Negative growth of 92,000: The US economic puzzle behind the surprising February non-farm payrolls

On the evening of March 6th, Beijing time, a piece of news shook the global capital markets: the US non-farm employment decreased by 92,000 in February, far below market expectations of a 55,000 increase, marking the second monthly negative growth since 2020. The unemployment rate unexpectedly rose to 4.4%, above the expected 4.3%.

This is data enough to make the market "doubt its own existence."

1. The Big Picture: Where Does the Chill Come From?

On the surface, the deterioration in February employment data is protected by a "one-off factor"—the U.S. Bureau of Labor Statistics pointed out that harsh winter weather and a strike by over 30,000 employees at Kaiser Permanente significantly dragged down the figures for the month. The strike coincided exactly with the survey week, directly leading to a reduction of 28,000 jobs in the healthcare sector.

But looking at the longer term, the chill cannot be fully explained by weather and strikes.

This is the third time employment has declined in the past five months. The BLS also revised historical data: December non-farm payrolls were revised from +48,000 to -17,000, and January from +130,000 to +126,000, a total downward revision of 69,000 compared to previous figures. These revisions further reinforce market concerns about ongoing softening in the employment market.

By industry, negative news is almost everywhere: manufacturing jobs decreased by 12,000, contrasting with the Trump administration’s policy goal of bringing manufacturing back through tariffs; information services decreased by 11,000, a sector that has shed about 5,000 jobs per month over the past 12 months, widely believed to be related to AI-related layoffs; transportation and warehousing decreased by 11,000; federal government employment decreased by 10,000. Since October 2024, federal employment has fallen by a total of 330,000, accounting for about 11% of the total workforce.

2. The Wage Paradox: Coexistence of Job Contraction and Wage Resilience

Against the backdrop of overall weak employment data, wage figures defied expectations and strengthened, adding complexity to the Federal Reserve’s policy judgment. In February, average hourly wages rose 0.4% month-over-month, unchanged from January, exceeding market expectations of 0.3%; year-over-year growth accelerated from 3.7% to 3.8%, also surpassing market forecasts.

This combination of "cooling employment and sticky wages" is a typical feature of stagflation. The continued rise in wages indicates that although the job market is cooling, labor cost pressures have not eased accordingly. Seema Shah, Chief Global Strategist at Principal Asset Management, warned that these employment figures are pushing the US economy toward stagflation.

3. Oil Prices Surge: External Shock Adding Fuel to the Fire

Contrasting sharply with the weak employment market is the sustained surge in crude oil prices. Driven by escalating conflicts in Iran and disruptions in shipping through the Strait of Hormuz, international oil prices soared—WTI crude futures for April jumped 12.21%, with a weekly increase of 35.6%; Brent crude futures for May surged 8.52%, with a weekly gain of 27.88%.

The rise in oil prices exacerbates economic complexity through two channels. First, inflation transmission: rising energy prices directly increase costs across industries, intensifying inflationary pressures. Second, monetary policy dynamics: soaring oil prices trigger concerns about inflation rebound, affecting market expectations for Fed rate cuts.

JPMorgan Wealth Management Chief Investment Strategist Ellen Zentner noted in a report that, combined with Middle East conflicts pushing oil prices higher, renewed tariff uncertainties, and the complex story of the labor market, the Fed faces a tricky stagflation risk scenario.

4. The Dilemma: The Fed’s Confusion and Powerlessness

After the non-farm payrolls were released, traders slightly increased bets that the Fed would cut rates at least once by 2026. According to CME’s "FedWatch," the probability of a 25 basis point rate cut by June rose to 40%, up from 31.5% before the release.

However, the path to rate cuts is far from straight. Some analysts warn that amid escalating tensions in the Middle East, concerns about stagflation are intensifying, and the Fed may face a dilemma of indecision.

Nick Timiraos, chief economics correspondent at The Wall Street Journal, known as the "voice of the Fed," pointed out that this report brings the Fed "one step closer" to its most feared scenario—simultaneous inflation rise and employment decline.

Fed officials’ statements also show clear divergence. Fed Governor Waller believes that the Middle East war will not have a lasting impact on US inflation and reiterated his inclination toward rate cuts. San Francisco Fed President Daly said that the February employment report deepened her concerns about the labor market, but with rising oil prices, persistently high inflation presents "dual risks."

Olu Sonora, US economist at Fitch Ratings, told Jiemian News that with renewed tariff tensions and rising energy prices bringing new inflationary pressures, the Fed is essentially in a state of confusion, waiting for these data to stabilize.

5. Market Reaction: Panic Spreading

On March 6th, Eastern Time, US stocks plummeted across the board. The Dow Jones Industrial Average briefly fell over 900 points during the day, the Nasdaq dropped 1.59%, and the S&P 500 declined 1.33%. The VIX fear index rose 22%, reaching its highest level since April last year.

Bob McNally, President of Rapidan Energy Group, said, "Investors’ sentiment has quickly shifted from complacency to near panic, and a real panic moment may be imminent."

Jeff Palma, Head of Multi-Asset and Macro Research at Cohen & Steers, pointed out, "On one hand, the economy is weak; on the other, oil prices are soaring. This combination makes it very difficult for the market to digest."

Conclusion

Negative growth of 92,000, a 4.4% unemployment rate, 3.8% wage growth, and soaring oil prices—these data collectively sketch a complex picture of the US economy in spring 2026.

This is not simply a story of economic slowdown, nor just inflation. It is a combination of both, a re-emergence of stagflation shadows. For the Federal Reserve, the dual pressures of the labor market and inflation are pushing monetary policy into an unprecedented crossroads. $BTC

As revealed in the latest "Beige Book" from the Federal Reserve, all 12 Federal Reserve districts report rising prices, with widespread mentions of increasing costs for insurance, energy, and raw materials. Against the backdrop of tightening geopolitical tensions raising import costs, the dual pressures of the labor market and inflation are testing the resilience of the US economy and the wisdom of policymakers. #2月非農意外負增長