The US Economy Shed 92K Jobs in February as Strikes, Tariffs, and AI Gang Up on a Fragile Labor Market

The labor market just threw a cold splash on the economy. The US shed 92K jobs last month, obliterating economists’ forecast of a 50K gain and reversing January’s 126K addition. The US has now lost jobs in three of the past six months as tariff swings, AI adoption, and federal workforce cuts rattle hiring plans.

• Unemployment ticked up to 4.4%, while downward revisions wiped another 69K jobs from December and January, making the labor market’s recent performance look even weaker.
• Healthcare — long the labor market’s hiring backbone — shed 18.6K jobs after January’s surge, while leisure and hospitality, manufacturing, and construction also cut payrolls.

The Fed’s nightmare scenario: The Federal Reserve now faces a brutal tradeoff — cutting rates to support a weakening labor market risks reigniting inflation that has already sat above its 2% target for five years. The dilemma is being worsened by shipping disruptions tied to US-Israel military tensions. As Gregory Daco of EY-Parthenon puts it, squeezed real incomes mean “people’s ability to spend is constrained,” putting the consumer engine that drives the US economy at risk.