People walk past the Moynihan Train Hall digital sign on March 3, 2025, displaying the new initiative of New York Governor Kathy Hochul, entitled “New York Waste You,” a program designed to recruit and hire federal workers displaced in New York.
David Dee Delgado |Reuters
The recent mixed signal from the labour market has increased fear among investors already at the edge of the knife about the potential threat that tariffs pose to inflation and economic growth.
Depending on your perspective, employers either cut workers at the highest percentage in a few years or skate at the current staffing level.
What has become clear is that workers are increasingly uncertain about their employment situation and are not likely to seek other opportunities. At the same time, some recent research has reported that job hunters are having difficulty finding new positions.
Sentiment indicators counter the solids that appear in more traditional data points, such as non-farm pay growth and unemployment rates.
Healthy basics
“Essentially, things are still relatively healthy in the US, and that doesn’t mean there’s no crack,” said Tom Polcelli, chief economist at PGIM bonds. “Just by passing it and putting a hat on your payroll report, you can recognize that your payroll report is a metric that will make you lag and is part of other metrics that give you a better taste of what’s going on beneath the surface.”
When the Labor Department’s Bureau of Labor Statistics released its February non-farm pay report at 8:30, the market will get another snapshot of the health of the labour market. Economists surveyed by Dow Jones expect employment growth of 170,000 from 143,000 in January, with unemployment rates steady at 4%.
It represents a stable labor market, but there are many warnings pointing to more difficult times ahead.
Outplacement challenger Grey & Christmas reported on Thursday that the announcement of layoffs in February has skyrocketed to monthly highest levels since July 2020. The main reason for that move was Elon Musk’s government efficiency efforts to cull the federal workforce. The Challenger reported over 62,000 Doge-related cuts.
DOGE behavior and other labor survey indicators showing workers’ anxiety are likely not reflected, primarily due to the timing of reductions and the methodology and methodology used in the number of household employment and job twins filled at the facility level.
Consumer reliability is reduced
However, a recent conference committee report showed that consumer confidence had dropped significantly unexpectedly and in line with a surge in respondents, they hoped that there would be fewer jobs and be difficult to obtain. Similarly, a University of Michigan survey showed slides as respondents were concerned about inflation.
In the world of economics, such fears can quickly become self-fulfilling prophecies.
“If workers aren’t sure they can find new jobs… that’s reflected in the economy and the same goes for the ambitious language that employers hire,” said Alison Schrivastaba, an economist at the real employment lab. “Don’t discount sentiment.”
Recently, economists have been strengthening the potential impact of Doge Cuts, with some saying that the multiplier effect involving government contractors could increase the total workforce reduction to over 500,000.
“They will have a hard time being reabsorbed by the economy,” Srivastava said. “It also stirs people’s confidence and emotions. It certainly can have an impact on the real economy.”
For now, Goldman Sachs said Doge Cuts has probably reduced the headline salary by just around 10,000, making it a small weather-related impact. Overall, the bank said the current photo, according to alternative figures, is “one of a robust pace of job creation and has been eased, but is expected to continue its contribution from catch-up employment and recent spikes in immigration.”
In addition to the number of jobs, BLS will release figures on wage growth. Average hourly revenue is expected to show a monthly profit of 0.3%, up 4.2% from a year ago, up about 0.1% from the January level.
