On the February Jobs Report and the DOGE Effect

151,000 payrolls is in line with the official consensus for 160,000 and a major beat versus what we believe was a far more pessimistic whisper number. Employment in the “household survey” fell sharply, and unemployment rose, driving up the unemployment rate slightly. This is at variance with an array of other contemporaneous labor market data, which support the “payroll survey” number. Immigrant employment and population fell. That data is not seasonally adjusted; other non-adjusted data rose sharply, so this is a worrisome early indicator of the effect of Trump border policy. There is some evidence of a DOGE effect, with federal government payrolls shrinking by 10,000 and Washington and Virginia leading the way in continuing jobless claims. It’s too early to be sure and the data is noisy, but it does appear there is a DOGE effect. The important test will be to see if former federal workers can find new jobs. Wage growth was modest. If anything, this report should make the Fed more cautious.