The U.S. economy demonstrated resilience in March by adding 228,000 jobs, extending its remarkable streak of consecutive monthly job gains to 51 months. Still, this positive news was offset by an overall increase in the unemployment rate, which ticked up from 4.1% to 4.2%. What’s worrisome is the mixed economic signals. This comes as the nation faces a booming economic deception, complete with major layoffs and a roaring trade war.
The continued tightness of the labor market has started to crack, especially in fields like education. In February and March, the sector saw losses with a net loss of 12,000 jobs during those two months. Together, these figures point to a deeply troubling trend that might just foretell an even bigger storm brewing for our workforce. While these losses are unfortunate, the net job growth is a sign of continued demand in one of our nation’s largest and most vital industries.
In a shocking twist, U.S. employers announced their intention to eliminate 216,215 jobs in the month of March. This jaw dropping number accounts for almost 80% of the 275,240 layoffs announced this month. This surge in layoffs illustrates the increasing pressures businesses face amid rising costs and economic uncertainty, raising alarms about the sustainability of job growth.
The U.S. government hit imported goods with major tariffs under Donald Trump’s presidency. Through much of 2018, this step was the linchpin of its trade strategy on the global stage. These tariffs have now climbed to $2.5 trillion and have led to reciprocal tariffs on U.S. goods from other countries. Beginning on April 10, China will begin applying tariffs of 34% to essentially all U.S. exports to China, raising the stakes even higher in this trade war.
The U.S. will respond with a punitive 46% tariff on all Vietnamese goods. It will blanket all Cambodian exports with a jaw-droppingly high tariff of 49%. That doesn’t excuse the new 10% tariff on U.S. imports, which goes into effect this Saturday. Even steeper punitive tariffs are scheduled to take effect this coming April 9. These measures are a clear break from prior trade policy. They are even more stringent than the rules imposed by the Smoot-Hawley Act of 1930.
The stock market is still reeling from these tariffs. To be sure, it has undergone a substantial and perhaps unjustified sell-off. Even the tech-heavy Nasdaq index fell by 3%. This drop has taken it nearly into bear-market territory, as it is now 20% below its highwater mark back in December. These policies have far-reaching implications for the future, and investors are rightfully concerned about their long-term effects on global economic stability.
Federal Reserve Chairman Jerome Powell just said the economic outlook is highly uncertain.
“We face a highly uncertain outlook with elevated risks of both higher unemployment and higher inflation,” – Jerome Powell
Powell emphasized that tariffs can lead to an immediate increase in inflation. He cautioned that they would drive more permanent changes.
“While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent.” – Jerome Powell
With these significant economic headwinds, there’s the fact that companies have been reorienting their plans to match what’s suddenly become a very different world. Nintendo recently announced the delay of the release of its next big video game title. This decision is made even as substantial uncertainties loom from the ongoing trade war.
While companies look to take advantage of these shifts, experts are calling for caution. They advise forward-thinking strategy to mitigate negative effects on operations and staff.
