Evelyn Reynolds

Economic forecasts have deteriorated in recent weeks, reflecting the upheaval from federal layoffs, tariff moves and immigration roundups.President Trump inherited an economy that was, by most conventional measures, firing on all cylinders. Wages, consumer spending and corporate profits were rising. Unemployment was low. The inflation rate, though higher than normal, was falling.Just weeks into Mr. Trump’s term, the outlook is gloomier. Measures of business and consumer confidence have plunged. The stock market has been on a roller-coaster ride. Layoffs are picking up, according to some data. And forecasters are cutting their estimates for economic growth this year, with some even predicting that the U.S. gross domestic product could shrink in the first quarter.Some commentators have gone further, arguing that the economy could be headed for a recession, a sharp rebound in inflation or even the dreaded combination of the two, “stagflation.” Most economists consider that unlikely, saying growth is more likely to slow than to give way to a decline.Still, the sudden deterioration in the outlook is striking, especially because it is almost entirely a result of Mr. Trump’s policies and the resulting uncertainty. Tariffs, and the inevitable retaliation from trading partners, will increase prices and slow down growth. Federal job cuts will push up unemployment, and could lead government employees and contractors to pull back on spending while they wait to learn their fate. Deportations could drive up costs for industries like construction and hospitality that depend on immigrant labor.“If the economy was starting out in quite good shape, it’s probably in less good shape after what we’ve seen the last few weeks,” said Donald Rissmiller, chief economist at Strategas, a research firm.A Strong FoundationThe U.S. economy has repeatedly shown its resilience in recent years, and there are parts of Mr. Trump’s agenda that could foster growth. Business groups have responded enthusiastically to Republican plans to cut taxes and reduce regulation. A streamlined government could, in theory, make the overall economy more productive.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Unemployment is low, but there isn’t much room to move around — especially for those with highly government-specific skills.For about a year now, the labor market has existed in a state of eerie calm: Not many people were losing their jobs or quitting, but not many of those seeking work were getting job offers.The mass layoffs now underway across the federal government, along with its employees who are voluntarily heading for the exits, could disrupt that uneasy equilibrium.While unemployment is relatively low at 4 percent, those losing their positions could face a difficult time finding work, depending on how well their skills translate to a private sector that does not seem eager to hire.“Federal workers all across the country are starting to look, and it’s impacting people everywhere,” said Cory Stahle, an economist at the job search platform Indeed. “It’s hard to think this isn’t going to stress test the labor market in the coming months.”On the eve of the Trump administration, the federal government’s executive branch employed about 2.3 million civilians. It’s not clear how many of those will end up being cut, and how many will get their jobs back after lawsuits over those terminations work through the courts.But impact of the pace at which government spending is being slashed, along with instructions from the White House budget office for agencies to slice even deeper, could be meaningful.Are you a federal worker? We want to hear from you.The Times would like to hear about your experience as a federal worker under the second Trump administration. We may reach out about your submission, but we will not publish any part of your response without contacting you first.

