The U.S. economy lost 92,000 jobs in February, surprising many economists who had expected job gains for the month. Friday’s Labor Department report also cut January’s unexpectedly strong gain by 4,000 and revised downward its December figures from a gain to a loss. The unemployment rate edged up from 4.3% to 4.4%.
In all, the economy averaged an 11,300 monthly job gain over the three months from December to February. That’s the second-lowest average for those months in the past decade (with the same period a year ago being the weakest).
The latest job loss comes even before the effects of the Iran war take hold. In March, oil prices have surged, spilling over into other energy-dependent industries. In the week since the war began, average gasoline prices have soared 34 cents to $3.32 a gallon on Friday, according to the AAA fuel tracker.
Why We Wrote This
The U.S. job market showed some signs of weakness even before war in Iran added a new strain on the global economy by pushing up energy prices.
Prices could go much higher if Iran continues to successfully block traffic through the Strait of Hormuz, which carries roughly one-fifth of the world’s oil. In a Financial Times interview published Friday, Qatar’s Energy Minister Saad al-Kaabi said Gulf exporters will shut down exports, driving oil prices from today’s $90 a barrel to $150 within weeks.
If the war drags on, the Federal Reserve could face difficult choices. A surge in energy prices weighs on consumers and businesses, so some Fed policymakers may want to lower interest rates to help the economy. But higher oil prices also put upward pressure on inflation rates – and often the Fed combats inflation by raising interest rates. That dire outlook could be premature.
Many economists suggest that the February figures make the job market look weaker than it really is. Physicians’ offices alone lost 37,000 jobs last month, mainly because of strike activity. Also, population revisions by the Labor Department make comparisons between 2026 and earlier years more difficult.
“The February employment data give a false impression of deteriorating labor market conditions and won’t prompt us to change our forecast for the economy or the Fed,” said Nancy Vanden Houten, lead economist at Oxford Economics, in written comments.
