U.S. economy shows signs of strain as Iran war brings more uncertainty

Let's turn now to the economy and a disappointing new jobs report today showing employers cut 92,000

jobs in February. The report also included downward revisions for the previous two months and

a slight rise in the unemployment rate from 4.3 to 4.4 percent. All together, it paints a

picture of a labor market struggling across a number of sectors, including some that were

engines of recent growth, like health care and construction. Stocks fell on the news,

capping a week of declines along with a rapid rise in oil and gas prices, a result of President

Trump's war with Iran. The average price of a gallon of gas rose 11 percent this week.

To unpack today's numbers, we turn now to Diane Swank, chief economist at KPMG that's

attacks an advisory firm. Diane, good to see you. So with the usual caveat, it's important not

to overreact to one month of data. The losses in today's report were widespread. What does all

this tell you about the economy? Well, part of the losses in health care, this was the one sector

that was really sort of the one-legged stool holding up the overall labor market. And we had a

major strike in California and Hawaii that shapes 27,000 health care worker jobs off with some

collateral damage as well in the unemployment rate with temporary layoffs. So that was part of it,

but even taking that out, it still was a lot of red ink. And when you lose the one stool holding

you up, you go negative and the unemployment rate rises. There's been a lot of talk about employers

having to navigate uncertainty around shifting tariff policies. How big a factor is that uncertainty

in all of this right now? It really acts like a tax on the economy. There's just no question

about it. We had escalating uncertainty last year and we're seeing it again this year. What's

important about it is it's much like a broken stoplight at a busy, busy intersection. When you see

a busy, a broken stoplight, everybody slows down, traffic backs up. Some people opt out and wait

for the traffic light to fight to be fixed or traffic to clear before they pass through the

intersection. That's the same kind of response you get from employers in periods of heightened

uncertainty. They cut back on investment decisions most notably on hiring. So if we zoom out just

a little bit here, Diane, outside of the two most recent recessions last year saw the lowest pace

of average job growth since 2003. January, we saw unexpectedly high numbers. Now we have unexpectedly

low numbers. What does this mean about long-term trends? We're still seeing a very, very slow sort of

slushy labor market. It's a low higher, low fire labor market. That is not a good place to be.

It's a labor market where it's very hard for those people who've not gotten a job yet new college

grads or new high school grads that are just entering the labor market to get their foot in the

door when firms are not hiring at a healthy pace. There's not a usual churn in the labor market

that we've seen. And in fact, the ability to hop jobs and get a premium has almost evaporated now.

So in a low fire, low higher economy, what does that mean for how the average American is experiencing

this economy right now? Well, it really has been what we've been in for the last year now,

and that is not good. What we've seen is both concerns about inflation and job security

intensify, even as the economy continued to grow. We had almost a jobless boom in 2025,

and that is not it's showing up in the dissonance that people say how they feel about the economy

because they're dealing with this sort of tension of both higher unemployment and higher inflation.

An inflation is much like stock returns, stock returns compound over time and make people wealthy

on the other side of that. Inflation has been high and too high for five years. It's compounded

and put the level of prices out of reach for far too many. In about 30 seconds or so, I have left.

We know the Federal Reserve is going to meet in another week and a half to discuss a possible

rate cut. What do you think we'll see? They're not going to be able to cut rates at this

meeting. There will be at least one descent, maybe two, but I think this is a very difficult

situation for the Fed to navigate. It's not the 1970s, but we are five years in with inflation

too high and that context matters. Diane Swank, Chief Economist at KPMG. Thank you so much for

your time. All was good to speak with you. Thank you.