The first major set of economic reports last week reflect the state of the United States economy during President Donald Trump’s first full month in office. The data reveal a spike in layoffs and slower hiring growth across both the public and private sectors, with looming cuts suggesting larger economic woes in the months ahead.
The US economy added 151,000 jobs, according to the Labor Department report, which came out on Friday – well short of economist expectations showing a stall in economic growth. Approximately 7.1 million Americans are currently receiving unemployment benefits compared with 6.5 million this time last year.
“I think the real risk here is that if Trump doesn’t reverse course on what he’s doing, it could be his last boring report, which I think would be really damaging to the economy. If you look under the hood, I think we are starting to see pretty foreboding cracks,” Elizabeth Pancotti, the managing director of policy and advocacy at the economic think tank Groundwork Collective, told Al Jazeera.
The White House painted an alternative picture. “In one month under President Trump, the American economy is soaring back to greatness after the economic calamity left by Joe Biden,” White House Press Secretary Karoline Leavitt said in a statement.
Former President Biden, however, was lauded as leading the best economic recovery in the world following the global economic downturn amid the COVID-19 pandemic.
Mark Zandi, the chief economist at Moody’s Analytics, said that last week’s numbers are probably the best we will get in a while amid looming layoffs and tariff fears.
“This is the calm before the storm, before we start to see the fallout in the job market from the trade war and the DOGE cuts, and other economic policies from Trump,” Zandi told Al Jazeera. DOGE is the newly created Department of Government Efficiency, which is led by ardent Trump supporter, billionaire Elon Musk.
Those concerns, coming on the back of comments that Trump made over the weekend declining to rule out an impending US recession, reverberated through the stock market on Monday when the S&P 500 lost 155.21 points, or 2.69 percent, to end the day at 5,614.99 points. This is the first time it finished below its 200-day moving average – a closely watched support level – since November 2023.
The Nasdaq Composite Index lost 726.01 points, or 3.99 percent, to 17,470.21 – its biggest single-day decline since September 2022, according to CNN. The Dow Jones Industrial Average also fell 890.63 points, or 2.08 percent, to 41,911.09.
Cuts on the horizon
There are key indicators that point to this getting worse in the months to come. The index which shows how many people took on part-time work including because they were unable to find full-time work or have had their hours reduced, increased by 460,000 from the month prior, to 4.9 million people.
“This is the shortest honeymoon period we’ve ever seen if you are 50 days on the job. He inherited on paper a pretty stable, pretty solid economy and it is already deteriorating after 50 days. I don’t think that that’s ever happened,” Pancotti added.
Since Trump took office, DOGE has cut almost 33,000 people across the federal government, according to Layoff.fyi, which tracks federal government and tech sector layoffs.
Because of ongoing court cases, the official count from the Labor Department is 10,000 jobs. The layoffs include employees at the US Agency for International Development (USAID), the National Park Service, the National Institutes of Health, the National Oceanic and Atmospheric Administration (NOAA) and the Department of Energy, among many other government agencies.
The number of public sector cuts is expected to increase as many of the recent DOGE cuts came after the end of the Bureau of Labor Statistics (a division of the Labor Department) reporting period for the month closed.
Earlier this month, the Trump Administration announced its plans to cut 80,000 employees from the Department of Veteran Affairs. The president has also called for the dissolution of the Department of Education, even though that can only be done by an act of Congress.
The global investment firm Apollo forecasts that when considering federal contractors on top of full-time employees, the federal workforce cuts could account for close to 1 million jobs lost.
In last week’s jobs report from the Labor Department, the biggest gains were in the healthcare sector, which added 52,000 jobs. However, looming healthcare cuts could make those gains very short-lived.
“If we’re looking at massive Medicaid cuts – we’re already seeing [National Institutes of Health] NIH and health research cuts – Medicare cuts are on the table. All of those really could threaten the sector that is driving a lot of those job gains,” Pancotti continued.
The downstream effect has already hit the private sector, which relies on federal funds. A private sector worker in Texas, who spoke to Al Jazeera under the condition of anonymity, said that the company they worked with had clients who were largely dependent on federal funds because of which business had dried up.
“We went from having a very busy-looking Q1 of 2025 to having absolutely nothing on the books within about a week of the inauguration,” the source told Al Jazeera.
“Now that I am having to not spend any money whatsoever and do nothing but look for jobs, I’m not spending money in the economy. I’m not doing things like making improvements to my house. I would have paid contractors to do that. I’m within a couple of months of paying off the last of my student loans and now those are going to be paused until I find something new. Now, I have to worry if I can make the necessary trip to take my cat to the vet,” the source added.
According to data from the Commerce Department, US consumers have cut back on spending for the first time in nearly two years.
