The labor market is suffering, but today’s job data is seen only peaches

In recent weeks, there has been a massive interruption in the labor market with the administration of President Donald Trump who moved to freeze federal aid and fire tens of thousands of federal workers. That is in addition to a large number of executive orders, threats of commercial wars, the beginning of mass deportations and stock market volatility.

But on Friday, the Labor Statistics Office He launched what investors and market observers considered a “positive” job report for January. That disconnection makes my head scratch.

An explanation is that economic data is the other way around: Friday’s report reflects the state of the labor market in January, before the relative chaos began. Even so, I expected that at least there was some impact of the destructive forest fires of Los Angeles, who saw hundreds of thousands of the Californians request unemployment benefits.

Instead, the most Recent labor data It shows low and stable unemployment, with 4%. In addition, employment growth is still moving at a healthy pace.

Perhaps official work data is not a reliable narrator of what is really happening, or what will come.

Lisa Countryman -irozCEO of JVS Bay Area, a non -profit organization for the development of the workforce, said there is no doubt that the actions of the new administration will cause instability for both workers and employers, with consequences that will extend between the Industries in 2025.

A potentially volatile labor market

The labor market indicators paint a wide image and reflect past trends, but do not precisely reflect the economic realities of different areas, populations or industries.

As someone who writes about the relationship between labor data, the real estate market and the Federal Reserve, I was not surprised to see economists positively turn the labor report on Friday. News reports decreed that the economy is “resistant” and “strong” and that the labor market “could not be better.”

However, ask your average person about finding a stable and well -paid job, and you are likely to get a very different response. In 2024, Pathrise labor market data shows that employment applicants brought him an average of eight months and 294 applications to get a job.

It is not an exaggeration to say that the economy feels that it is in free fall. The order of the State Department for an immediate 90 -day pause in foreign aidDefending by Elon Musk, he has left many government contractors and world agencies fighting for operating or even paying their workers. Meanwhile, some 65,000 Federal workers have accepted an offer to resign in exchange for payment until September 30. The White House has said that she hopes that up to 200,000 workers participate in the buyswhich was recently temporarily suspended by a federal judge.

In addition, Trump is taking aggressive measures to increase the deportation of undocumented immigrants, which are almost 1 in 20 workerswith an even greater representation in construction, agriculture and hospitality. Forced elimination of workers’ masses, which contribute billions of dollars in state and federal taxes, could lead to low -salaries employment vacancies, higher labor costs, supply chain interruptions and greater inflation.

“The president has changed the policy instructions several times,” said Gene Ludwig, a former currency comptroller and founder of the Ludwig Institute for shared economic prosperity.

“It is too early to evaluate the net effect of its employment policies,” Ludwig told me in an email.

Interest rate cuts will not occur until later

Economic data, such as Friday’s work report, also affect the main monetary decisions, such as adjusting interest rates. The Federal Reserve needs to achieve a balance between inflation and unemployment, and examines official statistics to determine its next movement.

First, the Central Bank wants to see the speed of inflation before reducing interest rates again. But that does not seem likely in the short term, given the threat of tariffs, which prices are expected to increase.

Second, the Fed is looking for signs of weakness in the labor market. Although Fed does not want unemployment levels to submerge at recession levels, a “healthy” labor market tells the Central Bank that the economy can pay high indebted rates.

The probabilities were Already low so that the FED reduces interest rates at its next meeting in March. But now it is even clearer that the Central Bank will delay rates cuts until May or June as very soon. It could take months to obtain a clear idea of ​​how administration policies will affect the labor market, consumer prices and the cost of loans.

“Any indicator that shows a deceleration economy would increase the possibilities of a rate cut, especially the increase in unemployment,” he said Greg HeymBrown Harris Stevens chief economist.

Meanwhile, we will only have to settle for different definitions of what constitutes a positive job report.

“A strong labor market is based on the expansion of opportunities for employment applicants, not restricting them,” said Countryman -irz.