In recent weeks, there have been massive disruptions on the labor market with the administration of President Donald Trump who has moved to freeze federal aid and dismiss tens of thousands of federal workers. It is aware of a wave of decrees, threats of commercial wars, at the start of mass deportations and market volatility.
But Friday, the Labor statistics office Published what investors and market observers considered a “positive” job report for January. This disconnection makes me scratch my head.
An explanation is that the economic data is behind: Friday’s report reflects the state of the labor market in January, before the start of relative chaos. Even so I expected hundreds of thousands Californians ask for unemployment benefits.
Instead, the most Recent labor data shows low and regular unemployment, clogging 4%. In addition, employment growth is still changing at a healthy pace.
Maybe the official work data is not a reliable narrator of what is really going on, nor what will happen.
Lisa Countryman-QuirozCEO of JVS Bay Area, a non-profit organization for the development of the workforce, said that there was no doubt that the actions of the new administration would cause instability to workers and employers, with consequences that will repercussions in the industries in 2025.
A potentially volatile labor market
The labor market indicators paint a broad film and reflect past trends, but they do not precisely reflect the economic realities of different areas, populations or industries.
As a person who writes on the relationship between work data, the housing market and the federal reserve, I was not surprised to see the economists turn positively on Friday’s work report. Information has declared that the economy is “resilient” and “strong” and that the labor market “could not be better”.
However, ask your average person to find a stable and well paid job, and you will probably get a very different answer. In 2024, data from the Patre labor market Eight months and 294 requests to get a job.
It is not an exaggeration to say that the economy has the impression of being in free fall. The order of the State Department for a 90 -day break on foreign aidDefended by Elon Musk, left many government entrepreneurs and world agencies who find it difficult to operate or even pay their workers. In the meantime, some 65,000 Federal workers have accepted a resignation offer in exchange for salary until September 30. The White House said she hoped that up to 200,000 workers to participate redemptionwhich has recently been temporarily suspended by a federal judge.
In addition, Trump takes aggressive measures to increase the expulsion of undocumented immigrants, who almost make up 1 workers out of 20With an even greater representation in construction, agriculture and hospitality. The forced suppression of the workers’ masses, which contribute to billions of dollars in state and federal taxes, could cause low-wage jobs, higher labor costs, disturbances of the chain supply and increase in inflation.
“The president has changed political instructions several times,” said Gene Ludwig, a former currency controller and founder of the Ludwig Institute for Shared Economic Prosperity.
“It is too early to assess the net effect of its employment policies,” Ludwig told me in an email.
Interest rate drops will not come until later
Economic data, such as Friday’s employment report, also affects the main monetary decisions, such as adjustment of interest rates. The federal reserve must find a balance between inflation and unemployment, and it examines official statistics to determine its next decision.
First, the central bank wants to see inflation slow down before reducing interest rates again. But that does not seem likely to soon, given the threat of prices, which should increase prices.
Second, the Fed is looking for signs of weakness on the labor market. Although the FED does not want unemployment levels to plunge at recession levels, a “healthy” labor market indicates to the Central Bank that the economy can allow high borrowing rates.
The dimensions were already low So that the Fed reduces interest rates at its next meeting in March. But now it is even clearer than the central bank will delay rate drops until May or June at the earliest. He could take months to obtain a clear image of how administration policies will affect the job market, consumer prices and the cost of the loan.
“Any indicator which shows an economic slowdown would increase the chances of a drop in rates, in particular the increase in unemployment,” said Greg HeymChief economist of Brown Harris Stevens.
In the meantime, we will simply have to be satisfied with different definitions of what constitutes a positive relationship on jobs.
“A solid labor market is based on the expansion of opportunities for job seekers, not restricting them,” said Countryman-Quiroz.
