On the January Jobs Report (and Tariffs)

The tariff panic has passed, and our call over last weekend to wait and see was correct. There will be more to see as the year unfolds, with the new call for a US “sovereign wealth fund” potentially opening a new dimension in Trump’s potential restructuring of global trade. January payrolls at 143,000 missed the consensus, but the prior two months were revised higher by 100,000. The annual benchmarking process revised the March 2024 reference month lower by 589,000, but previous BLS guidance had been 818,000, so this is an upside surprise. The “household survey” has upwardly revised its estimate of the population by almost 3 million, an order of magnitude greater than any past revision, potentially fueled by immigration estimates. Adjusted for this, employment in the “household survey” grew by 400,000. Wage growth was strong. Overall, a Fed-unfriendly report. But policy is not especially tight, so market expectations now for only one rate cut this year are perfectly appropriate.