In February of 2025, the U.S. unemployment rate picked up slightly to 4.1% from 4.0% in January, making it the first month of increases in several months. In the month, employment rose by 151,000 jobs, below the 170,000 economists had expected to add.
The increase in unemployment and slower job growth can be attributed in part to escalating trade tensions and recent federal workforce reductions. DOGE has made deep cuts, and thus there were the most jobs lost in any single month since July 2020. These reductions along with cancelled government contracts and fear of potential trade wars have created economic uncertainty.
Nevertheless, the labor market has been strong. Unemployment rate has been hovering between 4.0% and 4.2% since May 2024, which shows stability. However, unending trade conflicts and policy alterations may pose threats to employment growth in the future.
These developments are being watched closely by investors, especially in light of upcoming economic statistics and policy decisions. Federal Reserve Chairman Jerome Powell is due to speak later today, and his remarks are expected to give the central bank’s view of the economy and its possible policy responses. Thus, market participants pay close attention of how trade policies and actions of the government will affect the economy in the next few months.
