Looking at January's jobs report... Not as rosy as it might appear... A 900,000-job gap that's being ignored... Interest rates will likely hold steady in March... A risk to stocks...
On the surface, today's jobs report looked good...
This morning, the Bureau of Labor Statistics reported that the U.S. economy added 130,000 jobs last month.
That was well above Wall Street's "consensus" estimate of 55,000 new jobs. And it beat 79 out of the 80 individual estimates tracked by Bloomberg.
This wasn't the only good-looking number in this monthly "nonfarm payrolls" report. Thanks to those new jobs, America's unemployment rate fell to 4.3%, while Wall Street expected the rate to remain at 4.4%.
So, at first glance, the labor market had a good start to the year. In a post on Truth Social this morning, President Donald Trump posted that January's jobs numbers were "FAR GREATER THAN EXPECTED!"
He added that the report means the U.S. "should be paying MUCH LESS on its Borrowings (BONDS!). We are the strongest Country in the World, and should therefore be paying the LOWEST INTEREST RATE, by far."
This angle shouldn't come as a surprise to anyone who knows Trump's desire to cut interest rates, but today's market reaction might.
Why didn't the market take off higher today on this "good news" about jobs? The major U.S. indexes all fell slightly, and the benchmark S&P 500 Index was little changed. Only the energy sector was up significantly.
Well, as we'll explain, today's report wasn't as glowing as it might appear... And for folks focused on interest-rate cuts, these job numbers might be the opposite of what they'd want to see.
We'll start with the revisions...
For the 12 months ending March 2025, the Department of Labor just revised total job gains lower by 862,000. That's a revision of 0.5%, more than double the average annual revision of 0.2%, according to the Bureau of Labor Statistics.
And the Labor Department revised 2025's total job additions to 181,000, down from the initial reading of 584,000. Put another way, the economy added fewer than one-third of the jobs that the Labor Department counted last year.
These same revisions say that in the final six months of 2025, the economy lost a net of 1,000 jobs.
And while today's initial numbers for January were stronger than any other report since December 2024, it's quite possible they'll also be revised in the months ahead. Either way, they're not enough to say a new growth trend has begun.
Other numbers suggest a tough environment for job seekers...
For one thing, in today's report, growth was concentrated mostly in health care and related fields like nursing facilities.
Looking broader, in December, the monthly Job Openings and Labor Turnover Survey ("JOLTS") showed that there were about 6.5 million job openings. But 7.5 million people were without jobs at the end of the year. In January, that number edged lower to about 7.4 million.
So about 900,000 to 1 million more folks are looking for jobs than there are positions to fill. As we wrote in the September 4 Digest, that's a red flag for the labor market. From that Digest...
Since late 2000, when the JOLTS survey began, the number of unemployed has only jumped above total job openings twice – in 2000 and 2020. Both of those times marked recessions.
It's not a surefire sign that a recession is on the way this time around. But there's a red flag here. For the first time in four years, more folks are looking for work than there are jobs available.
Back then, only about 180,000 more people were looking for work than the number of job openings. That ratio has gotten even worse over the past few months – and now stands at the highest level since March 2021. And it comes at a time when the average duration of unemployment is still right around a four-year high of 24 weeks.
As our colleague Mike Barrett wrote this morning in his weekly Select Value Opportunities update, three new data points just last week pointed to a softening labor market...
Payrolls administrator Automatic Data Processing (ADP) reported that private employers added 48% fewer jobs in 2025 than in 2024 (398,000 compared with 771,000). Also, January private payrolls rose by just 22,000, compared with the FactSet consensus of 45,000.
On February 5, the Bureau of Labor Statistics reported that job openings sank 386,000 in December... and declined nearly 1 million for the year. Ideally, this figure rises and businesses expand. Job openings are now the lowest they've been since the early months of the COVID-19 pandemic (September 2020).
Outplacement firm Challenger, Gray & Christmas also announced the highest number of job cuts to start the year since 2009 (108,435). These cuts were more than double the January 2025 figure (49,795). The biggest workforce reductions came from United Parcel Service (UPS) (31,243) and [Amazon (AMZN)] (16,000).
Meanwhile, the firm reported just 5,306 new hires last month, down 13% from a year ago.
So, all is not well in the jobs market. It'll take more than one month of better-than-expected labor data to say the trend has turned around.
What this all means for the overall market...
Jobs numbers moving ahead will influence Federal Reserve policy and its next decision.
The Fed doesn't meet again until March 17 and 18. So there's another monthly jobs report on the way before our central bankers have to make another decision about interest rates. But if February goes anything like January, we likely won't see a rate cut in March.
That's what Fed members are telling us...
Yesterday, two Fed voting members in 2026 – Dallas Fed President Lorie Logan and Cleveland Fed President Beth Hammack – both made public comments in favor of holding rates steady. Hammack even said that she forecasts rates could be on hold "for quite some time."
