The Labor Department is set to provide key insights into the state of the U.S. economy with its upcoming April jobs report, which is anticipated to be released on Friday. This report may indicate whether the current downturn is merely a temporary consequence of tariffs or part of a more sustained economic decline.
Analysts predict nonfarm payrolls will increase by 133,000, a notable decrease from March’s increase of 228,000, according to the Dow Jones consensus. If realized, this figure would be close to the first quarter’s average of 152,000 and likely keep the unemployment rate steady at around 4.2%.
An unexpectedly low jobs number, however, could exacerbate fears about the economy and raise concerns about President Donald Trump’s tariff strategies affecting U.S. trade partners.
“If the numbers hover around 150,000, give or take, I think all will be forgiven,” remarked Mark Zandi, chief economist at Moody’s Analytics. “Our sentiment by the end of the week will be moderate—neutral, not disastrous, but stable.”
Nevertheless, Zandi cautioned that financial markets should be prepared for a potential letdown, particularly if payroll growth falls below 100,000. He believes such a scenario could deepen negative sentiments about the economy.
“If the number comes in at 100,000 or lower, I’d be cautious,” Zandi stated. “Such data will really shift the focus on all subsequent reports, prompting downward adjustments of expectations. That could lead to a challenging day for the markets.”
Gathering Storm of Bad News
This week, investors faced a dismal gross domestic product report, revealing a 0.3% contraction in the economy in the first quarter. Compounding the concerns were lackluster private payroll numbers from ADP, an increase in unemployment claims, a significant fall in job openings, and mixed signals from inflation data.
Despite this wave of unfavorable news, the stock market remained resilient, with the Dow Jones Industrial Average showing a nearly 2% increase for the week, as investors kept their focus on the latest tariff developments emerging from the White House.
Still, a disappointing jobs report could quickly alter this outlook, revealing signs of economic vulnerability.
According to ADP, which has sometimes struggled to provide accurate forecasts for nonfarm payroll numbers, private hiring was only 62,000—well below expectations. Additionally, job openings have declined to roughly 7.2 million, marking the lowest level since September 2024.
Further compounding these challenges, the unemployment rate among recent college graduates climbed to 5.8% in March, the highest rate recorded since July 2021. The underemployment rate also surged to 41.2%, a level not seen since February 2022, based on data from the New York Federal Reserve.
Growing Job Concerns
Data from March indicates that wage satisfaction has dropped to its lowest point since November 2021, now sitting at 54.8%. The average “reservation” wage—representing the minimum salary acceptable for accepting a job—also fell to $74,236, a nearly 10% decrease from the peak in November 2024.
Concerns regarding federal job cuts linger as Elon Musk’s Department of Government Efficiency has significantly reduced the federal workforce since President Trump’s administration began in January. So far, announced layoffs have reached 281,452, as reported by the consultancy Challenger, Gray & Christmas.
The full impact could be far more severe; Atlanta Fed researcher M. Melinda Pitts has calculated that when accounting for related losses among contractors and grant employees, the total job loss figure might approach 1.2 million. However, the full effects of these cuts may not be felt until later in the year, as government severance packages run out.
In the meantime, the upcoming jobs data is expected to reflect a slowdown in economic activity, but without precipitating a severe downturn.
Citigroup has projected job growth at 105,000, which, while not impressive, may be adequate to maintain the unemployment rate, especially given the recent decline in immigration rates, according to economist Andrew Hollenhorst.
Alongside the jobs report, the Bureau of Labor Statistics will also publish wage figures, which are being closely monitored for indications of inflation trends. The consensus among Wall Street analysts is that average hourly earnings increased by 0.3% in April, resulting in a year-over-year rise of 3.9%, slightly above the March figure.
The report is expected to be released at 8:30 a.m. ET.
