In this video, Vanessa Welch, Empower vice president for financial insights, and Marta Norton, Empower chief investment strategist, discuss the U.S. jobs report covering February 2025. Here is a transcript:

Marta Norton: We got some reassurance with this report.

Vanessa Welch: It's jobs Friday, and the February numbers are just below expectations with unemployment ticking up. Marta Norton, our chief investment strategist, is with me this morning. Marta, markets have been on edge all week long. Does this report calm nerves or add to the anxiety?

Norton: We got some reassurance with this report. So, to your point, payrolls missed on the headline — still managed 151,000 additional jobs — unemployment rate ticked modestly higher to 4.1%. At a high level, this report should calm some nerves in the market that the economy isn't rolling over despite some of the weak soft data that we've recently seen.

Welch: This is the first full monthly assessment of the job market during Trump's second term. And when you look at the sector breakdown, it seems to align with what we've been hearing about policy shifts. We know, Marta, all eyes will be on the government sector given the Elon Musk effect. So, what are we seeing in today's report there?

Norton: Well, the government sector added jobs broadly — really just on the margin — and that was largely at the local level. We see a decline, actually, at the federal level. So, based on timing, we wouldn't expect to see a large DOGE effect in today's report. We'll know more next month. Just bear with me — I want to give a bit of context here. On the whole, estimates across employees and contractors suggest we could see as many as 600,000 fewer jobs in aggregate — though that impact won't be felt in a single report — and not all of those job reductions would impact unemployment since some of them are retirees. For some sense of scaling, it takes about 200,000 jobs to impact the unemployment rate by 0.1%. So, even in the very worst-case scenario — where all the jobs count and the unemployment rate, they hit in a single month — we're looking at a move of just around 0.3% from that effect.

Welch: So, outside the government sector, are we seeing any other movement that gives us a sense of where the economy might be headed?

Norton: We are seeing some marginal softening. You can point to the labor participation rate, which was a touch disappointing. Leisure, hospitality shed jobs. But we did see a pickup in manufacturing. That alleviates some of the pre-tariff concerns around that sector. Wages at 0.3%. That's a reassuring number, though the prior month was revised down. Now, just remember the conversation a month ago: We saw wages increase by 0.5%, and that gave some concern around inflation. So, actually, seeing that number brought down should be some sense of reassurance.

Welch: Marta, let's dig a little bit into the timing here. The Dow dropped more than 425 points yesterday as fallout from the tariff policies continues to rattle markets. Treasury yields have been falling with the dollar struggling. Some think the market's overreacting to policy uncertainty. What do you think?

Norton: Well, I think context is really critical here. Remember how we enter 2025 — with very high expectations for earnings over the course of the year and very high valuations. That leaves us very little room for any sort of disappointment, any sort of uncertainty. So, as we have increased uncertainty on the fiscal front — as concerns are rattling around about the consumer — it's not all that surprising that we could see a lot of volatility, some losses related to that uncertainty. In terms of what the ultimate impact is from the fiscal policy changes, we're really going to have to wait and see, but I think it's reasonable to assume that some of these earnings expectations need to come down.

Welch: So, bottom line — wait and see. And despite coming in below expectations, this jobs report offers some reassurance about the economy as we face uncertainty ahead. Marta, we always value your perspective. Thanks so much for being with us this morning, and big thanks to all of you for watching Taking Stock. Marta and I will be back next week to analyze the inflation numbers — or sooner if we see major moves in the market. Have a great weekend.