WASHINGTON (Actonreviews) — U.S. employers added a solid 151,000 jobs last month, but the outlook remains uncertain as President Donald Trump threatens a trade war, purges the federal workforce, and promises to deport millions of immigrants.
The Labor Department reported on Friday that hiring increased from a revised 125,000 in January. Economists had anticipated 160,000 new jobs for the month.
The unemployment rate ticked up slightly to 4.1%, with the number of jobless Americans rising by 203,000.
Employment grew in healthcare, finance, and transportation and warehousing sectors. The federal government shed 10,000 jobs, the largest drop since June 2022, though economists do not expect Trump’s federal layoffs to significantly impact the jobs market until the March report. Restaurants and bars cut nearly 28,000 jobs last month, adding to the 30,000 losses recorded in January.
"The labor market continues to hold up, but we’re still a far cry from where we were a year or two years ago," said Sarah House, senior economist at Wells Fargo.
House predicts hiring will slow and unemployment could rise as Trump continues cutting spending on federal programs, slashes the workforce, and imposes tariffs on trading partners. “The spending cuts are likely to spill over into the private sector, affecting contractors and nonprofits. We still have a trade war picking up pace,” House explained. “There are multiple challenges the labor market is facing in the months ahead.”
The economy’s unexpectedly strong recovery from the pandemic recession of 2020 set off an inflationary surge, which peaked in June 2022, with prices 9.1% higher than the previous year.
In response, the Federal Reserve raised its benchmark interest rate 11 times in 2022 and 2023, reaching the highest level in over two decades. Despite higher borrowing costs, the economy remained resilient, defying expectations of a recession, buoyed by strong consumer spending, big productivity gains at businesses, and an influx of immigrants easing labor shortages.
The American job market has been notably resilient but has cooled compared to the red-hot hiring periods of 2021-2023. Employers added an average of 168,000 jobs per month last year, down from 216,000 in 2023, 380,000 in 2022, and a record 603,000 in 2021, as the economy rebounded from COVID-19 lockdowns. Inflation eased, dropping to 2.4% in September, allowing the Fed to reverse course and cut rates three times in 2024. However, progress on inflation has stalled since summer, and the Fed has paused its rate cuts.
Average hourly earnings increased by 0.3% last month, down from 0.4% in January.
Fed officials are likely to view these figures as reinforcing their current wait-and-see approach toward interest rate cuts. With inflation still modestly above the Fed’s 2% target, many have indicated they would prefer to see more progress before making further rate cuts.
The ongoing steady hiring and a growing economy make it easier for the Fed to remain on the sidelines. However, if companies begin to lay off workers and the unemployment rate rises, the Fed may face increased pressure to reduce rates.
On Thursday, Fed Governor Chris Waller suggested a rate cut was unlikely at the March meeting, adding that officials would need more data before making any further decisions.
Rick Gillespie, chief commercial officer at Revive Environmental Technology LLC in Columbus, Ohio, remains optimistic about his company’s prospects despite the uncertain economic landscape. Revive, which currently employs 34 full-time workers, plans to hire an additional 10 to 20 employees across its Ohio and Michigan locations in the coming months. The company specializes in the removal of PFAS, a toxic chemical found in everyday items such as nonstick cookware, waterproof jackets, and cell phones, which often contaminate landfills, drinking water, and industrial wastewater.
Others are seeing a more challenging economic environment. Sheela Mohan-Peterson, who owns a franchise of the Patrice & Associates recruiting firm, has been receiving more resumes from high-level executives previously employed in biotech and high-tech industries. "We’re talking C-suite level—chief financial officers, chief technology officers, even a couple of CEOs," she said.
Previously, Mohan-Peterson would receive one of these resumes per month; now, it’s one or two a week. "It has definitely accelerated in the last month," she noted. She attributes the trend to federal spending cuts, which have disproportionately impacted startups that rely on federal grants. “They’re shedding high-paid executives to save money since they can’t count on those grants anymore," she explained.
Mohan-Peterson, a former biotech lawyer, acquired her recruiting franchise in 2023. She’s noticed the job market cooling since then. “2023 was great. There were a lot of jobs around,” she said. "But in 2024, I started to see a slight slowdown. By the end of the year, it started getting harder and harder to place very skilled workers."