Overview of Upcoming Jobs Report

The U.S. economic landscape is poised for scrutiny as the Labor Department is set to release the April jobs report. This report is expected to provide critical insights into whether the economy is experiencing merely a temporary setback due to tariffs or facing a more prolonged downturn.

Expectations and Reactions

Economists forecast an increase of 133,000 jobs in nonfarm payrolls for April, a decline from March’s 228,000. This figure, while falling short of March’s performance, remains close to the average of 152,000 seen in the year’s early months. Such growth is anticipated to keep the unemployment rate around 4.2%.

Mark Zandi, chief economist at Moody’s Analytics, indicated that a payroll increase near 150,000 would keep market sentiments stable, stating, “If it’s around 150,000 give or take, I think all will be forgiven.” However, he cautioned that any significant drop, specifically below 100,000, could lead to negative market reactions.

Challenges Facing the Economy

This week has seen investors digest a range of troubling economic indicators, including a 0.3% contraction in the GDP during the first quarter. ADP’s report of only 62,000 new jobs, job openings declining to 7.2 million—the lowest since September 2024—and increasing jobless claims have contributed to growing concerns.

The current situation is compounded by rising unemployment rates among recent college graduates, which reached 5.8% in March, along with a sharp increase in the underemployment rate to 41.2%.

Worker Sentiment and Wage Satisfaction

Employee attitudes reflect increasing dissatisfaction, as wage satisfaction has plummeted to 54.8%, the lowest since November 2021. Interestingly, the average acceptable “reservation” wage has dropped nearly 10% from its peak to $74,236.

Adding to these challenges, the impact of federal workforce reductions is likely to escalate as the Department of Government Efficiency has announced significant job cuts since January. Reports indicate that approximately 281,452 federal positions have been eliminated. However, researchers estimate that including contractor impacts, the total figure may reach as high as 1.2 million job losses, the full effects of which may not be felt until later in the year.

Looking Ahead

Despite the grim outlook, Citigroup predicts a job growth figure of 105,000, which while not impressive, could represent the pace needed to maintain the current unemployment level amidst slowing immigration.

The forthcoming report will also provide wage growth data, anticipated to show a 0.3% increase in average hourly earnings for April, leading to a year-over-year rise of 3.9%, a slight improvement over March’s figures. The report is scheduled for release at 8:30 a.m. ET.