As of March, the US labor market remained on solid footing: Job gains were broad-based and better than expected and participation picked up.
However, a lot has changed for the US economy — and the world — in the first few days of April. President Donald Trump levied sweeping and steep tariffs against American trading partners, a move that sent markets plunging and triggered a trade war.
“Liberation Day” and its aftermath were not reflected in the March jobs data released Friday. However, the employment snapshot provided a critical look as to how the labor market is holding up as Trump slashes federal spending (and jobs) and how it could weather increasingly turbulent times.
The US economy added a stronger-than-expected 228,000 jobs in March, a significant increase from February’s downwardly revised gains of 117,000, according to Bureau of Labor Statistics data released Friday. The robust gains notched in March were likely a rebound after wildfires and bad weather depressed job growth in January and February (which were revised down by a combined 48,000 jobs).
The unemployment rate in March ticked higher to 4.2% from 4.1%, driven higher in part by new entrants to the labor market.
Economists were expecting job growth to slow to 130,000 in March and for the unemployment rate to tick up to 4.2%, according to FactSet.
The March employment data is the “calm before the potential tariff-related storms,” Dana Peterson, chief economist at The Conference Board, told CNN in an interview. The tariff actions could trigger stagflation, where economic growth stagnates and inflation and unemployment rise, she said.
In that scenario, “prices are rising faster than [people] want; growth is weak; and there will be some layoffs that will follow the demand destruction that could happen from tariffs being implemented,” she said. “We don’t anticipate a recession, but you could certainly see weaker growth, higher inflation and a hit — either major or minor — to the labor market if these tariffs and also retaliatory tariffs on the US go forward.”
US stocks were battered by a sell-off Friday after China retaliated against the United States for Trump’s tariffs in a tit-for-tat that escalates a global trade war. US stocks futures were off their morning lows ahead of the jobs report but ticked lower as investors digested the data.
The Dow was lower by 1,450 points, or 3.6%. The broader S&P 500 was 4.1% lower. The tech-heavy Nasdaq Composite was 4.1% lower.
