US economy added 151K jobs in February amid warnings of weak springtime labor market

The labor market picked up 151,000 jobs in February, a solid pace, despite a massive layoff among federal workers that began to show up in the data.

The unemployment rate ticked up to 4.1%, extending low levels that have marked the past year.

Federal government payrolls lost 10,000 jobs in February.

The jobs report data was collected the second week of February, when Elon Musk’s Department of Government Efficiency, or DOGE, was beginning to cut agency workforces. Also, in early February, some federal contracts and grants had been frozen or cut, due to executive orders, which led to private sector layoffs among government contractors and nonprofits.

“The jobs market has still been holding up pretty well,” said Sarah House, a senior economist at Wells Fargo. “But the outlook is deteriorating. And we’re looking at slower growth ahead after a pretty remarkable run for the U.S. economy over the past two or three years.”

In recent months, steady job creation, low unemployment levels and sparse layoffs have bolstered the view that the labor market remains on firm ground, despite cooling over 2023 and 2024. New filings for unemployment insurance fell nationally last week, according to Labor Department data released Thursday.

But a confluence of factors are sinking consumer confidence, with economists predicting a weaker labor market this spring. Some of the Trump administration’s policies—including sweeping new tariffs on China, Mexico and Canada, the ongoing work of the U.S. DOGE Service’s efforts to shrink the federal government, and a federal grants freeze—are expected to weigh on the economy, spooking employers into laying off workers.

Meanwhile, consumer sentiment has nosedived, and February saw the biggest drop-off in consumer spending since February 2021.

“We’re getting a policy mix that I think is going to be much more constrictive on the labor market. You’re pulling a lot of levers on the economy and on the labor market all at once,” said Guy Berger, director of economic research at the Burning Glass Institute. “But a lot of policies are floating around and could change.”

Given the uncertainty, Federal Reserve policymakers have hit pause on interest rate cuts, as they wait to see how the economy, which had been growing at a steady pace, will fare under economic policies pursued by the Trump administration.

The Labor Department has not released federal layoff data since January, but there are signs that layoffs have picked up. U.S. employers announced plans to cut 172,017 jobs in February, a 245% increase from the month before, according to a report released Thursday by the outplacement firm Challenger, Gray & Christmas.

Andrew Challenger, a senior vice president for the firm, said in a statement accompanying the report that job cuts soared because of “the impact of the Department of Government Efficiency … actions, as well as canceled Government contracts, fear of trade wars, and bankruptcies.”

Job gains over the past year have been powered by a handful of service-related sectors, such as health care, government, leisure and hospitality, and social assistance. That masked the increasing difficulty workers faced finding jobs, especially in white-collar and remote settings. Employers are hiring at the lowest levels since 2014, excluding the pandemic, according to Labor Department data from January.

“If you are looking for a job, it hasn’t been great or even, frankly, good,” said Berger, the Burning Glass Institute economist. “It’s not as bad as it would have been in 2009, 2010. But it’s a challenging environment.”

Naomi Harding, 28, of Phoenix, lost her remote sales job in December. Since then, she has applied for hundreds of remote jobs, which are her only option because she can’t afford child care for her special-needs daughter. She has received interview callbacks from three employers, none of which have worked out.

In the meantime, she has been delivering food on UberEats. Relying mostly on her husband’s salary, the couple have been coming up short each month as they try to pay for rent on their $1,700-a-month two-bedroom apartment, groceries, gas and debt payments.

“It kind of sucks to find a job right now,” said Harding, who did not go to college, which she feels hurts her chances for remote positions. “I’ve applied for everything.”

As the Trump administration’s tariffs roll out, layoffs are also expected to hit companies that rely on imported goods, especially high-end manufacturing such as automobiles. Meanwhile, industries that do not rely on imports, such as those that use certain raw materials, could expand.

Federal government employers, contractors and those whose jobs rely on federal grants—including in foreign aid, military defense and higher education—are also expected to continue to lose work. That could have a spillover effect on local economies such as the D.C. metro area, where many such workers are employed.