While everyone was focused on the tariffs and the stock market, the March jobs report came out. It provided some good news, along with a workforce participation rate that increased slightly in March. If the work requirements are passed on food stamps and medicaid, I suspect that the workforce participation rate will increase rapidly.
On Friday, Zero Hedge reported:
After today’s shocking retaliation by China, which hiked tariffs on US goods by 34%, the jobs report was an afterthought. To be honest, it would have been an asymmetric afterhought any way, as any upside would have been viewed as stale and not reflecting the new tariff reality, while any miss would have cemented the recession case. And while the market is certainly far more focused on the ongoing trade war, in the end, the March jobs report ended up being far stronger than expected, as the US added a whopping 228K jobs, the highest since December and more than double the 117K in February (revised lower from 151K)…
…The change in total nonfarm payroll employment for January was revised down by 14,000, from +125,000 to +111,000, and the change for February was revised down by 34,000, from +151,000 to +117,000. With these revisions, employment in January and February combined is 48,000 lower than previously reported.
The article concludes:
Commenting on the numbers, Trump posted on Truth Social that job numbers were “far better than expected” and that “it’s already working.”
Trump’s tweet suggests that contrary to some expectations, the president isn’t actually looking to throw the economy in a recession, but will push to keep it from crashing while he is playing the great game of trade war chicken with China and the rest of the world, which makes lives for traders more difficult as it means the Fed will have to make decisions on a tweet by tweet basis, which will be problematic.
Meanwhile, others disagreed: here is Seema Shah from Ptincipal Asset Management who encapsulates prevailing sentiment well:
“Everyone knows that economic weakness is coming, but at least we can be reassured that the labor market was robust coming into this policy-driven shock and therefore, the slowdown should not be overly steep. Next month is when hard data is likely to start showing signs of what soft data has already been signalling. From the Fed’s perspective, today’s payrolls number will not prevent them from future policy rate cuts – they know that this is just a moment of calm before the storm hits.”
Gregory Faranello, strategist at AmeriVet Securities, explained why today’s jobs report was largely ignored: “it’s all about the forward outlook around tariffs and the ensuing impact on global demand. You would never have thought to see yields performing this way with a jobs report like this.”
Ed Al-Hussainy, rates strategist at Columbia Threadneedle Investment, says “the market is betting that recession risks and the tightening of financial conditions will force the Fed to cut aggressively” now up to 100bp this year and rising.
As for Powell’s speech later this morning, Al-Hussainy says: “If we get any pushback against this from Powell & Co., front end rates may end up offside.”
But perhaps the best wrap of today’s jobs report, however, was from Omair Sharif, Inflation Insights: “Someone forgot there was a recession coming.”
President Trump has been in office less than three months. Are they planning to blame him for a recession? Why are some economists so focused on recession? Is this focus on recession political or economic?