Last week’s first major set of economic reports reflects the state of the US economy during President Donald Trump’s first month in office. The data reveals a surge in layoffs and slower employment growth in both the public and private sectors, and looming cuts suggest a greater economic challenge in the coming months.
The US economy has added 151,000 jobs, according to a report from the Department of Labor. This was announced on Friday. Currently, around 7.1 million Americans are receiving unemployment benefits, but this year it is 6.5 million.
“I think the real risk here is that if Trump doesn’t reverse the course of what he’s doing, it could be his last boring report. Elizabeth Pancotti, managing director of policy and advocacy at the economic think tank, Groundwork Collective, told Al Jazeera.
The White House drew another picture. “In a month under President Trump, the US economy has returned to greatness after the economic disaster left by Joe Biden,” White House press chief Carolyn Leavitt said in a statement.
However, former President Biden has been praised as leading the world’s best economic recovery following the global economic recession amid the Covid-19 pandemic.
Mark Zandy, chief economist at Moody’s Analysis, said last week’s numbers were probably the best they’ll get for a while amidst the horrors of looming layoffs and tariffs.
“This is calm before the storm and before we start seeing the fallout of the job market from trade wars and doge cuts, as well as other economic policies from Trump,” Zandi told Al Jazeera. Doge is led by billionaire Elon Musk, a newly created government efficiency bureau and avid Trump supporter.
These concerns behind Trump’s comments over the weekend reverberated through the stock market on Monday as the S&P 500 closes at 5,614.99 points, losing 155.21 points (2.69%). This is the first time since November 2023 that it has fallen below the 200-day moving average (heavy-monitored support level).
According to CNN, the Nasdaq Composite Index lost 726.01 points (3.99%) to 17,470.21, losing to 17,470.21. The Dow Jones industrial average also fell by 890.63 points (2.08%) to 41,911.09.
Cut the horizon
There are important indicators that this will get worse in the coming months. An index showing the number of people who worked part-time, as they were unable to find a full-time job or reduced their time, up 460,000 from the previous month.
“This is the shortest honeymoon period we’ve ever seen whether you’re 50 days at work. He inherited a fairly solid economy that’s pretty stable on paper and has already deteriorated after 50 days. I don’t think that’s happened,” Pancotti added.
Since Trump took office, Doge has cut nearly 33,000 people across the federal government, according to LayOff.fyi, which tracks layoffs for the federal government and the tech sector.
Due to the ongoing court case, the official number from the labor sector is 10,000 jobs. Layoffs include employees such as the United States International Development Agency (USAID), the National Park Service, the National Institutes of Health, the National Oceanic and Atmospheric Administration (NOAA), and the Department of Energy.
The number of public sector cuts is expected to increase in many of the recent Doge cuts that came after the end of the Bureau of Labor Statistics (a division of Labor Bureau) reporting period.
Earlier this month, the Trump administration announced plans to cut 80,000 employees from the Veterans Affairs Bureau. The President is also calling for the dissolution of the Ministry of Education, despite it being done solely through Congressional actions.
Global investment firm Apollo predicts that if they consider federal contractors in addition to full-time employees, the federal workforce cuts could account for nearly 1 million jobs that have been lost.
Last week’s employment report from the Ministry of Labor found that the biggest profit was in the healthcare sector, adding 52,000 jobs. But looming healthcare cuts can make those benefits very short-lived.
“If we’re looking at massive Medicaid cuts, we’re already seeing a reduction in (National Institutes of Health) NIH and health research – Medicare cuts are on the table. All of them could really threaten the sector that drives the benefits of many of those jobs,” Pancotti continued.
The downstream effect is already struck by the private sector and relies on federal funds. Private sector workers in Texas spoke with Al Jazeera anonymous state, but said the company they worked for had clients who rely heavily on federal funds as their business was exhausted.
“We have a very busy Q1 of 2025, so we have none of our books in about a week of inauguration,” a source told Al Jazeera.
“Now I’m not spending money on the economy because I have to spend no money at all and I have to ask for work. I’m not doing anything to improve my home. I’d paid the contractor to do that. I’m within a few months of paying off my last student loan, but now I’m paused until I find something new. Now I have to worry if I can do the trip I need to take my cat to the vet,” the source added.
US consumers have cut their spending for the first time in almost two years, according to data from the Commerce Department.
