There was a healthy increase of 151,000 employment in the United States last month, but with President Trump threatening a trade war, firing government employees, and pledging to deport millions of immigrants, the future seems bleak.
Hiring increased from January’s revised 125,000, according to the Labor Department’s report on Friday. Nearly 160,000 additional jobs were anticipated by economists last month.
With 203,000 more people out of work, the unemployment rate ticked up to 4.1%.
Those working in healthcare, banking, and logistics saw increases in employment. Economists do not anticipate the federal layoffs initiated by Trump to have a significant influence until the March jobs report, although the government did reduce employment by 10,000, which is the highest level since June 2022. The hospitality industry lost roughly 30,000 jobs in January alone, and another 28,000 positions last month.
The job market is holding up, but it’s still a long way from where it was a year or two ago, according to Sarah House, a senior economist at Wells Fargo.
With Trump’s continued program cuts, government personnel reductions, and tariff imposed on America’s trading partners, the House anticipates hiring to stagnate and unemployment to crawl higher.
“Contractors and nonprofits are likely to be hit hard by the spending cuts, and the trade war is heating up,” House said. In the months to come, the job market will have to overcome “many battles” and “many shocks.”
As a result of the economy’s surprisingly robust rebound from the pandemic recession of 2020, inflationary pressures rose sharply, reaching a peak in June 2022 with prices 9.1% higher than the previous year.
The Federal Reserve replied by raising its benchmark interest rate eleven times in 2022 and 2023, reaching its highest level in almost twenty years. Strong consumer spending, large productivity increases at companies, and an inflow of immigrants who alleviated labor shortages kept the economy afloat despite the increased borrowing costs, surprising predictions of a recession.
Despite a slowdown from the flurry of hiring in 2021 and 2023, the American employment market has shown remarkable resilience. On a monthly basis, employers added a respectable 168,000 positions last year. While this was an improvement above the record 603,000 in 2021 and the 216,000 in 2022, the economy recovered from the COVID-19 lockdowns and set a new high of 380,000 in 2023.
With inflation falling to 2.4% in September, the Federal Reserve was able to change its tune and reduce interest rates three times in 2024. Since the summer, the Federal Reserve has refrained from implementing its previously planned rate cuts due to the lack of progress on inflation.
Compared to January, when they increased by0.4%, average hourly wages increased by just 0.3% last month.
The statistics will likely be seen by Fed policymakers as providing further evidence to justify their present stance of waiting to see if interest rates are decreased. Inflation is somewhat higher than the Federal Reserve’s 2% objective, and many members of the Federal Open Market Committee have recently stated their need for greater evidence of improvement before reducing their benchmark interest rate any further.
The Federal Reserve can remain on the sidelines for longer while hiring is steady and the economy is growing. Pressure on the Federal Reserve to lower interest rates might increase if businesses begin laying off employees and the unemployment rate climbs.
At Thursday’s Federal Reserve meeting, Governor Chris Waller hinted that a rate decrease was improbable, saying that the central bank would want further data before taking any additional action.
In spite of the economy’s volatility, Rick Gillespie, chief commercial officer of Revive Environmental Technology LLC in Columbus, Ohio, expressed optimism about the company’s future prospects in the environmental pollution mitigation and water treatment industries.
According to Gillespie, Revive intends to hire an additional 10–20 people in Grand Rapids, Michigan and Columbus, Ohio, in the next months, bringing the total number of full-time employees to 34. A harmful chemical known as PFAS may be found in commonplace products such as nonstick cookware, waterproof coats, and cell phones. Revive has developed a method to eliminate this chemical, which has the potential to pollute landfills, drinking water, and industrial wastewater.
Some people are seeing a reorganization of the economy.
Recruiter Sheela Mohan-Peterson of the Patrice & Associates franchise has noticed an uptick in applications from former C-suite executives at biotech and IT businesses. According to her, “We’re talking C Suite level” – this includes CFOs, CTOs, and even a number of CEOs.
Those resumes would arrive once a month for her. One or two every week have been her visits since the year’s conclusion. The pace has “absolutely accelerated” in the past month, she stated. It is the result, according to Mohan-Peterson, of the disorganized federal funding cuts.
“In particular, startups rely on federal grants to launch their operations, and these are either going away or are about to,” she said. “They can’t rely on those grants, so they’re starting to lay off their high-paid executives to save money.”
Mohan-Peterson, a former biotech lawyer, bought her recruitment franchise in 2023 and has witnessed the cooling of the employment market ever since. 2020 was an amazing year. This area has a lot of career opportunities, she added. In 2024, I saw a decline. The difference was negligible. However, finding jobs for highly qualified individuals became increasingly challenging as the year came to a close.
