Feb jobs losses regresses us back to 2025's stagnant job market

If you thought January’s six-figure gain in jobs was the sign of a rebound for the economy in 2026 (something I told you to be cautious about at the time), you got slapped into a rough reality with the jobs report for February.

The US economy lost 92,000 jobs in February, Labor Department data released Friday showed, sharply missing economists' expectations and stalling the nascent hiring growth that started the year.

The unemployment rate edged up to 4.4%, while the share of people who have been without work for 27 weeks or more as a percentage of all unemployed hit 25.3%.

Economists surveyed by Bloomberg had anticipated 55,000 new positions after January's surprise print of 130,000 payrolls. Those gains were also revised lower by 4,000 positions, while December's previously reported addition of 48,000 jobs was updated to a loss of 17,000 — a combined culling of 69,000 roles from the last two employment reports.

It was especially shocking to see one sector in particular have a negative number in this report.

Healthcare, the one sector that has been gaining amid otherwise stagnant job growth, saw job losses of 28,000 in February amid strike activity, the Labor Department said. Shruti Mishra, an economist at Bank of America Securities, had noted in a research report previewing the jobs data that a massive strike among Kaiser Permanente healthcare workers in California and Hawaii could weigh on February’s payroll growth, since 31,000 employees walked off the job.

Still, health care had been averaging a gain of more than 35,000 jobs a month over the previous 12 months, so it’s still a significant change, and worth seeing if that is the start of something, or a one-month blip.

That said, I don’t think these job losses mean we suddenly fell into a recession in February, as much as I think it’s a seasonally-adjusted regression to the norm from January’s unbelievable numbers. If you take the gain of 126,000 jobs from January and then subtract the loss of 92,000 here, you get a total gain of 34,000 jobs between the 2 months. That’s an average gain of 17,000 a month, which is actually more than what we averaged in 2025 (now at a downwardly revised average of less than 10,000 jobs a month).

But this report also illustrates how an already-slowing jobs market from 2024 and early 2025 had gains grind to a halt starting in April 2025, when Trump announced his “Liberation Day” tariffs. In fact, the US had more jobs then than we do now.

In the household survey, the slight increase in the unemployment rate to 4.4% reflected an increase in the number of unemployed by 203,000 combined with a near-zero increase in the labor force (+18,000). But the February report from the Bureau of Labor Statistics also included later-than-normal annual updates of the population assumptions for that survey. And the official report told of this interesting adjustment.

Table A shows that the adjustment decreased the estimated size of the civilian noninstitutional population age 16 and over in December by 231,000. However, the adjustment increased the number of people not in the labor force by 1.2 million and decreased both the total civilian labor force and the -5- number of employed people by 1.4 million each. The adjustment lowered the labor force participation rate by 0.4 percentage point and lowered the employment-population ratio by 0.5 percentage point. The adjustment had little effect on the total unemployment level (+15,000), and the unemployment rate was unchanged.

So nearly 1.5 million fewer men in the population and 1.6 million fewer men working than what was assumed, but the increased female population doesn’t translate into that many more women working. And in both cases, those adjustments mean a smaller percentage of Americans were actually working than what we thought – to the lowest non-COVID levels in since 2015.

It also means that the size of the labor force and number of people working in America is smaller than what we thought it was this time last year. Which also may mean our capacity for job growth is even more limited for job growth in 2026 (especially if we keep ICEing immigrants).

Lastly, average hourly wages had a solid increase for February, but raises for everyday non-supervisory workers are lagging

In February, average hourly earnings for all employees on private nonfarm payrolls rose by 15 cents, or 0.4 percent, to $37.32. Over the past 12 months, average hourly earnings have increased by 3.8 percent. In February, average hourly earnings of private-sector production and nonsupervisory employees rose by 9 cents, or 0.3 percent, to $32.03.

And the year-over-year increase for nonsupervisory employees is also below the overall average, at 3.7%. That's back to pre-COVID levels, but in a time where inflation is higher than it was pre-COVID.

In summary, January’s good jobs report was a seasonally-adjusted illusion that masked the fact that we’re in a jobs market that has near-zero job growth, with demographics getting less favorable to break that stagnation. Unemployment is higher than it was a couple of years ago, but it also hasn’t jumped in a way that it would in a recession.

So if there isn’t some kind of inflation shock from a stupid war and/or a declining stock market, we should stay on the slow-growth trend we were in for the second half of 2025. I mean, it’s not like something’s happened over the last week to change that outlook, is there?

Hoo boy....