The Labor Department's revisions show the jobs market isn't as strong as January's initial numbers might indicate. But the economy is still adding jobs – just at a slower pace. And the unemployment rate has now ticked lower for two straight months.
So while the labor market has cooled off (and cracks are definitely forming), this current group of Fed policymakers doesn't believe it has worsened to a level where support is needed.
After today's jobs report, CME's FedWatch tool now only sees about a 5% chance of the Fed cutting interest rates in March. That's down from 20% odds just yesterday.
Still, with $9 trillion in debt coming due this year, Trump is going to continue his calls for lower rates. It's not to juice the economy, the Fed's usual reason for a rate cut... but so the government doesn't have to pay so much interest on its debt.
But lower rates may not be a panacea for the market – even after Trump's Fed chair nominee, Kevin Warsh, likely takes over in May. Here's more from today's Select Value Opportunities...
If employment data continues to weaken into June, but PCE [personal consumption expenditures] inflation remains well above 2% (which we believe it will), Warsh will quickly face his first test on interest-rate policy... just a few months before the midterm elections.
Warsh could aggressively cut rates as a way to improve employment. After all, lower borrowing costs encourage companies to expand operations, including hiring.
That could boost stocks... and appease Trump. But it could also push longer-term bonds sharply higher, in anticipation of worsening inflation. So it's a tricky situation.
We've seen these tricky situations before. They tend to be volatile for the markets.
Higher longer-term yields – which are more market-driven than Fed-policy influenced – could also eat into stock prices.
Either way, in the end, the currency always loses. It's just a matter of how much.
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In today's mailbag, feedback on yesterday's Digest about surviving a "K-shaped economy"... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"Dear Corey and Nick, Yes, the lack of asset ownership contributes to being on the lower limb of the K. With so many students not being proficient in math, it's hard to imagine they are graduating with an understanding of compound interest or dividend reinvestment. Perhaps corporate America could help.
"As a teenager 55 years ago, I worked at McDonald's and knew nothing about stocks. Imagine if they had given me even one share of stock along with a bit of education. Who knows what that would be worth today. Maybe I would have started investing more wisely decades ago. How hard would it be for corporations to give employees a few shares along with some education and a required holding period?
"On a hopeful note, my third grader grandson was pleased to report that he had made a few bucks shoveling driveways with his friends. When he mentioned a teacher had introduced the stock market, I told him, you know, with stocks, you can make money while you sleep." – Subscriber Steven M.
"The fact that you only talk about the wealthy and the low-income makes you part of the problem. The real issue in this country is the intentional destruction of the middle class. This is what our country was built on. Now, as a business owner in construction who makes over $200k/year with a wife and two girls it has become nearly impossible to continue to move forward. Thankfully, I have paid off our home and cars in Huntington Beach, CA and do not carry credit card debt and invested in 529's for our girls. I own physical and investable gold, silver, and platinum. I own high quality equities and balanced low-cost index funds. But business is slower than it has been in the last 20 years...
"I do my best to max out our ROTH contributions every year, but at 51 the portfolio returns simply cannot keep pace with the intentional massive depreciation of our currency, market manipulation and computer/AI trading, the decimation of our purchasing power, the excessive increases in all prices (food, insurance, health care, property taxes, college costs, the ever increasing costs of doing business, travel, etc.), the intentional and idiotic global economic shutdown, tax increases, the lack of value from the food, goods, and services we are forced to purchase while our government prints money into oblivion to sponsor foreign wars, bail out destructive corporations, allows senators to make millions off insider information, allows lobbyists to continue their insidious practices, and so much more.
"So, you writing about the greater margin between the rich and the poor is [BS]..." – Subscriber T.J.C.
Corey McLaughlin comment: This may surprise you, but I agree with almost everything you said... just not your implication that we shouldn't have covered the topic.
It's true that we highlighted ongoing problems for the lower leg of the "K" yesterday, with rising delinquencies on credit cards and auto loans. But we also wrote directly about the influence of the depreciation of the U.S. dollar on the middle class.
We ran this excerpt from a 2023 Digest yesterday. It's worth sharing again...
[We] want to draw your attention most to the trend among the richest 1% and the group that makes up the top 50% to 90th percentile, which is roughly the middle class.
The richest of the rich are the only group that has gotten richer in the past 30 or so years... and most everyone else has gotten relatively poorer, especially the middle class.
The big point is the richest people in this country have been increasingly getting a larger share of our wealth pie for decades... while most Americans have been largely unable to keep pace.
I grew up middle-class and understand the challenges, too. Over the years, I came to decide that the best chance of "keeping pace" and beating inflation was by taking my finances into my own hands and investing.
It's not perfect. As you point out, this "system" still has flaws. But investing gives you the chance to grow and protect your wealth. And if you're reading us here at Stansberry Research, you're already in good shape to take advantage of the market's possibilities.
All the best,
Corey McLaughlin and Nick Koziol
Baltimore, Maryland
February 11, 2026
