In March, the U.S. labor market demonstrated strong resilience with the addition of an unexpected 228,000 jobs, underscoring its robustness as President Donald Trump initiated a high-stakes trade war. This figure surpassed the employment growth in February, which reported 117,000 new jobs, and nearly doubled the 130,000 jobs that economists had projected. Additionally, revisions by the Labor Department reduced the job count for January and February by 48,000.
Average hourly wages for workers rose by 0.3% from February, aligning with economists’ predictions. Year-over-year, hourly wages increased by 3.8%, slightly under the anticipated 4% and approaching the 3.5% growth consistent with the Federal Reserve’s target for 2% annual inflation. The healthcare sector made significant contributions by adding nearly 54,000 jobs, while the food and beverage industry, including restaurants and bars, created about 30,000 jobs as conditions improved from the tough winter months. Conversely, employment in the federal government decreased by 4,000 positions, suggesting early impacts of job cuts under Elon Musk’s workforce reduction policies.
Although the unemployment rate saw a modest increase to 4.2%, economists view this as positive, noting that 232,000 individuals entered the workforce, indicating more people choosing to seek employment. Trump’s response to these numbers was prompt, taking to his Truth Social platform to boast that the data was evidence of his successful policies, asserting, “My policies will never change.”
Nonetheless, analysts caution that these employment figures may represent past performances and express concern about future economic impacts stemming from Trump’s policies, especially in light of his recent “Liberation Day” tariffs. Such measures have already caused turbulence in financial markets. For instance, the Dow Jones index suffered a 1,000-point drop following China’s announcement of retaliatory tariffs, a continuation from the previous day’s 1,600-point decline.
Diane Swonk, chief economist at KPMG, warns that the current employment data might be the peak for the upcoming spring. She notes heightened economic uncertainties, questioning the stability of tariffs, the potential escalation of trade wars, and the effect on financial markets. Further threats to the economy emerge from Trump’s dismissals of federal employees, the termination of government contracts, and his widespread deportation initiatives targeting undocumented immigrants. These workers, who have alleviated labor shortages and propelled economic growth, face exclusion, potentially forcing companies to scale back operations or raise wages, thereby fueling inflation.
The job market has been cooling relative to the vigorous hiring experienced between 2021 and 2023. March’s impressive job growth contrasts February’s 117,000 and January’s 111,000 additions, decreasing from 2021’s monthly surge of 603,000 new positions when the economy rebounded from the pandemic. Seema Shah, Chief Global Strategist at Principal Asset Management, remarked, “The market needed today’s number,” as assurance of the labor market’s strength ahead of potential policy impacts.
Despite the Federal Reserve’s 11 interest rate hikes over 2022 and 2023 aimed at curbing inflation, the economy has avoided recession, with consumer spending and employment sustaining growth. However, concerns continue to rise regarding the economic outlook. The University of Michigan’s consumer sentiment survey indicated that two-thirds of Americans anticipate increased unemployment within the coming year, marking the highest prediction level in 16 years.
Jorge Marquez, Chief Impact Officer at Goodwill Southern California, points out how uncertainties about federal job cuts and trade tensions have stalled recruitment for managerial positions. Meanwhile, demand for entry-level labor in construction and hospitality remains robust. Marquez, who also leads the Los Angeles County Workforce Development Board, noted companies’ eagerness to onboard new entrants in these sectors.
In New York, Fort Hamilton Distillery co-founder Alex Clark voiced hesitation in expanding his team amidst the tumultuous economic climate. Despite wanting to hire, the uncertainty inhibits such plans, particularly with Trump’s tariffs influencing purchases of materials like equipment and raw goods to stay ahead of price hikes. The anticipation of tariffs has led Clark to “front-load” some purchases, tying up funds that might go toward staffing.
Jessica Bettencourt, CEO of Klem’s in Spencer, Massachusetts, is similarly cautious. With suppliers signaling price increases due to new tariffs, Bettencourt is postponing additional hiring for her 70-strong team. Her store, which sources globally, is bracing for potentially volatile vendor pricing, leading her to prepare for frequent price adjustments in anticipation of a challenging year ahead.