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On Tuesday, Commerce Secretary Howard Lutnick went on Fox Business to reassure nervous allies and even more twitchy investors that the Trump administration was negotiating a deal to avoid tariffs on goods from Mexico and Canada, and that the president is “gonna work something out with them.”“It’s not going to be a pause” for Mr. Trump’s on-again, off-again tariffs, he insisted. “None of that pause stuff.”On Thursday, the world got what the president characterized as more of that pause stuff.Mr. Trump’s announcement that he had a good conversation with Mexico’s president, and would delay most tariffs until April 2, was only the latest example of the punish-by-whim nature of the second Trump presidency. A few hours after the Mexico announcement, Canada got a break too, even as Mr. Trump on social media accused its departing prime minister, Justin Trudeau, of using “the Tariff problem” to “run again for Prime Minister.”“So much fun to watch!” he wrote.Indeed, it appears that Mr. Trump is having enormous fun turning tariffs on and off like tap water. But others are developing a case of Trump-induced whiplash, not least investors, who sent stock prices down again on Thursday amid the uncertainty over what Mr. Trump’s inconstancy means for the global economy. (A later rise in stock futures pointed to rosier expectations for Friday.)When the White House finally released the text of Mr. Trump’s orders on Thursday evening, it appeared that some of the tariffs — those covered in the U.S.-Mexico-Canada trade agreement that Mr. Trump negotiated and celebrated in his first term — were indeed permanently suspended. Other tariffs were merely paused.Most everyone involved was confused, which may well have been the point.As Mr. Trump hands down tariff determinations and then pulls them back for a month or so, world leaders call to plead their case, a bit like vassal states appealing to a larger power. Chief executives put in calls as well, making it clear that Mr. Trump is the one you need to deal with if you are bringing in car parts from Canada or chips from China.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Two days after imposing sweeping tariffs on Canada and Mexico, President Trump on Thursday abruptly suspended many of those levies, sowing confusion with investors and businesses that depend on trade with the countries.The president said he would allow products that are traded under the rules of the U.S.-Mexico-Canada Agreement, the trade pact he signed in his first term, to avoid the stiff 25 percent tariffs he imposed just days ago on two of America’s largest trading partners.The suspension effectively abandons many of the tariffs that Mr. Trump had placed on Canadian and Mexican products — levies he said were necessary to stem the flow of drugs and migrants into the United States.His decision came a day after he said he would grant a 30-day reprieve to automakers, who had complained to the president that the levies would cause severe damage to U.S. carmakers. Mr. Trump implied that any relief would be short-lived, saying that other tariffs on Canadian and Mexican products are coming in April.Mr. Trump’s chaotic, stop-and-start approach has sent stock markets tumbling and generated anxiety among industries that depend on trade with Canada and Mexico, which account for more than a quarter of U.S. imports and nearly a third of U.S. exports. After Mr. Trump imposed his tariffs, Canada retaliated with levies on $20.5 billion worth of American goods, including agricultural products, and Mexico was threatening to impose its own import taxes on U.S. goods on Sunday if Mr. Trump did not relent.Still, the decision to suspend the tariffs did little to calm financial markets, which have been jittery since Mr. Trump ratcheted up his trade war earlier this week. In addition to hitting Canada and Mexico, Mr. Trump placed a second 10 percent tariff on all Chinese imports, prompting another round of retaliation from Beijing on American products. The president has not suspended any of his levies on China. More

When the United States signed a free-trade agreement with Canada and Mexico more than 30 years ago, the premise was that partnering with two other thriving economies would also benefit America.This week, President Trump abruptly scrapped that idea. He imposed a sweeping 25 percent tariff on Tuesday on the roughly $1 trillion of imports that Mexico and Canada send into the United States each year as part of that North American trade pact — before quickly walking them back. On Thursday, the president signed executive orders suspending the tariffs on Canada and Mexico for goods that trade under the rules of the U.S.-Mexico-Canada Agreement, which is much of the trade that crosses North American borders.If the tariffs had gone into full effect, they would have significantly raised costs for Canadian and Mexican exports, undermining their economies and likely tipping them into recession.Mr. Trump’s flirtation this week with unwinding decades of economic integration raises big questions about the future of North America and the industries that have been built around the idea of an economically integrated continent. While some factories in Canada and Mexico might have moved to the United States to avoid tariffs, the levies would also have raised costs for American consumers and manufacturers that have come to depend on materials from their North American neighbors.“This is a day where the United States stopped seeing trade as force for mutual benefit, and began seeing it as a tool of economic warfare,” said Edward Alden, a senior fellow at the Council on Foreign Relations. He added that the levies were “a fundamental attack on the economic well being of our closest neighbors.”While Mr. Trump suspended his tariffs on Thursday, any relief could be short lived. The president has said that he expects to issue more tariffs on Canada and Mexico next month, when he announces what he is calling “reciprocal” tariff measures.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Markets will get another snapshot into the health of the labor market when the Labor Department’s Bureau of Labor Statistics releases its February nonfarm payrolls report Friday at 8:30 ET.
Economists expect growth of 170,000 jobs, up from 143,000 in January, with the unemployment rate holding steady at 4%.
While that represents a stable labor market, there are a number of caveats that point to more difficult times ahead.

People walk past digital billboards at the Moynihan Train Hall displaying a new initiative from New York Governor Kathy Hochul titled ‘New York Wants You’, a program designed to recruit and employ displaced federal workers across New York State, in New York, U.S., March 3, 2025. 
David Dee Delgado | Reuters

Mixed signals lately from the labor market are adding to angst for investors already on a knife’s edge over the potential threat that tariffs pose to inflation and economic growth.
Depending on the perspective, employers either are cutting workers at the highest rate in years or skating by with current staffing levels.

