay high borrowing rates.
It was the odds Already low As the Fed cuts interest rates at its next meeting in March. But it is now even more clear that central banks will delay interest rate cuts until early in May or June. It may take months to clearly understand how management policies affect job markets, consumer prices and borrowing costs.
“Indicators that indicate the economy is slowing will particularly increase the chances of rising unemployment,” he said. Greg HeimChief Economist of Brown Harris Stevens.
In the meantime, we must settle for various definitions of what constitutes a positive job report.
“The strong labor market relies on expanding job seekers opportunities without limiting job seekers,” Countryman-Quiroz said.