Economists expected a slow month. They got something much worse.

What the Report Said

The Bureau of Labor Statistics reported Friday that nonfarm payrolls fell by 92,000 in February — the third time in five months the economy has shed jobs. The unemployment rate edged up to 4.4%. Economists had forecast a gain of around 50,000 to 60,000 jobs and a steady 4.3% unemployment rate.

The report also revised December's previously reported gain of 50,000 jobs to a loss of 17,000. According to NBC News, that makes 2025 the first year to record five months of labor market contractions since 2010. Bankrate senior analyst Mark Hamrick summed it up in three words: "Well, that was ugly."

Was Any of It Temporary?

There were real one-time factors. A Kaiser Permanente nurses strike sidelined more than 30,000 workers during the BLS survey week, accounting for most of the 28,000 healthcare jobs lost. A severe cold snap hit construction and hospitality. Both should partially bounce back in March.

But Indeed's Hiring Lab noted that even stripping out the strike, the report was still deeply negative. Job losses spread across healthcare, leisure and hospitality, manufacturing, construction, and the federal government. CNBC reported that federal employment has dropped 330,000 — or 11% of its workforce — since October 2024.

What It Means for the Fed

The report hit the same morning oil crossed $90 a barrel. That combination put the Fed in an impossible spot: a weakening job market normally calls for rate cuts, but surging oil prices push inflation higher — leaving the central bank with no good options.

San Francisco Fed President Mary Daly told CNBC: "Both of our goals are risks now and we have to keep our eyes on both." Wages grew 3.8% year-over-year in February — still above inflation — but the labor force participation rate fell to 62%, its lowest since December 2021.

The Fed meets March 17. No one expects a cut. The question is how much worse things have to get before that changes.