What has become clear is that workers are increasingly uncertain of their employment status and less prone to seek other opportunities, at the same time as job hunters are reporting it harder to find new positions, according to several recent surveys.
The sentiment indicators counter otherwise solid numbers showing up in more traditional data points like nonfarm payrolls growth and the jobless rate, which is still at a level historically associated with full employment and a bustling labor market.
Sound fundamentals
“Fundamentally speaking, things are still relatively sound in the United States. That doesn’t mean there are no cracks,” said Tom Porcelli, chief U.S. economist at PGIM Fixed Income. “You can just whistle past that and just hang your hat on the payrolls report, or recognize that the payrolls report is a lagging indicator and some of those other indicators that give you a better flavor of what’s happening under the surface are looking softer by comparison.”
Markets will get another snapshot of labor market health when the Labor Department’s Bureau of Labor Statistics releases its February nonfarm payrolls report Friday at 8:30 ET. Economists surveyed by Dow Jones expect growth of 170,000 jobs, up from 143,000 in January, with the unemployment rate holding steady at 4%.
While that represents a stable labor market, there are a number of caveats that point to more difficult times ahead.

Outplacement firm Challenger, Gray & Christmas reported Thursday that layoff announcements from companies soared in February to their highest monthly level since July 2020. A big reason for that move was the effort by Elon Musk’s Department of Government Efficiency to cull the federal workforce. Challenger reported more than 62,000 DOGE-related cuts.
DOGE actions as well as other labor survey indicators showing worker angst likely won’t be reflected in Friday’s jobs number, primarily due to the timing of the cuts and the methodology the BLS uses in its twin counts of household employment and jobs filled at the establishment level.
Consumer confidence drop
But a recent Conference Board report showed an unexpectedly large drop in consumer confidence that coincided with a spike in respondents expecting fewer jobs to be available as well as harder to get. Similarly, a University of Michigan’s survey saw a slide as respondents worried about inflation.
In the world of economics, such fears can quickly become self-fulfilling prophecy.
“If workers don’t feel confident that they’re going to be able to find a new job … then that’s going to be reflected in the economy, and the same in terms for how willing employers are to hire,” said Allison Shrivastava, economist at the Indeed Hiring Lab. “Don’t ever discount sentiment.”
In recent days, economists have been ramping up the potential impact for DOGE cuts, with some saying that multiplier effects involving government contractors could take the total labor force reduction to half a million or more.
“They’re going to have some trouble being reabsorbed into the economy,” Shrivastava said. “It also does shake people’s confidence and sentiment, which can certainly impact the actual economy.”
For now, Goldman Sachs said the DOGE cuts probably will lower the headline payrolls number by just 10,000 or so and exepcts weather-related impacts to be small. Overall, the bank said the current picture, according to alternative figures, is one of “a firm pace of job creation, and we expect continued, albeit moderating, contributions from catch-up hiring and the recent surge in immigration.”
In addition to the employment numbers, the BLS will release figures on pay growth. Average hourly earnings are expected to show a 0.3% monthly gain, up 4.2% from a year ago and about 0.1 percentage point above the January level. More

Treasury Secretary Scott Bessent on Thursday offered a full-throated defense of the White House’s position on tariffs, insisting that, “Access to cheap goods is not the essence of the American dream.”
In a speech delivered to a crowd of leading economists, Bessent indicated that Trump is willing to take strong measures to achieve his trade goals.
Earlier in the day, Commerce Department data underscored how far the U.S. has fallen behind its global trading partners. The imbalance swelled to a record $131.4 billion in January

Scott Bessent, US treasury secretary, speaks during an Economic Club of New York (ECNY) event in New York, US, on Thursday, March 6, 2025. Sanctions on Russia “will be used explicitly and aggressively for immediate maximum impact” at President Donald Trump’s guidance, Bessent said Thursday. 
Victor J. Blue | Bloomberg | Getty Images

Treasury Secretary Scott Bessent on Thursday offered a full-throated defense of the White House’s position on tariffs, insisting that trade policy has to be about more than just getting low-priced items from other countries.
“Access to cheap goods is not the essence of the American dream,” Bessent said during a speech to the Economic Club of New York. “The American Dream is rooted in the concept that any citizen can achieve prosperity, upward mobility, and economic security. For too long, the designers of multilateral trade deals have lost sight of this.”

