Strong Jobs Report, But Tariffs Take Focus

February 11, 2025

WisdomTree Senior Economist

The employment report was uniformly strong except for one component: the average hours worked per week fell to the lowest level since the pandemic, which may be weather related. Although headline numbers were slightly weaker than consensus, the past two months of revisions more than made up for it. And the unemployment rate fell to 4.0%, indicating a slight tightening of the labor market. Furthermore, wage gains exceeded expectations, although much of it was due to revisions of earlier data. We have noted often that this could reflect higher productivity, nevertheless it adds to the inflationary bias of the whole report. In addition, the one-year inflationary expectations jumped by one percentage point, one of the largest on record for a month-to-month change, undoubtedly due to the fear of Trump tariffs. A disappointing development is the drop in the University of Michigan’s consumer confidence number, perhaps also related to the fear of Trump’s tariffs.

Naturally the 10-year yields jumped on the employment news, but still ended a hair below 4.5%. The fact that yields have held below 4.5% has supported the equity market. And, although stocks fell Friday, the indexes are within a couple percentage points of their all-time high.

Over the weekend Trump announced 25% tariffs on steel and aluminum, although stocks sloughed it off in early Monday trading. Many other countries have tariffs on steel and Trump can use this as a negotiating tool. Domestic steel producers did jump on the news.

Next week we have the PPI and CPI reports, and I expect them to come in line with expectations. The impact of these reports may be muted since we still have a month’s worth of data before the next Fed meeting. Trump’s tariffs are now higher on the mind of investors than most of the economic data and will likely be the most important mover of stocks until the last set of data before the March meeting.

Important Risks Related to this Article

Past performance is not indicative of future results. You cannot invest in an index.

Professor Jeremy Siegel is a Senior Investment Strategy Advisor to WisdomTree Investments, Inc. and WisdomTree Asset Management, Inc. This material contains the current research and opinions of Professor Siegel, which are subject to change, and should not be considered or interpreted as a recommendation to participate in any particular trading strategy, or deemed to be an offer or sale of any investment product and it should not be relied on as such. The user of this information assumes the entire risk of any use made of the information provided herein. Unless expressly stated otherwise the opinions, interpretations or findings expressed herein do not necessarily represent the views of WisdomTree or any of its affiliates.

Perspectives in Onchain Finance

View all

WisdomTree Senior Economist

Jeremy J. Siegel, WisdomTree’s Senior Economist, is the Emeritus Professor of Finance at The Wharton School of the University of Pennsylvania. Professor Siegel has written and lectured extensively about the economy and financial markets and is a regular contributor to the financial news media. In 1994, he received the highest teaching rating in a ranking of business school professors conducted by BusinessWeek magazine. His book Stocks for the Long Run was named by The Washington Post as one of the 10 best investment books of all time. His second book, The Future for Investors, was a bestseller, and his research on dividend investment strategies in that book coincided with WisdomTree’s development of its original family of dividend-weighted stock ETFs, the first of which launched in 2006. Currently, Professor Siegel and WisdomTree collaborate on a suite of Model Portfolios that incorporate Professor Siegel’s outlook for stock and bond returns and the latest research from the sixth edition of Stocks for the Long Run.

READ ALL INSIGHTS