The U.S. added 178,000 jobs in March, beating expectations and reversing February’s ugly 133,000 decline. Unemployment ticked down to 4.3%. On the surface, everything looks fine.
Except it’s not.
Peel back the headline number and the picture is far less rosy. Nearly half of March’s job gains came from health care—76,000 positions, with 35,000 of those simply Kaiser Permanente workers returning after a February strike. Strip that out and you’re left with tepid growth at best.
Worse, the unemployment rate only fell because 396,000 people dropped out of the labor force entirely. That dragged the labor force participation rate down to 61.9%, the lowest since November 2021. When fewer people are even trying to find work, the unemployment rate becomes a statistical mirage.
Wage growth? Disappointing. Average hourly earnings rose just 0.2% for the month and 3.5% year-over-year—the slowest annual pace since May 2021. Hours worked also declined slightly.
Here’s the real story: The labor market has been flatlining for months. The three-month average for job creation is a measly 68,000. Since April 2025, hiring has been nearly nonexistent. The St. Louis Fed recently estimated the economy only needs about 15,000 new jobs per month to keep unemployment stable. By that measure, March’s number is fine—but it’s hardly a reason to celebrate.
The Federal Reserve is watching all of this closely. With inflation still above target and oil prices surging due to the Iran conflict, the odds of rate cuts in 2026 are evaporating. Markets now assign a 77.5% probability the Fed stays frozen through year-end.
Bottom line: March’s jobs report won’t change the Fed’s mind, and it won’t change the reality that this is a cooling labor market in slow motion. If you’re a job seeker, buckle up—it’s going to be a tough spring.
