BREAKINGVIEWS-US labor market runs into Trump’s reality

By Gabriel Rubin

WASHINGTON, March 7 (Reuters Breakingviews) - U.S. Federal Reserve leaders are fond of the adage that economic expansions don’t die of old age — they’re murdered. There is now growing evidence that February’s jobs report, showing a 50th consecutive month of net gains, could be the last of its kind for a while, thanks to unwelcome unpredictability from the Trump administration.

The numbers, released on Friday by the U.S. Bureau of Labor Statistics, were mostly good: a 4.1% unemployment rate, an 80.5% participation rate for prime age workers, and 4% wage growth. But recent events instantly give the data a sepia sheen. A rapidly devolving trade war has pushed uncertainty indicators to crisis levels, and enterprises, public and private, have been spooked by cut-off payments and slashed workforces at the hands of Elon Musk’s government efficiency initiative. The future for the U.S. economy doesn’t look nearly as bright as the recent past.

Below the headline figures were some troubling signs that showed the early impacts of erratic policy. The average number of hours worked in a week matches the 34.1 of March 2020, a possible indicator of softening labor demand. The federal government shed 10,000 jobs in the month — a preview of larger losses not yet showing up in the data. Global outplacement firm Challenger, Gray & Christmas said on Thursday that pending layoffs jumped 245% to 172,017 last month, the highest level since July 2020.

During all this, the White House has careened between bad trade ideas and worse ones. Newly instituted 25% tariffs on Mexico and Canada were curtailed on the auto industry, then paused further on goods covered by earlier trade pacts, leaving companies guessing which imports are affected on a given day. The reprieve is set to expire on April 2, when Trump also plans to institute reciprocal levies on a broader set of countries. As a result, imports soared in January.

Adding to the turbulence, Treasury Secretary Scott Bessent said in a combative speech to the New York Economic Club on Thursday that “access to cheap goods is not the essence of the American dream” and that unfettered trade had hurt upward mobility. If this economic expansion is truly in its death throes, the murder suspects will be easy to identify.

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CONTEXT NEWS

U.S. employers added 151,000 jobs in February, below economist estimates of 160,000, according to a Reuters poll. The unemployment rate ticked up to 4.1% from 4% in January. The report, issued by the Labor Department's Bureau of Labor Statistics on March 7, showed a loss of 10,000 federal government jobs, which were counterbalanced by more growth in the private sector and in state and local governments.

The data comes as the U.S. expands its tariffs on imports from its top trading partners, along with significant delays and rollbacks following negotiations with the leaders of Mexico and Canada, as well as U.S. corporations.