Stock market crash alarms are ringing across Wall Street ahead of Friday’s crucial March jobs report. Indeed, this time around, economists are keeping a close eye on the report for signs of an impending recession.
It seems every major economic data release these days has major stock market and global economic implications. This Friday’s jobs report is no different. Reasonably so, coming off of a surprisingly weak unemployment report last month, economists are already projecting continued weakness in employment. This, of course, is in no small part due to the Federal Reserve.
A Change Is Coming
The Fed’s rate hikes continue to slowly eat away at the U.S. economy, in some areas more than others. Jobs have been relatively strong through most of the rate hike cycle, but evidence is mounting that a change is coming.
If you recall, last month’s jobs were slightly worse than expected. While the U.S. economy added more jobs than projected, 311,000 compared to 225,000 expected, the unemployment rate came in higher than most economists predicted, 3.6% versus 3.4%.
“It’s no longer accurate to say without reservation that the labor market is a bright spot in the economy. From 35,000 feet, the picture still looks sterling, but digging an inch beneath the surface, there are clear pockets of softening,” said Aaron Terrazas, Chief Economist at Glassdoor.
In fact, the Fed has already laid out expectations that unemployment will likely end the year far higher than its current level.
At its last Federal Open Market Committee (FOMC) meeting in March, central bank members submitted their projections for year-end unemployment, alongside other economic indicators, like GDP. The median projected Q4 unemployment rate came in at 4.5%, a nigh-recession level of joblessness in the country.
With that in mind, what should you expect this time Friday?
Stock Market Crash Fears Swirl Ahead of Pessimistic Jobs Report
It seems equity markets tend to hold their breaths before major economic data releases, and this time should be no different. Depending on the results, a shift in the narrative for unemployment could be enough to spur a notable stock sell-off. What are economists looking for this Friday?
Well, current projections for the March jobs report are for the U.S. to have added about 238,000 jobs. While this is below the 311,000 jobs added in February, it’s slightly higher than the 225,000 projected non-farm payrolls from last month. In terms of the unemployment rate, Wall Street consensus estimates put unemployment at 3.6% in March, the same as in February.
Interestingly, there are already signals that jobs may come in below expectations. According to a Labor Department report Tuesday, the number of total positions fell below 10 million in February for the first time in almost two years. Likely a symptom of the Fed’s rate hiking efforts, the available positions totaled 9.93 million, well below Wall Street projections of 10.4 million.
“The labor market is starting to loosen as the number of job openings declined in most sectors. As the economy slows, firms will likely cut openings and workers will be less likely to quit in search of better hours and higher pay,” said Jeffrey Roach, Chief Economist at LPL Financial.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
