WASHINGTON — The economy added jobs in March, leaving unemployment relatively steady at 4.2% as financial markets continue to digest the Trump administration's tariff announcement from earlier in the week.
Total nonfarm payroll employment rose by 228,000 last month, and the unemployment rate rose from February's 4.1%, the U.S. Bureau of Labor Statistics reported Friday. Private payroll firm ADP said Wednesday that 155,000 new jobs were added to the economy in March.
Job gains occurred in health care, in social assistance, and in transportation and warehousing. Employment also increased in retail trade, partially reflecting the return of workers from a strike.
The bureau said federal government employment declined by 4,000 jobs in March after losing 11,000 jobs in February.
The bureau said the economy added 151,000 jobs in February after modestly revising its December and January figures downward by about 2,000 jobs.
The March jobs report comes as financial markets continue to fall in response to the Trump administration's aggressive trade initiative unveiled Wednesday, which would apply a 10% tariff on all imports and significantly higher levies on specific countries, including China, India and countries in southeast Asia. Bank stocks were particularly hard-hit, with the KBW Nasdaq Bank index falling 9.8% in Thursday trading. The index is down 12% year to date.
The unexpectedly robust jobs market poses a quandary for the Federal Reserve as it considers whether and when to lower interest rates. Late last year, the central bank had penciled in three interest rate cuts for 2025 on the expectation that inflation would continue to cool, but the Trump administration's immigration and trade policies have presented potent inflationary pressures into the economy.
During a press conference last month following the Federal Open Market Committee's decision to maintain its interest rate range between 4.25% and 4.5%, Fed Chair Jerome Powell emphasized that the central bank is not on a "
Federal Reserve Gov. Adriana Kugler said in a speech Wednesday that "the recent lack of progress on inflation, recent increases in inflation expectations, and upside risks associated with announced and prospective policy changes" led her to vote to keep interest rates unchanged. She said she would prefer to maintain the status quo "for as long as these upside risks to inflation continue."
Federal Reserve Vice Chair Philip Jefferson struck a different tone in a speech Thursday, saying the U.S. economy has thus far been propelled through choppy global economic seas by strong consumer demand, and that despite some softening of consumer sentiment in recent months, he is confident that consumers will continue to spend.
"If uncertainty persists or worsens, economic activity may be constrained," Jefferson said. "An important lesson learned in recent years, however, is that American consumers have been resilient, and negative sentiment reported in surveys often does not translate into a slowdown in actual activity."
Jefferson said the labor market has also remained robust despite a softening of unemployment figures in recent months. He noted that while new hires have slowed, layoffs have remained relatively low. The open question, he said, is what impacts the president's efforts to cut the federal workforce and federal support for things like research and international development would have on the labor market, and thus on the Fed's interest rate trajectory.
"Low layoffs are a reason why the unemployment rate has been steady even as hiring has moderated," Jefferson said. "Recently, there has been an increase in former federal government employees seeking unemployment benefits and some uptick in claims filings in certain regions affected by those layoffs. I will be monitoring incoming data closely and remain vigilant about potential spillover effects in sectors such as education, health care, and state governments."
