WASHINGTON — The U.S. economy lost 92,000 jobs in February and the unemployment rate rose to 4.4%, an unexpected setback that added to concerns about a cooling labor market after economists had forecast continued job growth, March 6. The weak report also complicated the outlook for the Federal Reserve as rising oil prices tied to conflict involving Iran threatened to keep inflation elevated even as hiring slowed.
The Labor Department said total nonfarm payroll employment edged lower after January job growth was revised down to 126,000. December’s total was also revised sharply lower, from a gain of 48,000 to a loss of 17,000, leaving employment in December and January combined 69,000 below previous estimates.
Health care, usually one of the economy’s steadiest sources of hiring, lost 28,000 jobs in February, largely because of strike activity. Information employment fell by 11,000, while federal government payrolls declined by 10,000. Since peaking in October 2024, federal employment has fallen by 330,000 jobs, or 11%.
The report rattled financial markets and intensified political pressure on President Donald Trump, who campaigned on improving economic conditions. Democrats quickly seized on the figures, with Sen. Elizabeth Warren saying the administration was “tanking the job market.” Wall Street stocks fell after the data was released.
Economists said the report undercut the view that the labor market had begun to stabilize. Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, said, “The idea the labor market has turned a corner implodes with this report.”
White House officials sought to downplay the numbers. Kevin Hassett, director of the National Economic Council, said continued economic activity would support hiring, saying, “There will be so much activity that everybody is going to be able to find a job that wants one.”
The data now leave the Fed facing competing risks. A softer job market would normally strengthen the case for cutting interest rates, but higher energy prices could feed inflation and make policymakers more cautious. Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management, said, “Today’s numbers may have put the Fed between a rock and a hard place.”