The recent mixed signals from the labor market have intensified investors' anxiety, as tariffs pose a potential threat to inflation and economic growth, making them feel uneasy.

According to different perspectives, employers either lay off employees at the highest rate in years or maintain the current level of staff.

Recent surveys have shown that employees are becoming increasingly uncertain about their employment status and less willing to seek other opportunities, while job seekers also indicate that it is more difficult to find new positions.

These confidence indicators contrast with the robust numbers displayed by more traditional data points such as non farm employment growth and unemployment rate. Historically, the unemployment rate remains at a level associated with full employment and a thriving labor market.

Good fundamentals

Tom Porcelli, Chief US Economist of PGIM Fixed Income, said, "Fundamentally, the situation in the United States is still relatively good. This does not mean there are no cracks. You can ignore this and focus only on the employment report, or recognize that the employment report is a lagging indicator, while other indicators that can help you better understand what is happening beneath the surface look milder compared to others

The Bureau of Labor Statistics of the US Department of Labor will release its non farm payroll report for February, at which time the market will once again understand the health of the labor market. Economists surveyed by Dow Jones expect to create 170000 new jobs, up from 143000 in January, and the unemployment rate remains stable at 4%.

Although this represents a stable labor market, there are also some warnings that the days ahead will be even more difficult.

Career introduction company Challenger, Gray&Christmas reported on Thursday that the company's layoffs in February surged to the highest monthly level since July 2020, largely due to efforts by Musk's Department of Government Efficiency (DOGE) to cut federal labor. Challenger's report states that there have been over 62000 layoffs related to DOGE.

DOGE's layoffs and other labor survey indicators that indicate employee anxiety may not be reflected in non farm employment data, mainly due to the timing of layoffs and the methods used by the Bureau of Labor Statistics in household and institutional employment statistics.

Consumer confidence declines

However, a recent report from the Conference Board shows that consumer confidence has unexpectedly declined significantly, while the proportion of respondents expecting a decrease in job opportunities and increased difficulty in finding employment is also on the rise. Similarly, a survey conducted by the University of Michigan showed that consumer confidence has declined due to respondents' concerns about inflation.

In the economic world, this concern will soon turn into a self fulfilling prophecy.

Allison Shrivastava, an economist at Indeed Hiring Lab, said, "If employees have no confidence in whether they can find a new job... then this will be reflected in the economy, and employers' willingness to recruit will also be the same. Never underestimate emotions

In recent days, economists have been raising the potential impact of DOGE layoffs, with some saying that the multiplier effect involving government contractors could lead to a total layoff of 500000 or more.

Shrivastava said, "They will be difficult to be absorbed back into the economy, which will also shake people's confidence and emotions, and definitely affect the actual economy

Goldman Sachs stated that for now, DOGE layoffs may only result in a reduction of approximately 10000 overall employment, with little expected impact related to weather. The bank stated that overall, based on other data, the current situation is that "the pace of job creation is firm, and we expect that although there has been a slowdown, the rising recruitment and recent surge in immigration will continue to contribute

In addition to employment data, the Bureau of Labor Statistics will also release wage growth data. The average hourly wage is expected to see a monthly increase of 0.3%, a year-on-year increase of 4.2%, which is about 0.1% higher than the level in January.