Before the important non-farm payroll report, the White House takes "precautionary measures": Hassett hints that job growth may be below expectations

Before the release of the crucial non-farm payroll report, U.S. President Trump's chief economic advisor has already been "taking precautions," attempting to prepare the market for potentially disappointing employment data.

On Wednesday, February 9th, Eastern Time, White House National Economic Council Director Kevin Hassett stated that employment growth data in the coming months will weaken, but this does not mean a reduction in growth momentum; rather, it reflects structural changes in the labor market.

Hassett said in a media program, "You should expect employment data to weaken slightly, but this is consistent with high GDP growth." He urged the market "not to panic," even when seeing a series of employment numbers below previous levels.

Hassett attributed this trend in employment growth to two main factors: slowing population growth and a "surge" in productivity growth, calling it "a combination of unusual circumstances."

He mentioned that the labor force has seen "a significant decline," partly due to "illegal immigrants leaving the U.S.," which, combined with strong GDP growth, may lead to lower employment numbers.

Hassett attempted to redefine the potential weak employment data as a structural shift in the labor market rather than a signal of weakening economic growth momentum. He emphasized in the interview that as companies achieve higher output through technological advancements and efficiency improvements, the demand for new labor naturally decreases.

Hassett also pointed out that the so-called breakeven rate—the monthly employment growth rate needed to maintain a stable unemployment rate—is currently "far below" the levels seen during former President Biden's administration. This statement aims to provide a rationale for the lower employment growth numbers.

Market Expects Weak January Employment; Historical Revisions May Intensify Market Concerns

Economists generally have weak expectations for the January employment report. According to a Reuters survey, non-farm payrolls are expected to increase by only 70,000, continuing the sluggish trend of adding 50,000 jobs in December. The unemployment rate is expected to remain unchanged at 4.4%.

Signs of a cooling labor market have already emerged. According to Bloomberg, the number of job vacancies in the U.S. has fallen to its lowest level since 2020, and layoffs have slightly increased. A report released last week by payroll processing company ADP showed that only 22,000 jobs were added in the private sector in January, attributing this modest growth to a slowdown in manufacturing and professional services.

Market analysts describe the current environment as a "low hiring, low firing" model, where employers are neither conducting large-scale layoffs nor actively expanding their workforce. Although financial markets are reaching new highs, the unemployment rate remains low, and wage growth is stable, the health of the labor market does not appear ideal for job seekers.

Currently, the market is awaiting the January non-farm payroll report, which has been delayed until Wednesday due to a brief shutdown of the U.S. federal government. Economists expect the report to show that only 69,000 non-farm jobs were added in January, with the unemployment rate likely holding steady at 4.4%. The report will also include historical data revisions up to March 2025, which are expected to show significant downward adjustments in employment data.

This Wednesday, the U.S. Bureau of Labor Statistics (BLS) will also announce standard revisions to last year's employment data, which are expected to show a significant deterioration in labor market conditions. This revision may further corroborate Hassett's assertion that the labor market is undergoing profound changes, but it may also trigger market concerns about the economic outlook The White House proactively released signals for expectation management ahead of the report's release, indicating that the Trump administration remains vigilant about potential weak data and is attempting to incorporate it into a broader economic narrative framework