{"id":1078,"date":"2025-04-03T19:29:15","date_gmt":"2025-04-03T19:29:15","guid":{"rendered":"https:\/\/www.insuracarelife.com\/blog\/the-job-market-has-been-resilient-the-trade-war-could-be-its-undoing\/"},"modified":"2025-04-03T19:29:15","modified_gmt":"2025-04-03T19:29:15","slug":"the-job-market-has-been-resilient-the-trade-war-could-be-its-undoing","status":"publish","type":"post","link":"https:\/\/www.insuracarelife.com\/blog\/the-job-market-has-been-resilient-the-trade-war-could-be-its-undoing\/","title":{"rendered":"The Job Market Has Been Resilient. The Trade War Could Be Its Undoing."},"content":{"rendered":"<div data-testid=\"companionColumn-0\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">For three years, the U.S. economy has been buffeted by rapid inflation, high interest rates and political instability at home and abroad. Yet it has proved surprisingly resilient, supported by the sturdy pillars of robust consumer spending, a rising stock market, and healthy balance sheets for households and businesses alike.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">But one by one, those pillars have begun to crack under the weight of tariffs and uncertainty. The all-out global trade war that President Trump declared on Wednesday could be enough to shatter what had arguably been the economy\u2019s final source of support, the strong job market.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cThe strength of the consumer is coming down to the jobs market,\u201d said Sarah House, an economist at Wells Fargo. \u201cAnd it\u2019s increasingly perilous.\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The sweeping tariffs that Mr. Trump announced on Wednesday, and the duties that U.S. trading partners quickly imposed in retaliation, sent stock indexes around the world tumbling on Thursday. The effects won\u2019t be limited to the financial markets: Economists say tariffs will raise prices for consumers and businesses, which will lead employers to pull back on hiring and, if the tariffs remain in place long enough, lay off workers.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-1\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">\u201cIf the economy isn\u2019t growing as fast, or it isn\u2019t growing at all, you don\u2019t need as many workers,\u201d Ms. House said.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Economists will get their latest glimpse of the job situation on Friday, when the Bureau of Labor Statistics will release March figures on hiring and unemployment.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Even before the latest salvo on trade, the uncertainty surrounding the administration\u2019s policies had led many businesses to delay hiring plans and put off expansions or other investments. A <a class=\"css-yywogo\" href=\"https:\/\/www.dallasfed.org\/research\/surveys\/tmos\/2025\/2503#tab-report\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">survey<\/a> of manufacturers released by the Federal Reserve Bank of Dallas on Monday showed that forecasts for capital expenditures in six months\u2019 time dropped sharply in March. The outlook for employment also soured as businesses turned downbeat about the overall economic backdrop.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cTrump, tariffs, massive uncertainty \u2014 how can you do business planning with all of this uncertainty and the daily changes in direction made by the Trump administration?\u201d one electronics manufacturing executive <a class=\"css-yywogo\" href=\"https:\/\/www.dallasfed.org\/research\/surveys\/tmos\/2025\/2503#tab-comments\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">said in a survey response<\/a>.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The labor market has proved remarkably resilient in recent years, defying predictions from many forecasters that the Federal Reserve\u2019s efforts to rein in inflation would lead to rising unemployment. That has helped support the broader economy: Even as Americans\u2019 savings have waned and their confidence has faded, most have held on to their jobs, allowing them to keep spending.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-2\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">But even before Mr. Trump took office, there were hints that the labor market was more fragile than the low unemployment rate and steady pace of job growth suggested. Companies weren\u2019t cutting jobs, but they weren\u2019t adding many, either. Workers had grown reluctant to change employers, and those who were looking for jobs were taking longer to find them. That caution has only intensified during the chaotic early months of Mr. Trump\u2019s presidency.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cI think there is some shakiness starting to show,\u201d said Allison Shrivastava, an economist at the job site Indeed. \u201cYou can almost think of the labor market as a rock in the ocean getting battered and getting weathered by all the other things going on in the economy.\u201d<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-3\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">Any pullback in hiring is likely to show up first in industries that are directly hurt by tariffs, like retailers that sell imported goods and manufacturers that rely on imported materials to make their products. That may already be happening: A <a class=\"css-yywogo\" href=\"https:\/\/www.richmondfed.org\/press_room\/press_releases\/2025\/the_cfosurvey_20250326\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">survey of chief financial officers<\/a> released last week showed that a quarter of the companies are scaling back their hiring and capital spending plans for 2025 because of tariffs.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">But even businesses that are seemingly far removed from the trade war could feel the effects if higher prices lead consumers to pull back their spending.