Dante DeAntonio, Senior Director of Economic Research at Moody's Analytics, shares his insights on the February jobs report and the fragility of the labor market. The discussion uncovers how federal workforce cuts and inconsistent tariffs could impact the economy. They delve into rising unemployment rates and the effects of demographic shifts on labor participation. Dante also highlights his success in the stats game while the hosts reassess their recession probabilities, illuminating current economic uncertainties with engaging banter.
February job growth of 151,000 primarily stemmed from healthcare, indicating a troubling concentration in fewer sectors contributing to employment gains.
Wage growth has slowed to around 4% annually, reflecting stagnant economic momentum and raising concerns about the overall health of the labor market.
Federal employment cuts, estimated at 400,000 jobs, may have long-term implications for labor force growth and economic conditions amid ongoing trade uncertainties.
Deep dives
Current Job Growth Trends
Job growth in February showed an increase of 151,000, primarily driven by the private sector. However, this growth has been concentrated mainly in healthcare, while other sectors such as leisure and hospitality have begun to decline. This pattern indicates a troubling shift in job creation, suggesting that fewer industries are contributing to growth. The report highlights the potential vulnerability of the labor market as fewer sectors participate in ongoing job gains.
Stagnant Wages and Hours
Wage growth has returned to normal levels, with an increase of around 4% on a yearly basis. However, monthly increases have slowed down, and average weekly hours remain at historic lows, which raises concerns about the overall labor market. This stagnation in wages, combined with reduced hours, reflects a lack of robust economic momentum. Observers note that urging caution is crucial, as these stagnant indicators could lead to broader economic challenges.
Concerns Over Household Employment Data
Household employment data presented a more concerning picture, with the unemployment rate rising to 4.1%. Significant declines were observed in household survey employment and labor force participation rates, suggesting more individuals are leaving the labor market altogether. This deterioration raises alarms about the overall health of the economy moving forward. Experts highlight this household segment as a critical area of concern that requires closer monitoring.
Federal Government Cuts Impact
Recent shifts in federal employment indicate potential job losses, with estimates suggesting around 400,000 jobs may be affected due to attrition and program changes. Most recent reports suggest that many of these cuts stem from voluntary resignations rather than immediate layoffs. This impending reduction in federal employment may lead to longer-term consequences for labor force growth and economic conditions. Analysts stress the need for vigilance regarding the fiscal implications of these federal cuts.
Impact of Trade Wars on Economic Stability
The ongoing tariff and trade wars are introducing significant uncertainty into the U.S. economy, impacting consumer and business confidence. Businesses are hesitating to make long-term investments, waiting for clarity on trade policies that can change daily. This lack of predictability is leading to a cautious stance among employers, potentially stalling job growth and contributing to recession risks. As tensions escalate, the implications of these trade policies on economic health remain a pressing concern.
Moody’s Analytics colleague, Dante DeAntonio joins the podcast to discuss the February jobs report, and the team shares their angst about potential cracks in the labor market. The conversation then turns to the potential impact of DOGE cuts to the federal workforce and the economic implications of the on-again, off-again tariffs that has developed in recent weeks. Finally, Dante celebrates his clean sweep in the stats game and Mark and Cris revise their recession probabilities.
Guest: Dante DeAntonio, Senior Director of Economic Research, Moody's Analytics
Hosts: Mark Zandi – Chief Economist, Moody’s Analytics, Cris deRitis – Deputy Chief Economist, Moody’s Analytics, and Marisa DiNatale – Senior Director - Head of Global Forecasting, Moody’s Analytics
Follow Mark Zandi on 'X', BlueSky or LinkedIn @MarkZandi, Cris deRitis on LinkedIn, and Marisa DiNatale on LinkedIn
Questions or Comments, please email us at helpeconomy@moodys.com. We would love to hear from you.
To stay informed and follow the insights of Moody's Analytics economists, visit Economic View.
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