US adds 151K jobs in February, missing expectations as DOGE uncertainty weighs on hiring
Mar 7, 2025
Key Points
- U.S. job creation slowed to 151,000 in February, missing consensus by 9,000 as uncertainty over Trump administration policy direction chills hiring among companies dependent on federal contracts and approvals.
- Federal government shed 6,700 jobs in February, the largest monthly decline in over two years, driven by a hiring freeze imposed January 20th rather than active layoffs.
- Bank of America data shows spending by Washington DC-area government workers has slowed noticeably as they brace for potential job losses, signaling the policy uncertainty is already reshaping consumer behavior.
Summary
The U.S. added 151,000 jobs in February, missing the consensus expectation of 160,000 and marking a slowdown from January's 125,000. Unemployment ticked up to 4.1 percent, above the expected 4.0 percent.
The federal government shed 6,700 jobs, the largest monthly decline in more than two years. Economists and Morgan Stanley attribute this to the hiring freeze Trump imposed on January 20th rather than active layoffs. The Postal Service separately lost 3,500 jobs, a normal monthly fluctuation. Because these cuts came late in the month, they likely won't show up fully in March data.
The deeper problem appears structural. Strategists at Evercore ISI worry that uncertainty over government contracts, grants, and regulatory approvals is paralyzing hiring at companies exposed to federal funding or dependent on agency sign-offs. When agencies themselves are frozen by DOGE reviews, decision-making cascades down to the private sector.
Bank of America data shows card spending by customers in the Washington DC metropolitan area has slowed noticeably as government workers brace for potential layoffs or job loss. The effects are already bleeding into consumer behavior.
Stock futures initially moved higher on the miss, betting on rate cuts, then reversed. The ambiguity reflects a genuine strategic puzzle. The administration has signaled it is not focused on cheap goods or stock market performance, which breaks a long political tradition of at least appearing to care about those benchmarks. The trade-off it's proposing is near-term pain through tariffs and job dislocation for promised long-term gains of 10 percent GDP growth and mass prosperity. But people struggling financially in the present don't experience promised future gains, creating a credibility gap that no economic statistic easily closes.
Payroll figures now mix traditional employment with contract work and gig labor. Door Dash workers, for instance, count as job additions. Without clarity on the composition of each month's additions, the headline number tells less than it once did.