The January Jobs report from the US Labor Department on Friday showed a slight dip in the non farm jobs, and this from an expected 175,000, a figure that would have aligned it with the private payroll firm ADP in its Thursday reporting of jobs in the private sector. But, as it was, the 143,000 did not reveal upon examination a weakening of American employment, in fact it showed much of the same detail as the prior months: strong hiring in government, leisure retail trade and hospitality, and the general unemployment rate, what we refer to as the marquee rate, which dipped down to 4.0.
What was remarkable about the report was that, other than the lower figure, it was not remarkable, in fact it has shown a steady stream of numbers that has given a consistency that is remarkable under varied market forces, political winds, and a weakening consumer confidence.
The same data points of prior reports are here; both for the unemployed and its continued litany of sameness: no change along racial or gender; the long term unemployed; those working part time hours that wanted full time work, people that were not in the workforce that wanted a job, and perhaps most significantly for policy wonks, as well as economists, the labor force participation rate which has remained the same at 62.6 percent.
Taking a look at the winners we see health care that added 44,000 jobs, but also showed gains in hospital work of 14,000; retail which enjoyed a good holiday earning margin , ratcheted up to to 34,000 in January; and social assistance added 22,000 jobs, that was “led by individual and family services of 20,000; and government employment held at a steady rate of 32,000.
This is all solid stuff, and for those looking for clouds in the silver lining they are not finding it. For example, it was expected that the fires in Los Angeles County, and the frigid temperatures that much of the nation faced, would be a factor, but DOL ruled this out when it said that these events had “no discernible effect” on employment. Of course, it was also noted in the household survey that record numbers of these workers were absent from their jobs.
While layoffs were up by 28 percent from 38.792 from December of 2024, according to Challenger, Gray and Christmas, they also reported that there was a decrease below 40 percent from the 82.307 from January of 2024.
All in all, most economists agree that, "There is still much to like about the U.S. labor market's resilience and sustainability," said Scott Anderson, chief U.S. economist at BMO Capital Markets, reported Reuters; and he noted, "This report cements the view that the Fed could be on hold for a considerable time before cutting rates again."
In fact, most market observers are saying just that, and there are some that are saying that any rate cuts might occur in mid-year, but at this point that is only speculation.
It bears to remember that the Fed cuts rate in response to the state of the economy: when it overheats and there is threat of inflation, rates are increased, when it cools down and needs stimulation, rates are cut to increase spending, and at this point in time, we are not seeing either scenario to dictate cuts or increases.
“The Fed left its benchmark overnight interest rate unchanged in the 4.25%-4.50% range last month, having reduced it by 100 basis points since September, when it embarked on its policy easing cycle. The policy rate was hiked by 5.25 percentage points in 2022 and 2023 to tame inflation,” added the news agency.
Taking a broad view, this is a healthy labor market and especially noting that average hourly earnings hit a high of 0.5 percent, “the most since August, after gaining 0.3 percent in December; and, more than enough to meet inflation.
Consumer confidence is a factor that many are examining, and especially the Fed, and in a press statement, The Conference Board, said, in part, the following:
“The Conference Board Consumer Confidence Index® declined by 5.4 points in January to 104.1 (1985=100). December’s reading was revised up by 4.8 points to 109.5 but was still down 3.3 points from the previous month. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—fell sharply in January, dropping 9.7 points to 134.3. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—fell 2.6 points to 83.9, but remained above the threshold of 80 that usually signals a recession ahead. The cutoff date for preliminary results was January 20, 2025.”
As has been noted before the sentiments of the American consumer can loom large, both in perception, one tenth of the law as the old adage states, but if we have the good news, then consumers may see a different reality than that of economists, and even the Labor Dept.
Doing a deep dive into methodology, and statistics, there is a New methodology by DOL for the household survey has resulted in an incomparable reporting of the unemployment rate from December, now at 4.0%, its lowest since May.
One word of caution coming from The New York Times, “James Knightley, chief international economist at ING, has an interesting data point on the “quality” of the jobs being added. Initially, he noted that 78 percent of all U.S. jobs created since 2022 came from only a handful of sectors: government, leisure and hospitality and private education and healthcare. Following January’s revisions, that share has jumped to 88 percent. He adds, “We believe those three sectors tend to be lower paid, less secure and more part-time.”
Politically speaking, the Trump White House has eviscerated the 2024 job gains of the Biden administration, but, in truth, despite the larger revisions of the end of the 4th quarter, there was more substance than they might want to acknowledge, “And while job growth was weaker than earlier estimates showed, the revisions did little to change the overall picture of a strong labor market. Employers added 2.6 million jobs in 2023 and two million in 2024. Over President Joseph R. Biden Jr. 's four years in office, the economy added more than 16 million jobs, although much of that came during his first two years as businesses reopened from the pandemic,” said the Times in their coverage.
“The White House press secretary, Karoline Leavitt, leaned into the narrative that job growth was weaker in 2024 than previously estimated. “Today’s jobs report reveals the Biden economy was far worse than anyone thought, and underscores the necessity of President Trump’s pro-growth policies,” she said in an earlier statement.
Continuing along the political path, there is a great deal of anxiety and worry by many economists and observers, not to mention the average citizenry on the 25 percent tariffs by President Trump that began on Monday, on steel and aluminum from all of US trading partners, beginning March 12; but, as the Council on Foreign Relations reported, it is not clear if these will be in addition to "existing duties, though a White House official said this would be the case for Canada."
With the US importing ha half of aluminum for Canada, and two thirds from Canada, the effects on the American consumer would be great, causing a ripple affect on the cost of military aircraft, but many industries, as they reported use imported steel on specific productions of steel pipes and steel, which would boost production and increase jobs in the country. But, the offset would result "by losses in manufacturing and other industries that rely on steel."
As can be guessed, the cost of job loss and increased prices from consumers would be great, as it was done in 2018 in response to Trump tariffs.
The biggest job losses are from the federal government with the gutting efforts by the Department of Government Efficiency, headed by Elon Musk, but also many average working Americans who work in related industries that would affect their kitchen table issues, quite literally fruit and vegetables from Mexico, and lumber and auto parts from Canada; which has created tensions on the borders between the two countries, especially seen in Windsor, Ontario and Detroit, where hundreds of auto parts as well as automobiles cross between the two countries.
Anticipating the hardships that Americans might endure, Canadian Prime Minister Justin Trudeau, in a video warned Americans of the pending economic consequences.
Economists have warned that the average American household expense would rise to $1200 per year if they are enacted.
Recent news has shown the bloodletting from these losses, and what is known, now, but with more to come, are from a workforce of nearly 200,000 workers across the country. Here is just a partial list of those that now face unemployment: USAID, 10,000; Dept. of the Interior, 2,200; Small Business, 20% of its workforce; Dept. of Energy, 1200 to 2000; Centers for Disease Control, 10 %; Dept. of Homeland Services, 400,00; and in Veteran Affairs, 1,000 of the 43,000 probationary employees were fired.
And there is more to come in the coming days and weeks
Finally, there is Immigration, or the presence of illegal, or undocumented, immigrants to the US, like them, or not, they have contributed to greater employment in not only agriculture but construction, and manufacturing; and, while there is plenty of blame to be assigned, the fact remains that many local governments participated in the hiring of these workers, often flouting local and state laws that skirted existing federal laws against their hiring. And, their loss, through deportation, adds to the instability of a mostly strong American economy in the coming months.
Updated February 16, 2025 at 10:20 p.m. CST
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