Fed Watch – 3/6/2026

The below transcript is a literal translation of the podcast audio that has been machine generated by Notta.

Hi, I’m Lauren Saidel-Baker, and thank you so much for joining us for this March 6th edition of Fed Watch. Well, it’s Jobs Friday, but don’t panic yet. Despite that headline 92,000 job loss that was reported in February, we’re really gonna unpack what this means for the economy for the Federal Reserve. And again, it is too soon to panic.

One poor print, even missing expectations by as much as this does, does not mean our economy is necessarily on shaky ground. First and foremost, employment is a lagging indicator. This is not leading the macroeconomic cycle. This tells us where we have been and not where we are going next. But let’s really unpack what’s happening in that number. The biggest, well, one of the larger of the negative contributing factors is actually only a temporary one. The healthcare segment saw a loss of about 28,000 jobs. However, that was heavily influenced by a strike in California and Hawaii of 30,000 workers. And those are only going to be temporary losses that were reported in February. This strike has since been resolved. Those workers are now back to work. So we’ll see those numbers bounce back in subsequent reports.

But really what’s more interesting here, if we look at healthcare specifically, we have been talking month in and month out about how many of these job gains were concentrated in the healthcare and the social services sector. By some estimates, that has been the entirety of jobs gained in the year 2025. And even if it wasn’t every single job gained, it certainly was the vast majority of these jobs on a net basis. So healthcare, social services, education is another one. These are not the traditional engines of a macro economy. For that to be where we have been gaining the most jobs, that really says something about the type of breakdown that we’ve been seeing over time.

In the most recent report, again, we’re really seeing that breakdown of a little bit more negativity in the healthcare, the social assistance space, leisure and hospitality, also somewhat negative. But what we really want to delve into here are the types of jobs that do turn those more fundamental wheels, looking at things like manufacturing, like construction. Anytime we look at these segments, or anytime I have a one-on-one consulting conversation in these spaces, we’re still seeing key skills gaps. There are still certain jobs, certain roles. The two big ones that come to mind for me right now are welders and CNC machine operators. Those are just not finding the same labor supply that’s really needed for demand today.

Now, also reported in today’s numbers, wages are up and they’re actually up more than expected. We saw this back on Wednesday with the private payrolls survey that came out. Wages are still very strong. To me, again, that speaks to that skills gap, that speaks to the need to retain top talent. If you can find the right person doing the right thing, companies are increasingly willing to pay them more.

Companies really don’t want to lose that qualified talent that they have. So, well, yes, the unemployment rate did tick up. And if you are one of those folks who did lose a job or can’t find one, I know that feels like a challenging number, but an unemployment rate of just 4.4%, historically, this is still somewhat low.

We’re still in the ballpark of where the Federal Reserve is looking for that full employment number to be. And again, I really want to come back to our first point today. Employment is a lagging indicator. There was so much uncertainty. So many unprecedented trends in 2025, those are going to be a drag on hiring. Those hiring managers are still looking in their rear view mirror. They are still feeling all of that uncertainty, all of that negativity. We’re finding that it’s a little bit harder to pull the trigger to make that new hiring, if in fact you can even find that qualified individual to fill the job opening. So just this week, the Director of the National Economic Council said that with immigration trends being where they are today, he thinks the breakeven employment number is more in the 30 to 40,000 job range. So to have, yes, a big miss as we had in February, certainly that says something, but I think we’re also going to have to normalize some of these slightly lower, albeit positive numbers, which is really where our job gains have been averaging in recent months. But I love that uncertainty, this drag overall that we’re still feeling that backward looking sentiment that is going to remain a drag on hiring numbers and on future job reports at least into the first half of this year.

This is where I think companies can make the differentiation. We are in a, time that this economy is going to show different winners and losers. And it’s easier than ever to see the divergence between the two, because as we’re in this environment of relatively slower, still positive, but slower growth with more persistent inflation, while that’s a challenge for the fed, we’re not getting the same type of lift with rate cuts that we would have given just a growth concern picture.

The challenge for businesses is that this leads very, very easily into a time of profitless prosperity. That’s the term we have here at ITR economics. And that’s the real risk factor for businesses out there decisions in a time like this in uncertain environments, decisions become much more reactionary. You aren’t the visionary leader that you want to be because you’re almost playing defense. There’s a playbook to get around that. We actually have a webinar coming up here at ITR economics on March 20th. We’ll put a link in the description below. If you want to see that playbook into how to avoid profitless prosperity, how to just miss that pitfall altogether, I think it is going to be a risk for some of your competitors. Do not fall victim to this. Please join us on March 20th. I’ll be there watching. It’s going to be a great webinar with some really strong strategies, but beyond that, don’t be caught up by this uncertainty that is out there.

It is not going away anytime soon. In fact, we are starting to see more pressures build, whether it’s from a geopolitical or even from a judicial court based side of the equation. There are so many reasons out there to feel uncertain in your decisions.

The federal reserve teetering on that edge. Will they, won’t they? We don’t expect many rate cuts this year. Certainly I don’t see any coming very soon. The market’s still split about 50 50 for a cut to come in the June meeting, but this is not what we should be banking on. Rates are where they are. We know the pressures of inflation. We know the drag caused by some of these growth concerns. It’s up to you to get out in front of it. So we will be right back here next week talking more about it. I hope you’ll join us then until then. Thank you so much for joining us today on ITR economics Fed Watch.