Analysis of Topline Figures in the April BLS Report
The economy added 228,000 jobs in March, while the unemployment rate increased to 4.2%. In the midst of a brewing trade war and talks of a potential recession, the job gains caught forecasters off guard. We should note that the reference period for the establishment survey ended on March 12th, meaning the effects of the latest tariff announcements and stock market meltdown were not factored into this latest jobs report.
The sectors with the largest gains were healthcare (+54,000), retail trade (+24,000) and transportation/warehousing (+23,000). The federal government lost 4,000 jobs amidst a massive purge of federal workers. Job gains from January and February of this year were revised down by 48,000.
While the labor metrics for minority communities are prone to fluctuate wildly from month to month, the 3-month moving average of the Black unemployment rate has remained above 6% throughout the end of 2024, with this trend continuing into March of this year. Similarly, the 3-month moving average for Hispanic workers has remained above 5% for 2025.
The Trade War Intensifies
On April 2nd, President Trump announced sweeping tariffs on 57 countries ranging from 10% to 50%. After a turbulent trading day that saw the US 10-year Treasury yield jump precipitously—a sign that investors were growing concerned about the dollar’s safe-haven status—President Trump delayed most of these tariffs for 90 days and placed a universal 10% tariff on the previously targeted countries. He simultaneously increased the effective tariff rate on Chinese imports to a whopping 145% after Beijing slapped counter-tariffs on US exports the night before.
Despite assurances from the President, there seems to be a universal consensus among economists that across-the-board tariffs are a bad policy choice because they are regressive, inflationary and add undue uncertainty to the economy. The annual cost to the average American family from the new tariff regime could be $4,700, effectively becoming an invisible tax that will far exceed its total savings for many households.
Foreign Affairs reports that China can escalate this trade war in a way that Washington would be unable to replicate. This is because China produces a range of consumer goods, such as pharmaceutical drugs and simple computer chips for cars, that the United States either can not produce domestically or or can’t easily replace. Although the Trump Administration is highly unpredictable and the majority of the April 2nd tariffs are on pause, it is worth considering their effects on households.
The most prescient effect of the tariffs for households will be how they might affect the price of consumer goods. An analysis from the Yale Budget Lab found that all of the tariffs announced thus far, including the revised April 9th measures, could cost households at the bottom of the income distribution $2,100 more in their yearly consumer spending. Car prices could rise by 12% and apparel prices by a staggering 64%. These estimates only include retaliation announcements made by China and Canada, meaning the effects could be significantly worse if the trade war intensifies.
Are We Entering a Recession?
While the topline figures for the April BLS report exceeded expectations, they haven’t stifled chatter about a potential recession. Much of the talk derives from policy decisions coming from the White House, especially the recent tariff pronouncements. We can look for clues in various economic data points to gauge whether a recession is imminent.
For instance, the manufacturing industry’s production outlook is deteriorating. The closely watched ISM Manufacturing Index fell from 50.3 to 49 after two consecutive months of expansion. This resulted from a near across-the-board contraction in key metrics, including in new orders, production, employment, supplier deliveries and exports.
Additionally, the Prices Index surged 7 percentage points to its highest level since the summer of 2022. Prices are expected to continue increasing as the tariffs hit producers along the supply chain. The second worrying sign for the US economy was the decline in household spending at food and drink establishments by 1.5% in February. Luxuries like eating out are some of the first things to be cut when households start to face financial trouble.
Fueled by inflation concerns, the University of Michigan’s consumer sentiment index dropped by nearly 12% in March as households across party lines and income groups worried about the potential effects of the White House’s economic policies. Perhaps most shockingly, the percentage of households expecting higher unemployment rates over the next year shot up to its highest level since 2009.
The Wall Street Journal reported on various alternative “higher frequency measures” indicating emerging weakness in the economy. They include a decline in visitor traffic and occupancy rates at Las Vegas hotels, rising weekly bankruptcy filings, declining weekly movie theatre visits, slowing daily jobs postings, softening daily traffic at US airports and increasing continuing jobless claims as key indicators.
Other worrying trends include an expected decline in international travel into the United States, lower rates of immigration putting downward pressure on job gains in the coming months and the end of student loan forbearance programs straining household spending.
The combination of inflation, rising unemployment and declining job growth is known as stagflation. Possibly worse than a recession, stagflation is devastating because the traditional tools used to fight inflation or boost economic growth can be counterproductive. For example, central banks typically raise interest rates to stem inflation, but that could lower investment and hence slow economic growth. To that point, the aforementioned consumer sentiment report found that households are worried about both rising joblessness and inflation.
All of these observations taken together make a strong case for the fact that the economy faces intensifying headwinds as we move into the spring and summer months. Consumers could be hammered by rising prices and a deteriorating labor market in what is typically a strong season for spending. The president places his bets on the possibility of a realignment of the global economy making up for the temporary economic pain from the tariffs. Will Trump’s gamble deliver a massive payoff for Americans or will the economy call his bluff?
Joseph Dean is the Jr. Racial Economic Research Specialist with NCRC’s Research team.
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