‘ugly’: Trump’s Job Market Shrinks As Oil Fears Mount

Oil prices are spiking, and the job market is contracting. That’s a dangerous combination for President Donald Trump as Republicans gear up for midterm elections that will be defined by concern about the economy.

The Labor Department on Friday said U.S. employers shed 92,000 jobs in February and lowered estimates for the previous two months, a downside surprise that erases the substantial gains the White House had celebrated only last month. The unemployment rate ticked up to 4.4 percent.

With the Iran conflict having pushed oil prices close to $85 a barrel, economists are warning that the combination of shocks could weaken the economy.

E.J. Antoni, the chief economist at The Heritage Foundation and Trump’s first pick to lead the Labor Department's Bureau of Labor Statistics, called it an “UGLY jobs report.”

There’s “no way to sugar coat it, and the downward revisions still aren't fixed,” the conservative economist posted on X. “And this was all BEFORE we attacked Iran and spiked energy prices.”

The combination of a weakening labor market and higher energy prices poses serious risks to Republicans in the coming months as the administration tries to repair Trump’s approval rating on the economy.

White House officials are looking for ways to bring down gas prices. Treasury Secretary Scott Bessent announced temporary sanctions relief for Indian fuel-makers with regard to Russian oil on Thursday. A prolonged oil shock risks pushing up consumer prices — creating even more pressure on inflation — and that would make it much harder for Federal Reserve officials to lower short-term borrowing costs.

In a statement, White House spokesperson Kush Desai said that that private-sector jobs growth has still expanded through the first two months of the year — even with a large hospital strike having dragged down payrolls — and that the administration is "doing its part to unleash robust, private sector-led economic growth with tax cuts and deregulation that are fueling trillions in investments along with booming wage and productivity growth. It’s high time for the Federal Reserve to cut interest rates and stop foolishly strangling America’s economic resurgence under President Trump.”

The Commerce Department also reported Friday that retail sales — a critical barometer of economic health — fell in January as consumers pared back from holiday spending.

The recent surge in oil prices becomes a bigger deal if “it becomes more permanent,” Fed Governor Christopher Waller said on Bloomberg TV. “Then it’ll start bleeding through to other parts of the economy. Energy is a big part; it feeds into everything else.”

The contraction in payrolls was evident across both the public and private sectors. Government payrolls have shrunk considerably since Trump’s election, falling by about 11 percent since October 2024. But losses were spread across many sectors, including in both health care and leisure and hospitality — two industries that have been among the rare bright spots for payroll growth over the last year.

“Let's be careful not to be excessively alarmist about a stagflationary scenario,” said Gregory Daco, the chief economist at EY-Parthenon. But given the supply shocks the U.S. economy has withstood in the form of immigration restrictions, geopolitical turmoil and rising oil prices, “stagflation does become a growing risk.”