Others are worried about how they’re going to get by, like Kathlyn Clore who worked in audience engagement at The Organized Crime and Corruption Reporting Project, a nonprofit that received funding from USAID, until she was recently laid off. A single mom in Hawaii – one of the single most expensive states where the average home price is well over $800,000 – Clore has two kids.
“I’m on my own supporting my two kids. It’s just going to make that a lot more difficult to make it through this uncertainty,” Clore told Al Jazeera.
“I keep wondering if Donald really thinks about what he’s doing to normal, middle-class people like me who are just trying to make a living and provide for their kids. Why does he want to make my life so much more difficult?” she added.
Private sector cuts rage on
Trump said on Friday: “We’re trying to shrink the government and grow the private sector. That’s what we’ve been doing.”
But layoffs in the private sector are also on the rise. The ADP, which tracks non-farm private payrolls added to the US economy over the previous month, showed the economy added 77,000 jobs, which is well short of the 148,000 economists otherwise expected. The leisure and hospitality sector, a notoriously low-paying set of industries, led the gains, adding 41,000 of those jobs.
“Policy uncertainty and a slowdown in consumer spending might have led to layoffs or a slowdown in hiring last month,” Nela Richardson, the chief economist at ADP, said in a statement.
A separate report from Challenger, Gray and Christmas, which helps redundant employees find new employment, showed that in February alone, US employers announced job cuts of more than 172,000 – a 245 percent increase from this time last month – the highest jump since July 2020 during the height of the COVID pandemic. The jump in cuts showed the biggest annual increase since the height of the recession in February 2009.
The retail sector led the cuts with a 572 percent increase in cuts across the industry compared with this time last year.
The tech sector saw a wave of high-profile layoffs, continuing a theme that began last year. In 2024, the tech industry cut more than 157,000 jobs. Among those who made cuts in the last month include Meta – Facebook and Instagram’s parent company – which laid off 3,600 employees. The news comes only weeks after its CEO donated $1m to Trump’s inaugural fund.
Jeff Bezos also donated $1m to Trump’s inaugural fund. Only weeks later, Aerospace giant Blue Origin, which Bezos runs, laid off 1,400 people. Alphabet – Google’s parent company – laid off roughly 100 people in February. It also donated $1m to Trump’s inaugural fund.
CEOs of all of those companies attended Trump’s inauguration.
Microsoft cut roughly 2,000 people from its workforce. Its CEO met with Trump at his Mar-a-Lago golf club in January, only days before the inauguration.
Other major companies including oil and gas giant Chevron announced pending layoffs last month. It comes as Chevron’s woes are about to get more substantial. The Trump Administration revoked the Houston, Texas-based oil and gas company’s licence to pump Venezuelan oil.
Starbucks and Southwest Airlines also announced cuts in recent weeks.
Tariffs could lead to broader cuts
Trump’s economic policies, including his back and forth on tariffs and the subsequent retaliatory tariffs, will hinder the US workforce. Trump delayed 25 percent tariffs on Canada and Mexico until April 2. This is the second time he put in place tariffs and then quickly pulled back.
“The trade war is even doing more damage than those kinds of other economic policy steps that are being taken. It’s creating uncertainty for businesses,” Zandi added.
One sector that will be immediately impacted by the tariffs on Canada and Mexico is the automotive industry. Major players in the sector have slammed the president’s plans in recent weeks, including Ford CEO Jim Farley who said that the tariffs would “blow a hole” in the automotive industry.
Other major players across the manufacturing sector also expect this to get worse. William Oplinger, CEO of Alcoa, one of the largest US aluminium manufacturers, said last month at a conference that the aluminium tariffs could cost the US economy 100,000 jobs.
“It does look increasingly like the president is serious and is going to engage in broad-based tariffs in a persistent way. If he does, I do expect other countries to retaliate more or less in kind, and that full-blown trade war is going to do a lot of damage. And if it actually goes down that path, I do think recession risks later in the year, later this spring and summer, are very high,” Zandi continued.
New investments
Trump has claimed a handful of economic wins in his first weeks in office, including a larger investment from Honda to build more plants, which would ultimately lead to more manufacturing jobs. However, production would not come online until May 2028 – less than a year before Trump’s term is up.
Japanese truck maker Isuzu also announced a new plant in South Carolina, which will employ 700 people. But it will begin operations in 2027.
Trump also touted a deal with TSMC – a Taiwanese semiconductor chip manufacturer – for a $100bn investment. Negotiations for a deal began well before Trump took office and under the Biden Administration, which pushed the chip maker to increase its initial $6.6bn investment.
In February, the Trump Administration touted Apple’s recent $500bn investment commitment as a result of Trump’s policies. In April 2021, when Biden was president, Apple made a comparable commitment.
The White House did not respond to Al Jazeera’s request for clarification.
