Stats and Fury, Signifying (Almost) Nothing

This was not the jobs report you’re looking for

OK, I ordinarily don’t step on my daily post with a second item. But I thought readers might want to know what I think about this morning’s jobs report.

My answer is this: nothing.

For what it’s worth, the numbers were OK. Slightly weaker than consensus projections, but well within the range of normal statistical noise. In February the U.S. economy was still chugging along, with solid job growth and low unemployment.

But the first thing you should know is what “in February” means. We’re not looking at a snapshot of the job market on Feb. 28. The Bureau of Labor Statistics asks employers to report payroll for “the pay period that includes the 12^th of the month.” Pay periods could be monthly, biweekly or weekly, but in any case we’re probably getting a picture of the employment situation in the first half of February.

This means in turn that Donald Trump had only been in office a few weeks. There hadn’t been time for him even to take significant policy actions, let alone for the economy to feel the effects of these actions. Basically, we’re still looking at the Biden economy, which was, whatever Trump may say, doing fine.

It’s true that expectations about future policy can move the economy, so some thing began happening as soon as Trump won the election. Most notably, there has been a surge in imports as companies race to get stuff into America ahead of Trump’s tariffs, or possible tariffs, or whatever is going on in his mind.

But these were for the most part durable items that could be and have been stored. So as I understand it, the import surge should be roughly matched by a surge in inventories. And this in turn means that there won’t be much effect on GDP: higher imports reduce measured GDP, but inventory accumulation increases it, so the overall effect should be more or less a wash.

There are many reasons to believe that the numbers will start to look considerably worse over the next few months. The threat of tariffs has shaken consumer confidence. DOGE layoffs and cancellations of contracts may exert a significant drag. And the erratic nature of Trump’s policies — huge tariffs, oh never mind, oh they’re back, oh never mind again — has to weigh on business investment. Should you invest in Mexican production, or spend money to bring it to the United States? Either way you may find that you’ve wasted a lot of money, so best to just sit on cash and wait for clarity.

But that’s all for the future. No amount of squinting at the current numbers will tell you what’s going to happen.