February’s unemployment data was largely as expected, perhaps some hints of softening as for example a decline in the labor participation rate to a two-year low, but otherwise the data is largely in line.
However, the fast-moving events of recent weeks have not been captured in February’s data. The real test for how public spending cuts, federal layoffs and the impact of tariffs will become clearer in the months ahead.
The data indicated government payrolls, which have been a key driver of payrolls in recent years, “climbed at the weakest pace in nearly a year,” according to the BLS. Federal payrolls were down the most since June 2022, but the decline was “statistically insignificant.”
Some have noted job cuts from Disney, Amazon, Goldman are “exponentially higher” than what has thus occurred on the federal level.
As noted last week, some are expecting there could be a decline of 500,000 workers in the next year, the effect of federal jobs cuts which affect other parts of the economy.
At the time of this writing, the market is anticipating three quarter point Fed rate cuts over the seven remaining policy meetings this year. The odds of a May reduction are around 50%.
FRB Chair Powell reiterated Friday “We do not need to be in a hurry [to lower rates] and are well positioned to wait for greater clarity.” Powell also recognized the “elevated levels” of uncertainty, the economy continues to be in a “good place” further stating “it remains to be seen how these developments might affect future spending and investment.”
His remarks initially did little to move markets.
The volatility of change is incredible, almost masking massive losses in the Magnificent Seven. NVDA has dropped $1 trillion in two months, TSLA is down over $700 billion. The NASDAQ has dropped over 11% since its apex and according to Bloomberg. An investor who made equal investments into this index over the last fourteen months is now down.
The S & P 500 has violated the technically significant 200 day moving average line for the first time since October 2023.
Markets rebounded midafternoon, perhaps on the reconsideration of Powell’s remarks and a possible ceasefire in Ukraine.
The economic calendar is comprised of the JOLTs Jobs Data, the CPI and PPI and several sentiment indicators.
Last night the foreign markets were down. London was down 0.47%, Paris was down 0.50% and Frankfurt down 1.06%. China was down 0.19%, Japan up 0.38% and Hang Seng down 1.85%.
Dow and NASDAQ futures are off 1% and 1.50%, respectively, on tariff and economic fears. The 10-year is up 15/32 to yield 4.25%.
