When the Bureau of Labor Statistics released its February Jobs Report at 8:30 this morning, most everyone was pleased. Or, at least, relieved. Certainly, there was no dancing in the streets, but 151,000 new jobs and a 4.1% unemployment rate (up from 4.0%) are good news, right? What with all those DOGE firings and layoffs, it could have been a lot worse, right?
Well, kinda’. But when you take a closer and more professional look, especially beneath the surface, you see things the untrained eye might not see. It’s like going for an MRI of your abdomen and the doctor saying it’s nothing … but… we found a spot on your lung we don’t like.
There are a few of those spots I don’t like, and that’s what I want to point out today.
Over the last four years, the one adjective I used most frequently about the best job market in history was ‘harmonious’ – all the parts working in sync, like an efficient machine. I can’t in good faith, do that now. But first, keep in mind that the big DOGE shakeups either don’t seem to be reflected in February’s stats (much of the data is collected earlier in the month) or have been pushed back by the courts and we really don’t know what the numbers are in the first place. Mostly, the latter is real for now and this will all come out in March’s and April’s wash. In the meantime, here’s what’s going on.
The Job Market at a Glance
The civilian labor force (those who are looking for work) shrank by 385,000 while the ranks of the civilian noninstitutional population rose by 162,000. Usually, you’d want to see them headed in the same direction.
Employed and Unemployed
Meanwhile, the ranks of the unemployed swelled by 203,000 while the employment-population ratio dropped by 0.2% (61.1% to 59.9%). Eye-opening is the drop of 508,000 from the ranks of the employed.
Job Creation
More granularly, fewer labor sectors than usual reported job gains. Health care, financial services, transportation and warehousing, and social assistance all gained; all others either lost or held. Of them, the one of interest is the government sector, which reported a loss of only 10,000 jobs, In light of DOGE’s blitzkriegs in the VA and the IRS alone, which could have totaled 170,000 jobs. We have an idea why the February report was not worse. Millions of government jobs – plus private sector jobs dependent on government contracts – are not safe and could be a big story in the ensuing months.
Suffice to say, it is not a harmonious market – and it took only a month to happen.
Wages Still Rising
One more thing to watch is wages. Over the previous 12 months, wages rose 4.0%, but in February, that dipped to an annualized 3.6%. That could be merely an outlier, but I’m watching.
All in all, not a disaster. Yet.