Celebration of strong job growth is tempered by concern over what comes next: Economists react to March employment data

By Greg Robb

It could be May or June before the effects of the war in Iran on labor market will be seen

The economy has added an average 68,000 jobs per month this year.

Although the addition of a healthy 178,000 jobs in March was "stirring," and the unemployment rate ticked down to 4.3%, economists were muted in their celebrations, as the impact of the war in Iran on the labor market is still unknown.

Economists polled by the Wall Street Journal had expected the addition of 59,000 jobs and an unemployment rate of 4.4%.

See: U.S. jobs report shows 178,000 workers were hired in March. But the hiring boomlet is unlikely to last

Below are some initial reactions from economists and other analysts, including their views on what the jobs report means for the Federal Reserve.

-- "Today's increase is significant, but it doesn't mean the labor market is back on track or growing robustly. Should the conflict continue, we will likely begin to see those effects on the labor market around May or June. So this and the next jobs report will probably look like many of those in the recent past: mediocre - neither alarming nor impressive," Elizabeth Renter, senior economist at NerdWallet, said in a note.

-- "Though nonfarm payrolls surprised to the upside, the March jobs report doesn't change our assessment that the downside risks to the labor market have increased due to the Iran war. The baseline still calls for the Fed to look past the one-time boost to inflation from higher oil prices and lower rates twice this year to prevent any future weakening of the labor market," Nancy Vanden Houten, lead U.S. economist at Oxford Economics, said in a note.

-- "We expect a largely frozen labor market in 2026, characterized by selective hiring, compressed wage growth and strategic workforce resizing as labor supply remains historically strained," Lydia Boussour, senior economist at EY- Parthenon, said in a note.

-- "Although the visuals are stirring, we do not think there is a good reason to expect this is going to change too much for the Fed's outlook. The data is mostly backward looking, and likely does not incorporate any impact from the recent rise in energy prices, or other risks related to the war in Iran. For now, there is nothing here that suggests they need to act soon," Thomas Simons, chief U.S. economist at Jefferies, said in a note.

-- "The Fed just yesterday published a research note that the new breakeven rate [the number of jobs that is needed to keep the unemployment rate steady] is 10,000. It tells you that 68,000 jobs created over the past three months is a blowout number and the momentum in the economy is quite strong at the moment. The risk is that we will continue to see inflation stay higher for longer. The first rate cut, as we speak, is now seen in October 2027. That's far out in the future. The market is not expecting that rates are going to come down anytime soon," Torsten Slok, chief economist at Apollo, said in an interview on Bloomberg.

The stock market SPX was closed Friday. There was a modest selloff in Treasurys BX:TMUBMUSD10Y. The market thinks the Fed will keep rates unchanged all year.

-Greg Robb

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04-03-26 1103ET