In February 2025, the U.S. economy added 151,000 jobs, a figure slightly below economists’ expectations of 170,000. This marks an improvement from January’s revised addition of 125,000 jobs. However, the unemployment rate inched up to 4.1% from the previous month’s 4%.
Sector-Specific Job Changes
The healthcare sector led job growth, contributing 52,000 new positions. Transportation and warehousing also saw gains, adding 18,000 jobs. In contrast, the retail sector experienced a loss of 6,000 jobs, while leisure and hospitality shed 16,000 positions.
Government Employment Trends
Federal government employment decreased by 10,000 jobs in February. This decline aligns with the administration’s efforts to reduce the federal workforce, led by the Department of Government Efficiency under Elon Musk. Conversely, state and local government employment increased by 21,000 jobs, indicating a shift in public sector employment dynamics.
Wage Growth and Consumer Confidence
Average hourly earnings rose by 0.3% from January, culminating in a 4% year-over-year increase. Despite this wage growth, consumer confidence has declined, reflecting public concerns over economic stability amid federal layoffs and trade policy uncertainties.
Impact of Federal Layoffs
The federal government has implemented significant workforce reductions across various agencies. Notably, the Department of Health and Human Services terminated approximately 5,200 probationary employees, including 1,300 from the Centers for Disease Control and Prevention. The Internal Revenue Service initiated layoffs affecting around 7,000 employees, raising concerns about potential delays in tax return processing during the peak filing season.
These layoffs extend to other agencies as well. The Department of the Interior reduced its workforce by approximately 2,300 positions, impacting the National Park Service and the Bureau of Land Management. The Environmental Protection Agency also saw a reduction of 388 employees.
Trade Policies and Economic Outlook
The administration’s recent tariff implementations targeting Mexico, Canada, and China have introduced uncertainties in the economic landscape. These trade policies, coupled with federal spending cuts, have led economists to lower GDP growth estimates, with some predicting potential contractions due to decreased consumer spending and increased trade deficits.
Market Reactions
Financial markets have responded to these developments with increased volatility. The U.S. dollar has struggled, nearing a four-month low amid growth concerns and shifting trade policies. Investors are closely monitoring upcoming economic data releases and Federal Reserve communications to assess the economy’s resilience in this uncertain environment.
In summary, February’s jobs report presents a mixed picture of the U.S. labor market. While certain sectors continue to exhibit job growth, the broader economic outlook is tempered by federal workforce reductions and trade policy uncertainties. These factors collectively contribute to a cautious economic sentiment as stakeholders navigate the evolving landscape.