April is one of those transition months where we’re caught between seasons – winter reluctantly releasing its grip while spring eagerly pushes forward. This in-between state reminds me of our current economic landscape. We’re witnessing a similar tension between conflicting forces: tariff impacts and inflation concerns on one side, versus steady job markets and consumer resilience on the other.
As someone who’s built a business through economic cycles, I know firsthand how challenging it can be to navigate these moments of uncertainty. When Marty and I launched Change State in 2019, we faced a very different landscape than today’s. Yet the fundamental questions remain the same: How do we adapt? Where should we focus our resources? What signals should we trust?
I don’t have a garden this spring, as my efforts have been directed towards my May wedding this year. But if I did, you could probably imagine a business metaphor in here about resilience and knowing which areas need your attention versus which ones will flourish with the right foundation.
Alas, let’s dig into what’s happening with the labor market.
March showed a labor market that’s still standing strong despite mounting headwinds, with employers adding 228,000 jobs, significantly above economists’ expectations of 135,000. However, the unemployment rate ticked up to 4.2% from February’s 4.1%. This headline number reflects some significant shifts happening beneath the surface.
The labor market continues to exhibit a persistent two-track pattern, with sectors experiencing dramatically different realities. This economic divergence has been a defining feature of the post-pandemic economy. Healthcare continues its reliable growth, adding 54,000 jobs, while manufacturing added just 1,000 positions – reflecting the impact of ongoing trade tensions. Federal government employment declined by only 4,000 jobs, despite the administration’s workforce reduction efforts.
“The labor market’s surprising spring surge likely cements the Fed’s ‘wait-and-see’ stance on rate cuts,” said Sam Williamson, senior economist at First American. “The broad-based March surge in jobs came as more people joined the labor force, causing a slight uptick in the unemployment rate.“
January and February’s jobs reports saw significant downward revisions, reducing the previously reported gains by a combined 48,000 jobs. This continues a pattern we’ve observed over the past year, where initial optimism gives way to a more sobering reality.
Average hourly earnings rose by 0.3% in March, bringing the year-over-year increase to 3.8% – outpacing inflation but showing signs of moderation from the 4.0% seen in February. While wage growth has historically supported consumer spending as the primary driver of economic expansion, economists are watching closely for signs that rising prices from tariffs might begin to erode purchasing power and consumer confidence.
The labor market saw 232,000 people enter the workforce in March, a sign of continued confidence among job seekers despite the uncertain economic outlook. This influx of workers contributed to the slight increase in the unemployment rate despite the strong job gains.
Job openings were little changed at 7.6 million in February, according to the latest JOLTS report, but were down by 877,000 over the year. While this remains well above pre-pandemic levels, it’s a significant decline from the peak of job openings seen during the post-pandemic recovery. The job openings rate held at 4.5 percent, while the number of people quitting their jobs was little changed at 3.2 million but down by 273,000 compared to the previous year. These trends suggest a gradual normalization of labor market conditions. March data is scheduled for release in two weeks, which should provide further insight into how the labor market is evolving alongside the strong hiring we saw in March.
The tariff landscape has seen dramatic shifts in recent weeks, making it challenging to assess the full economic impact. On April 9, President Trump announced a 90-day pause on his “reciprocal” tariffs for most countries, bringing the rate down to 10% after markets experienced significant turmoil. However, this relief notably excluded China, where tariffs were instead increased to 125%, up from the previous 104%. This policy reversal, which the White House characterized as part of a strategic approach to trade negotiations, triggered a dramatic 9.5% surge in the S&P 500—its largest single-day gain since 2008.
The administration’s frequent shifts in tariff policy have created substantial uncertainty for businesses and investors. According to Diane Swonk, chief economist at KPMG, “This is nuts. Damage done. Market relief is a headfake, unless the administration makes a major course correction. Uncertainty is its own tax on the economy.” Cornell economist Wendong Zhang noted that the 125% tariffs on Chinese goods would still have enormous repercussions, as “many products that the U.S. imports are predominantly from China,” including 73% of smartphones, 78% of laptops, and 87% of video game consoles.
The most recent inflation data showed surprisingly good news, with the Consumer Price Index decreasing 0.1 percent in March on a seasonally adjusted basis. The year-over-year increase fell to 2.4 percent, down from 2.8 percent in February. Core inflation (excluding food and energy) rose just 0.1 percent for the month and 2.8 percent over the past year—the smallest 12-month increase since March 2021. A significant drop in energy prices, particularly gasoline (down 6.3 percent), helped offset increases in food prices (up 0.4 percent).
These encouraging inflation figures would typically provide the Federal Reserve with more flexibility in its monetary policy decisions, but President Trump’s trade policies have significantly raised the bar for interest rate cuts. Fed Chair Jerome Powell emphasized this challenge in a recent speech, noting that tariffs risk “higher inflation and slower growth than initially expected” and stressing that the Fed’s obligation is to “keep longer-term inflation expectations well anchored.”
Market expectations for rate cuts have become increasingly divided. While federal funds futures markets are pricing in as many as five quarter-point cuts this year, many economists believe the Fed will need to see “tangible evidence that the economy is weakening significantly” before acting. As Richard Clarida, former Fed vice chair, noted, officials “will not be inclined to be pre-emptive to cut rates to avoid what may be a downturn” and will instead “have to see an actual crack in the labor market.”
The administration’s policies are creating competing pressures on inflation. On one hand, tariffs and immigration restrictions are pushing prices higher. On the other, reduced government spending through workforce cuts may help cool demand. Federal Reserve Chair Jerome Powell noted the tariffs are “larger than expected,” adding “the same is likely to be true of the economic effects, which will include higher inflation and slower growth.”
For businesses, this mixed economic picture requires careful planning. Companies with exposure to global supply chains face particular challenges, as evidenced by recent earnings guidance from major retailers and manufacturers.
Consumer sentiment, which had been improving steadily since last summer, declined in March according to the University of Michigan survey, falling to 76.5 from 79.8 in February. Respondents cited concerns about inflation and economic policy as primary factors in their more cautious outlook.
The financial markets have reflected this uncertainty, with increased volatility in recent weeks. The VIX index, often called the “fear gauge,” has risen to levels not seen since the banking stress of early 2023.
For talent acquisition leaders, this environment requires a particularly nuanced approach. While overall hiring remains positive, sector-specific challenges mean some organizations face intense competition for talent while others implement hiring freezes or reductions. Understanding your industry’s specific dynamics—and how it might be affected by shifting tariff policies—is more important than ever.
And a personal favorite this month: Rethinking Work by Rishad Tobaccowala. He was one of my favorite guests on our podcast, and his reflections on how work is evolving in the age of remote work and AI are timely, clear-eyed, and refreshingly optimistic. A great read for anyone rethinking their own approach to talent strategy.
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(Sources: Bureau of Labor Statistics, Federal Reserve, CME Group, University of Michigan, Gallup, LinkedIn Economic Graph, Aspen Institute Future of Work Initiative, McKinsey & Company, Microsoft Research, Economic Policy Institute, Oxford Economics, Bloomberg, The Wall Street Journal, CNBC, Reuters, KPMG, Challenger, Gray & Christmas, New York Post, Business Insider)
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Copyright © 2025 Charge State. All rights reserved.
