Posted on 03/10/2026 7:55:04 AM PDT by lasereye
Last Friday’s jobs report from the BLS shocked the market by claiming 92,000-jobs were lost in February, after the economists’ consensus called for +55,000-new jobs. Two-days previously, ADP had reported 63,000 private-sector payroll jobs being created in February – the strongest monthly private payroll gain reported by ADP since last July. ADP chief economist Nela Richardson explained this surge in jobs: “We’ve seen an increase in hiring and pay gains remain solid, especially for job-stayers,” adding this caveat: “But with hiring concentrated in only a few-sectors, our data shows no wide-spread pay benefit from changing jobs. In fact, the pay premium for switching employers hit a record low in February.”
Following this bullish ADP jobs report, the market rose on Wednesday, but then it reversed those gains for the rest of the week when the Labor Department reported 92,000-fewer payroll jobs in February, a miss of -147,000 from the expected gain of 55,000-jobs. Furthermore, the Labor Department revised the previous two-months down by 69,000 – from +48k in December to -17k, then a small drop from +130k to +126k in January. Put it all together and payrolls have declined in two of the past three-months, and five of the past nine-months. Also, the unemployment rate rose to 4.4% in February, up from 4.3% in January.
The good news is hourly earnings rose by 0.4% (a 5% annual rate) to $37.32 per-hour, but the severe winter-weather curtailed construction jobs and there was a strike by Kaiser healthcare workers (as 28,000-healthcare jobs disappeared), so due to negative payroll reports in December and February, the Federal Open Market Committee (FOMC) may be more inclined to cut key interest rates at its meeting next week.
Another impact of the jobs report came when 10-year Treasury bonds briefly fell below 4% and mortgage rates fell below 6% for the first time since 2022. A flight to quality is clearly underway as some nervous investors flee stocks. The market is also fighting a severe bout of “AI derangement syndrome,” based on fears unemployment will continue to soar as AI replaces many types of workers. Although Nvidia’s founder Jensen Huang said Wall Street was mistaken (by saying AI is bad for software stocks), the media continue to perpetuate these AI fears, perhaps because these pundits are worried about layoffs themselves.
The other big news on Friday came from the Commerce Department, which said retail sales declined by 0.2% in January. Excluding autos and gasoline, retail sales rose 0.3%, but only seven of 13-categories fell in January, so retail sales continue to sputter and may help convince the Fed to cut key interest rates.
Speaking of the Fed, Minneapolis Fed President Neel Kashkari said one or two key interest rate-cuts would be appropriate this year, if inflation cools. He also said the war in Iran could justify an extended pause. Kashkari described the labor market as steady to soft. Kashkari is open to further key interest rate-cuts, but he implied they would have to be triggered by weak payroll data or favorable inflation data.
In other economic news, the Institute of Supply Management (ISM) said its manufacturing index came in at 52.4 in February, down slightly from 52.6 in January. This was the second-consecutive month the ISM manufacturing index rose above 50, signaling an expansion. The new orders component came in at a healthy 55.8 in February (down from 57.1 in January), while the production component was 53.4 (down from 55.9 on January). The best news was the “backlog of new orders” component surging to 56.6, up from 51.6 in January. (It is possible severe winter weather in February helped to boost the new order backlog). Overall, fully 12 of the 17-industries ISM surveyed reported an expansion during February.
On Wednesday, ISM reported its non-manufacturing (service) index rose to 56.1 in February, up from 53.8 in January. This represents the 20th straight month the ISM service index has been over 50 and signaling an expansion. The business activity component surged to 59.9 in February (up from 57.4 in January), while the new orders index soared to 58.6 in February (up from 53.1 in January). The largest jumps were in the “backlog of orders” component, rising to 55.9 in February (up from 44 in January) and the “new export orders” component, which surged to 57.2 in February (up from 45 in January), as fully14 of the 17-service industries ISM polled had reported an expansion in February.
All this tells me the job losses reported last Friday may be temporary or misleading, as the economy is doing just fine. I expect fourth-quarter GDP growth to be revised upward, since the Labor Department on Thursday reported productivity rose at an annual pace of 2.8% in the fourth-quarter, which was substantially higher than the economists’ consensus estimate of 1.9%. The Labor Department also revised productivity up to 5.2% in the third-quarter, which is truly stunning. If such robust productivity growth persists, my prediction of 5% annual GDP growth should arrive soon, perhaps by the second-quarter!
One last item, the European Union (EU) is trying to take budget planning away from EU members with more than 115% debt-to-GDP ratio. This has Italian Prime Minister Giorgia Meloni reportedly furious at Brussels and Germany, where this budget planning threat originated. I stand by my prediction Italy could become our 51st state, since the U.S. could offer to assume the Italian debt and have Italy abandon the euro in favor of the U.S. dollar. As the value of the dollar continues to strengthen, this will make an Italian switch to the U.S. even more attractive, plus all tariffs against Italian products would be removed. Since approximately 40% of Americans have some Italian heritage, Italy would be welcomed to the USA!
However, Spain will not become the 52nd state! In a press meeting with German Chancellor Merz at the White House, President Trump said the U.S. is going to “cut off all trade with Spain.” Trump is furious after socialist Spanish Prime Minister Pedro Sanchez refused to allow U.S. planes at NATO bases in Spain to participate in the attack on Iran, which Sanchez opposes. After Sanchez called the U.S. operation a “disaster,” President Trump threatened to take over Spanish bases. Also, Spain is not meeting its NATO obligations. Trump said, “Spain has been terrible” (although the U.S. enjoys a trade surplus with Spain!).
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If we get 5% GDP growth this year (which is very high), it won't necessarily result in huge employment gains. AI is eliminating jobs in the short run.
One set of “Facts” are government propaganda, The other set is... well.... actual numbers. You Decide.
There was also a counter-intuitive datum from this report that isn’t mentioned much. Part-time employment took a big cut. Either people don’t need the work, or employers are turning those part-time positions into full-time ones, or employers are shrinking hours again. However, productivity took a big jump, so maybe the last.
Annual pay up 4.5%.
Private sector jobs up 63,000.
And according to CNBC's report of the Friday jobs report:
The report was made shortly before the 30,000 jobs strike in Hawaii was resolved. (In other words, instead of 92K jobs losses it's 62K.)
10K of the job losses were federal govt jobs. No crying here over that.
Plus, the jobs report had this (quote from CNBC):
A broader measure of unemployment that includes discouraged workers and those holding part-time positions for economic reasons moved lower, to 7.9% or 0.2 percentage point below the January level.
In other words, there's a higher percentage of full-time working wannabees working full-time instead of settling for part-time work.
Weather related. Deported job holders.
There is ongoing drop in government jobs.
And lots of illegals left!
So, maybe, the drop is because illegals self deported and their jobs were not filled up yet?
Over the last 10 years 5 million Indians and Pakistanis’ have been brought into the USA to replace all American tech workers in the USA. That is just a fact.
Removing hundreds of thousands or millions of illegals will reduce demand somewhat, as they did eat in restaurants, shop at stores, utilize housing, etc. And the cuts in government bloat also show up as lost jobs, even if they weren’t doing anything useful. So don’t be disheartened by lackluster jobs reports as the mess in America gets cleaned up. The real issue is per-capita productivity in goods and services that people actually want.
I was wondering how AI replaces humans and how I can get on the train. I’ve come up with a way to assist the Democrats. Requirements:
1) identify/define the issues
2) determine where President Trump stands
3) identify words and terms that can be confusing
4) develop talking points
5) write speeches that are geared to defy common sense and confuse voters.
Their statements on ICE fit that perfectly.
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