Trend watch
Perhaps we jinxed the funding deal for the Department of Homeland Security last week. Still, as we write this, it appears that Congress once again is on the cusp of restoring funding. Regardless, most TSA agents have received retroactive pay after working without pay during a partial government shutdown that started on February 14th.
We’ll continue to include the personal tax refunds chart (slide 7, available to clients in the full report) through the end of tax filing season.
Our take
March has definitely lived up to the madness moniker this year. The Iran conflict has upended markets and the economy, injecting uncertainty and volatility.
Yet, based on a series of labor market indicators, it appears that a rebound in March payrolls is likely. Weekly jobless claims in the latest week fell to 202,000, which is nearly a two-year low. Meanwhile, continuing claims – the count of workers receiving unemployment benefits – is at 1.84 million. That’s hovering near the pre-COVID 3-year average of 1.8 million.
Other private data providers seem to be singing the same tune. Payroll giant ADP private payrolls in March increased by 62,000, led by health care, which was weak in the official February employment report, and small businesses. The ADP report also revised February’s tally upward by 3,000 to 66,000.
Separately, outplacement firm Challenger Gray & Christmas reported that layoff announcements rose 12,000 in March, but that’s down sharply from March 2025. The bulk of those layoffs were by tech companies.
Taken together, these reports suggest that payrolls rebounded in March. We anticipate job growth greater than 50,000 and that the unemployment rate will remain steady at 4.4%. We’ll find out tomorrow when the official employment report is released.
Otherwise, much of the other economic data was also solid from February retail sales and ISM Manufacturing to March new auto sales.
Bottom line
We’ve described the U.S. economy as having one foot on the gas—driven by fiscal stimulus—and one foot on the brake, reflecting trade and tariff uncertainty, underwhelming job growth, and now the Iran situation. Against this muddled backdrop, the Federal Reserve is likely to remain in a holding pattern in the near term.
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