Tough jobs report puts Trump’s Iran war plans to the test

The tough jobs report comes at a difficult time for the White House. While gas prices are rising due to the war in Iran, stock market turmoil is making savers and retirees nervous about the status of their 401(k)s.

Data released Friday showing a loss of 92,000 jobs in February will put pressure on the Trump administration to reconsider military and domestic security policies that have complicated the country’s economic outlook. But there may not be enough time before the November midterm elections to push through a significant policy change that could improve the economic outlook.

The economic situation is complicated. The unemployment rate rose to 4.4% in February, reversing the decline from the previous month. This rate is still historically low. Wages, meanwhile, rose 3.8% from the previous year, helping to reverse losses in workers’ purchasing power caused by hyperinflation during the Biden administration.

The rosy outlook of this report is that it shows that the economy is in rough stagnation and has a high probability of recovery. Healthy businesses no longer need to expand because they become more productive and do not engage in mass layoffs. As the crackdown on illegal immigration continues, it’s no surprise that large numbers of people are leaving the workforce.

“If you have a big increase in productivity, you can have strong manufacturing and not really have spectacular employment growth,” senior White House economic adviser Kevin Hassett said on CNBC’s “Squawk Box” on Friday.

But that high-profile message may not go over well with people who watched gas prices rise nearly 23 cents in just one week, according to AAA. Captains of ships carrying oil and other energy supplies are reluctant to pass through the Strait of Hormuz while missiles are in the air. This situation increased the barrel price of Brent type crude oil to over 90 dollars as of Friday morning. A week before the Iran operation started, this figure was around $72.50. The last year oil rose above $100 per barrel was 2022, after Russia invaded Ukraine.

Stocks fell as investors digested the possibility that higher energy prices would fuel inflation. The S&P 500 was down 1.5% entering Friday morning trading. That could prompt the Federal Reserve under Chairman Jerome Powell to reconsider lowering interest rates, as President Donald Trump has repeatedly demanded.

“It is high time for the Federal Reserve to lower interest rates and stop foolishly strangling America’s economic resurgence under President Trump,” White House spokesman Kush Desai told CNBC on Friday. he said.

For now, the administration is not expressing much concern. Hassett told CNBC that there has been “no discussion” about extracting oil from the Strategic Petroleum Reserve.

Trump said in a social media post on Friday that he was not considering any quick deal to end the war with Iran. “No agreement will be made with Iran other than UNCONDITIONAL SURRENDER!” he wrote.

However, economic data such as the jobs report will make it difficult to maintain this position. Americans may ask why the United States is paying an economic and military price in Iran, as Trump has said previous airstrikes in June destroyed the country’s nuclear program. New joint US-Israeli operation kills Iran’s longtime religious leader. Why should we continue?

At this point, it may not be in the US’s hands. With Iran still among the leaders, it is unclear who could agree a ceasefire, even if it were valid. And Iran’s military forces have little left to lose in attacking US interests, including their energy resources. The threat of an all-out US attack was one of the reasons why the Iranians refrained from retaliating against the US in previous episodes. That bridge is now completely burned.

It may be easier for Trump to turn to immigration. The crackdown in Minneapolis sparked enough political backlash for Trump to soften his approach. Now there’s a chance to do that nationwide. He fired Homeland Security Secretary Kristi Noem on Thursday and appointed Sen. Markwayne Mullin, R-Okla., as her expected replacement. An immigration approach that focuses on catching dangerous criminals and avoids raiding workplaces could help with the loss of workers in the labor market.

It is also possible to achieve the low interest rates that Trump wants. Fed chairman candidate Kevin Warsh will likely lower interest rates despite the oil shock because he, too, believes in the productivity story. But for Warsh to take office, Trump must end the investigation into Powell, which led Sen. Thom Tillis, R-N.C., to block any Fed nominee from coming forward. Trump and U.S. Attorney for the District of Columbia Jeanine Pirro have so far shown no signs of backing down.

The Trump administration’s overall effort to improve the economic outlook may yield some progress, but how long it will take to reflect that in the numbers is anyone’s guess. But this will require the same level of political coordination and strategic discipline that Trump struggled with in his second term. The pace of events will make this even more difficult.