What it means…for Trump

Friday’s report indicates that the labor market is slowing down, which would threaten the political prospects of the GOP, which has already been dragged down by President Donald Trump’s poor economic approval ratings. 

Up until February, there had been two major reasons to think that the underlying health of the economy was better than it would seem at first blush. 

The first is that private-sector employment had been relatively resilient. Overall job losses have been weak in part because of cuts to federal employment implemented by the Trump administration. In February, though, private-sector payrolls dipped by 86,000.

The second is that some of the slowdown in hiring was attributable to Trump’s immigration policies, which have massively slowed migration into the country.

The underlying reality

Friday’s report shows that the labor market is heading in the wrong direction to start 2026.

It is helpful to look at the overall trend for the labor market. With revisions to the numbers for December and January, the three-month moving average of job gains was just 6,000 in February. 

That is well short of the roughly 114,000 new payroll jobs needed each month to keep unemployment from rising – the “breakeven rate” of job growth – according to one estimate from the Federal Reserve Bank of Atlanta. 

But that figure is highly uncertain, thanks to the Trump administration’s crackdown on illegal immigration. The breakeven rate might be closer to zero if net migration has stalled, and it might even be negative if more people are leaving the country than entering. 

Prime-age employment, relative to the overall population, is strong by historical standards. It dropped just a tenth of a percentage point in February.

Recession watch

The unemployment rate, taken from the jobs report’s household survey, is still low by historical standards, although it has been drifting upward. It rose a tenth of a percentage point to 4.4% in February.

Recessions entail a rising unemployment rate.

Friday’s data suggests that the U.S. labor market is moving away from triggering one major recession indicator — namely, when the three-month moving average of the unemployment rate rises half a percentage point relative to its minimum point over the past year. This indicator, known as the Sahm Rule, had signaled the start of all post-war recessions.

The indicator had been triggered in mid-2024, but is not signaling a recession right now.

This is a developing story and will be updated.