Spot Crude Oil Breaks $140 for First Time Since 2008. March Nonfarm Payrolls Expected to Rise by Only 60,000; Is a US Recession Coming?

TradingKey - According to The Wall Street Journal, the situation in the Middle East continues to deteriorate: thousands of Marines and airborne troops are heading to the region under orders from Trump, while Iran is strengthening its oil port defenses, threatening to attack broader targets around the Persian Gulf, and initiating large-scale conscription.

Against this backdrop, the March non-farm payroll report, set for release at 8:30 AM ET on April 30, will be the first major data point since the outbreak of the US-Iran conflict. This will serve as a crucial basis for the market to assess employment conditions and gauge the Federal Reserve's policy trajectory.

However, the market is not optimistic. Consensus expectations indicate that U.S. non-farm payrolls for March are likely to increase by 60,000, while the unemployment rate is expected to remain at 4.4%; both monthly and annual average hourly earnings are projected to retreat slightly from previous levels.

By the standards of the early years of this decade, job growth of 60,000 is extremely weak; even before the conflict, the U.S. labor market had already shown signs of fatigue in February, when non-farm payrolls shed 92,000 jobs.

Under the dual impact of weak employment and high oil prices, where is the U.S. economy headed?

March Non-Farm Payrolls Projected to Grow by 60,000: Is the Labor Market Flashing Red?

Analysis suggests that compared to a labor market with virtually no job creation over the past year, the 60,000 nonfarm payroll increase projected by Wall Street already represents above-trend employment growth.

While this growth figure is quite dismal compared to nonfarm data from earlier years, the March data at least shows a labor market rebound compared to the loss of 92,000 jobs in February, which may represent a "healthy" trend.

Impacted by geopolitical uncertainty and the economic downturn, many companies are neither willing to hire on a large scale nor to implement mass layoffs, causing the labor market to stall and appearing in data as flat job growth. This signifies that the job market has entered a new phase.

Guy Berger, chief economist at Homebase, pointed out that the criteria for evaluating employment data need to be re-established: data that appeared very poor and could have triggered alarms in the past might not cause anyone to panic now. In short, the stagnation of the job market has made the market less sensitive to fluctuations in nonfarm growth.

Berger noted that the market now places more weight on the unemployment rate—the bottom line for the job market and a key metric for labor market stability. Despite weak job growth, the current 4.4% unemployment rate is only 0.2 percentage points higher than it was a year ago.

Currently, the overall unemployment rate is slowly trending upward, rising from 4.0% in January 2025 to 4.6% in November, and is expected to remain at 4.4% in March. This "boiling frog" new normal maintains a delicate balance, and Berger believes there are no real signs that the U.S. economy is on the brink of recession.

However, some Wall Street economists disagree, and some institutions have recently raised the probability of a recession over the next 12 months. Goldman Sachs (GS) has raised this recession probability to 25%, noting that threats from the simultaneous impact of an employment slowdown and energy shocks warrant attention; Moody's (MCO) 's model predicts that the probability of a recession has risen to 49%.

Weakening Employment and Surging Inflation: The Fed's "Trolley Problem"

For the Federal Reserve, choosing between raising or cutting interest rates is a dilemma when both employment and inflation are problematic. A slowing labor market provides a rationale for rate cuts, while intensifying inflation triggered by surging energy prices limits the Fed's room to cut—as loose monetary policy would further inflame inflation.

Currently, the federal funds rate is maintained within the 3.50%-3.75% range, and the market generally expects March non-farm payrolls to increase by 60,000, placing it in a moderate recovery zone. In this scenario, the Fed will likely continue to stay on the sidelines, focusing on the impact of energy on inflation to assess the policy space for rate cuts.

If employment data unexpectedly weakens while the unemployment rate rises, the Fed may lean toward making "protecting employment" its primary consideration, and the probability of rate cuts will increase. However, if employment improves but energy shocks intensify, the pace of rate cuts will be further delayed, or the Fed may even initiate rate hikes as the market predicts.

The current risk of recession is hidden in the Fed's potential misjudgment of the economic situation, particularly in this scenario: when employment data is already extremely exhausted yet the Fed remains on the sidelines, the recession will hit the consumer side first.

However, non-farm payrolls are only one of the bases for the Fed's policy path. Currently, as the credibility of employment data declines, analysts believe that the informational value of a single data release has diminished, and judgments must rely on multiple data sources and time-series trends.