Others worry about how she’ll get it until she’s recently fired, like Kathlyn Clore, who worked in audience engagement with the Organized Crime and Corruption Reporting Project, a nonprofit that received funds from USAID. a Single mothers in Hawaii – one of the most expensive states with an average home price well above $800,000 – Kroar has two children.
“I support my two children. Overcoming this uncertainty only makes it even more difficult,” Croix told Al Jazeera.
“I wonder if Donald really thinks what he’s doing to ordinary middle class people. Why does he want my life to be even more difficult?” she added.
The private sector stops anger
Trump said Friday: “We’re trying to scale down government and grow the private sector, and that’s what we’ve been doing.”
However, private sector layoffs are also increasing. Tracking non-farm private pay that was added to the US economy over the previous month, the ADP showed that the economy added 77,000 jobs. The leisure and hospitality sector is a well-known low-wage industry set, of which 41,000 additional jobs.
“Policy uncertainty and slower consumer spending could have led to slower layoffs and jobs last month,” ADP chief economist Nella Richardson said in a statement.
Another report from Challenger, Gray and Christmas helped redundant employees find new jobs, showing that in February alone, US employers announced more than 172,000 job cuts. Cut jumps marked the largest annual increase since the height of the recession in February 2009.
The retail sector led the cuts by increasing the industry by 572% compared to this period last year.
The tech sector continued its theme that began last year after seeing a wave of prominent layoffs. In 2024, the tech industry cut more than 157,000 jobs. Those who made the cut last month include Meta (the parent company of Facebook and Instagram), which fired 3,600 employees. The news comes just weeks after the CEO donated $1 million to Trump’s first fund.
Jeff Bezos also donated $1 million to Trump’s first fund. Just a few weeks later, the blue origin of Bezos’ aerospace giant slowly unlocked 1,400 people. Alphabet – Google’s parent company – Approximately 100 people were fired in February. He also donated $1 million to Trump’s first fund.
CEOs of all these companies attended Trump’s inauguration.
Microsoft has cut around 2,000 people from its workforce. The CEO met with Trump in January at his Mar-A-Lago Golf Club just days before his appointment.
Other major companies, including oil and gas giant Chevron, announced pending layoffs last month. It comes as Chevron’s misery is becoming more substantial. The Trump administration has revoked its license to pump Venezuelan oil, a Houston, Texas-based oil and gas company.
Starbucks and Southwest Airlines have also announced cuts in recent weeks.
Tariffs could lead to wider reductions
Trump’s economic policies, including his return and his return on tariffs and subsequent retaliation tariffs, would hamper the US workforce. Trump delayed 25% tariffs in Canada and Mexico until April 2nd. This is the second time he introduced tariffs and pulled back immediately.
“The trade war is causing more damage than other types of economic policy measures being taken. It creates uncertainty for businesses,” Zandi added.
One sector that will be immediately affected by the impact of tariffs in Canada and Mexico is the automotive industry. Key players in the sector have been denounced the president’s plans in recent weeks. This includes Ford CEO Jim Farley, who said tariffs would “drill holes” in the automotive industry.
Other major players in the manufacturing sector are hoping this will get worse too. William Oplinger, CEO of Alcoa, one of the nation’s largest aluminum manufacturers, said at a meeting last month that aluminum tariffs could cost the US economy 100,000 jobs.
“It seems increasingly that the President is serious and will be involved in a sustainable way in a wide range of tariffs. If so, I hope that other countries will retaliate more or less kindly, and that full-scale trade war will cause a lot of damage. And if it really goes that path, I think there will be a very high risk of a recession this second half of this year, this spring and later this summer,” Zandi continued.
New Investments
Trump claimed some economic victories in his first weeks of office, including a larger investment to build more plants from Honda. However, production will not be online until May 2028, less than a year after Trump’s term rises.
Japanese truck maker Isuzu has announced a new factory in South Carolina. This employs 700 people. However, it will begin operation in 2027.
Trump also touted a $100 million investment with Taiwanese semiconductor chip maker TSMC. Negotiations for the deal began before Trump took office and took over under the Biden administration, prompting chipmakers to increase their initial $6.6 billion investment.
In February, the Trump administration promoted Apple’s recent $500 million investment commitment as a result of Trump’s policies. In April 2021, when Biden was president, Apple made equal commitments.
The White House did not respond to Al Jazeera’s request for clarification.