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-4\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">At Woodhouse Spa, a Colorado-based chain of 88 luxury wellness centers, business has grown rapidly in recent years, as a rising stock market and strong economic growth have lifted the fortunes of the affluent households that make up its customer base. So far, there is little sign of that changing, said Ben Jones, who runs Woodhouse\u2019s parent company, Radiance Holdings.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">But with stock prices falling and surveys showing that consumers are increasingly wary, Mr. Jones is watching his sales figures closely for any signs that business is taking a hit. And tariffs will further drive up already sky-high construction costs, making it harder to expand.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">As a result, when Radiance\u2019s executives made hiring plans for this year, they took a cautious approach. Positions they had hoped to add, like a site-selection specialist to help identify potential new locations, were put on hold.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cWe openly discussed, \u2018Do we really need these positions?\u2019\u201d Mr. Jones said. \u201cIn the face of this uncertainty, let\u2019s make sure that we\u2019re only hiring exactly what we need this year.\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Radiance isn\u2019t planning on cutting any jobs. But that could change if revenues start to fall behind the company\u2019s projections.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-5\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">\u201cWe have a budget to hit,\u201d Mr. Jones said. \u201cWe obviously watch revenue very closely and need to make the hard decisions if we see we\u2019re going to start missing the budget for the year.\u201d<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-6\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">Layoffs have crept up in recent months, particularly among small businesses, which have less of a cushion against higher costs. But companies have generally responded to uncertainty by pausing hiring, not cutting jobs \u2014 in part because memories of the post-pandemic labor shortages remain fresh among hiring managers.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cI think there\u2019s still a little bit of scarring from that labor market that leaves employers really wanting to hold on to their workers,\u201d said Amy Glaser, senior vice president at the staffing firm Adecco.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">That could change if tariffs begin raising companies\u2019 costs or hurting sales. Employers may initially resist layoffs in the hope that the trade war proves short-lived. But if tariffs remain in place, job cuts are inevitable, said Noah Yosif, chief economist for the American Staffing Association.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-7\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">\u201cWhen we\u2019re going to start to see more of an acceleration in layoffs and this freeze within the labor market is if employers en masse begin to lose hope in the fact that tariffs are not going to be short-term tools designed to secure better trade deals,\u201d he said.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">High and potentially rising inflation further complicates the hiring picture for companies. When supply chains gummed up during the pandemic and costs soared, businesses were able to pass along much of those added expenses to their customers. They may be much more constrained this time around, which would force them to absorb the costs themselves.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cI\u2019d be more worried that consumers just say \u2018no\u2019 and it comes out of corporate profits,\u201d said Donald Rissmiller, chief economist at Strategas, a research firm. That would be followed by layoffs and cuts in capital spending and travel, he said, adding, \u201cI\u2019m worried about that channel.\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">After Mr. Trump\u2019s announcement on Wednesday, Mr. Rissmiller said he expected the unemployment rate to rise to 5 percent, from 4.1 percent in February. He also raised his U.S. recession odds for this year to 45 percent.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Most forecasters expect the March employment report to show a modest slowdown in hiring, punctuated by job losses among federal workers. But the data was collected in mid-March, an eternity ago given subsequent developments.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cI never thought that a month behind would be seen as ancient history, but it does seem that way now,\u201d Ms. Shrivastava said.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n","protected":false},"excerpt":{"rendered":"<p>For three years, the U.S. economy has been buffeted by rapid inflation, high interest rates and political instability at home and abroad. Yet it has proved surprisingly resilient, supported by the sturdy pillars of robust consumer spending, a rising stock market, and healthy balance sheets for households and businesses alike. But one by one, those [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1079,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[756,324,757,246,605],"class_list":["post-1078","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","tag-job","tag-market","tag-resilient","tag-trade","tag-war"],"_links":{"self":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/posts\/1078","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/comments?post=1078"}],"version-history":[{"count":0,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/posts\/1078\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/media\/1079"}],"wp:attachment":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/media?parent=1078"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/categories?post=1078"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/tags?post=1078"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}