The remarks came with markets on edge over how far President Donald Trump will go in an effort to attain his goals on global commerce. Stocks fell sharply Thursday despite news about some movement from the administration on Mexican imports.
In a speech delivered to a crowd of leading economists, Bessent indicated that Trump is willing to take strong measures to achieve his trade goals.
“To the extent that another country’s practices harm our own economy and people, the United States will respond. This is the America First Trade Policy,” he said.
Earlier in the day, Commerce Department data underscored how far the U.S. has fallen behind its global trading partners. The imbalance swelled to a record $131.4 billion in January, a 34% increase from the prior month and nearly double from a year ago.
“This system is not sustainable,” Bessent said.

Economists and market participants worry that the Trump tariffs will raise prices and slow growth. However, White House officials point out that tariffs did little to stoke inflation during Trump’s first term, touting growth potential from reshoring as companies look to avoid paying the duties.
“Across a continuum, I’m not worried about inflation,” Bessent said. He added that Trump considers tariffs to have three benefits: as a revenue source with the U.S. running massive fiscal deficits, as a way to protect industries and workers from unfair practices around the world, and as “the third leg to the stool” as Trump “uses it for negotiating.”
Thursday’s talk was hosted by Larry Kudlow, the head of the National Economic Council during Trump’s first term.
In addition to discussing tariffs, the two chatted about deregulation as well as the onerous debt and deficit burden the government is facing. The budget is already $840 billion in the hole through just the first four months of fiscal 2025 as the deficit runs above 6% as a share of gross domestic product, a level virtually unheard of in a peacetime, expansionary economy.
“This is the last chance bar and grill to get this done,” Bessent said of imposing fiscal discipline. “Everyone knows what they should do. It’s, do they have the willpower to do it?”
Bessent also advocated a deep examination of bank regulations, particularly for smaller institutions, which he said are burdened with rules that don’t help safety.
As Bessent spoke, stocks added to losses in what has been a tough week for Wall Street.
“Wall Street’s done great, Wall Street can continue doing well. But this administration is about Main Street,” he said. More

The rate cut brings the ECB’s deposit facility rate, its key rate, to 2.5% — a move that markets had widely priced in before the announcement.
The central bank updated the language in its decision to say monetary policy was becoming “meaningfully less restrictive.”
Data published earlier this week showed that inflation in the region eased to 2.4% in February, down from January’s reading but slightly higher than expected.

European Central Bank (ECB) President Christine Lagarde speaks to present the bank’s 2024 Annual Report to the European Parliament, in Strasbourg, eastern France, on February 10, 2025.
Frederick Florin | Afp | Getty Images

The European Central Bank on Thursday cut interest rates by 25 basis points and updated the language in its decision to say monetary policy was becoming “meaningfully less restrictive.”
The cut brings the ECB’s deposit facility rate, its key rate, to 2.5% — a move that markets had widely priced in before the announcement.

The central bank’s six rate cuts over the past nine months have come amid lackluster economic growth in the region, and as the specter of tariffs on EU imports to the U.S. looms large.
“Monetary policy is becoming meaningfully less restrictive, as the interest rate cuts are making new borrowing less expensive for firms and households and loan growth is picking up,” the central bank said in a statement Thursday.
Euro zone headline inflation remains below the 3% mark, despite picking up in the last few months of 2024.
Data published earlier this week showed that inflation in the region eased to 2.4% in February, down from January’s reading but coming in slightly higher than expected. So-called core inflation — which strips out food, energy, alcohol and tobacco costs — as well as services inflation also dipped after proving sticky for several months.
The euro area’s seasonally adjusted gross domestic product, meanwhile, eked out a 0.1% increase in the fourth quarter, the latest reading from statistics agency Eurostat showed.

Tariff uncertainty

The Thursday rate decision comes as U.S. President Donald Trump pursues an aggressive global tariff policy and European leaders look to increase defense spending.
Tariffs on goods imported to the U.S. from Europe have not yet been announced, but have been repeatedly threatened by Trump. The extent of any such duties is currently unclear, and the option for negotiation might still be on the table.
European countries are also looking to boost their defense and security budgets, as relations between the U.S. and Ukraine have soured. An increase in defense spending could affect key economic markers like inflation and growth.
Analysts told CNBC that these geopolitical developments could result in more disagreement than usual within the ECB’s Governing Council when it comes to monetary policy decision-making in the coming months.
Officials have also appeared split on where the so-called “neutral rate” — where policy is neither stimulating nor restrictive — lies and if rates may need to go below it to help entice economic expansion.
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