How to tell if Trump's cutbacks are affecting the labor market
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As the Trump administration seeks to lay off thousands of government workers and slash spending that supports many private sector jobs, those cuts could start to show up in economic data — if you know where to look.
Why it matters: Federal government employment is a small share of the overall economy — especially when you exclude the military and the postal services — but the cuts underway may prove large enough to create some visible ripples in the data that comprise the nation's economic dashboard.
State of play: Every Thursday, the Labor Department releases a tally of the number of people filing new claims for unemployment benefits in the previous week, which is often an early warning sign of economic trouble.
- The numbers are broken out by state, so it is particularly worth watching if there is any surge of jobless claims in Washington, D.C., Maryland and Virginia, which have a particularly large share of federal government workers and government contractors.
- Last week, there was a surge in such claims in D.C., rising from 768 two weeks ago to 1,408. (That's not enough to meaningfully change the national number of new claims, which was 219,000 last week.)
- The numbers were essentially flat in Virginia (up 88 to 2,610) and down slightly in Maryland (down 105 to 2,451).
By the numbers: In terms of total employment, numbers that are published by the Bureau of Labor Statistics each month should quantify any large-scale employment cutbacks.
- The federal government directly employed 3.02 million people in January, little changed from December.
- Other recipients of federal support can be found in a variety of places in government data. One place to watch is "Religious, grantmaking, civic, professional, and similar organizations," which had 2.9 million employees in January (also little changed).
- Government contractors are included in a wide variety of employment categories, including "custom computer programming services" and "administrative management and general management consulting services."
What's next: The February jobs report is due out March 7 at 8:30am ET, and next week is its "reference week," meaning the period that survey respondents are asked about.
Of note: In the event of disruptions to the flow of government jobs data, private employment data may become particularly useful. Payroll processor ADP, for example, tracks private-sector employment every month, broken down into several major sectors.
- ADP's data would not capture direct cutbacks to federal employment, but would likely pick up any decline in jobs at beneficiaries of public money through categories like "professional and business services," "information" and "other services."
