U.S. job openings rose to nearly 7 million in January, better than expected at a time when the American labor market has looked sluggish.
The 6.95 million job postings in January were up from 6.55 million in December, the Labor Department said Friday. That was higher than economists had forecast.
Layoffs fell slightly, and the number of Americans quitting their jobs — a sign of confidence in their prospects — slipped modestly.
In the hiring boom that followed COVID-19 lockdowns, job openings peaked at a record 12.3 million in March 2022.
The American job market is sputtering. Last month, employers cut 92,000 jobs. In 2025, they added fewer than 10,000 jobs a month, the weakest hiring outside recession years since 2002. The lingering effects of high interest rates, uncertainty around President Donald Trump’s policies, and possibly the increasing use of artificial intelligence appear to be weighing on the labor market.
The U.S. economy has been resilient in the face of President Donald Trump’s import taxes and deportations. But the Commerce Department reported Friday that economic growth slowed sharply in the last three months of 2025, to 0.7%, half its initial estimate of fourth-quarter growth and down from a strong 4.4% advance in the third quarter.
The war in Iran has also created considerable uncertainty over the economic outlook.
“At least companies were posting more jobs in January. Job openings did rise, but companies weren’t actually hiring much. The United States is in the midst of a hiring recession,″ said Heather Long, chief economist at Navy Federal Credit Union. “The only good news is that layoffs also remain low, but it’s hard for anyone looking for a job right now, and the war in Iran and AI adoption are only going to make this spring more challenging for job seekers.″
An inflation gauge closely monitored by the Federal Reserve moved higher in January in the latest sign that prices were persistently elevated even before the Iran war caused spikes in oil and gas costs.
Prices rose 2.8% in January compared with a year earlier, the Commerce Department said Friday, slightly below December’s increase in a report that was delayed by last fall’s six-week government shutdown. The shutdown created a backlog of data that is nearly cleared.
Yet excluding the volatile food and energy categories — which the Fed pays closer attention to — core prices rose 3.1%, up from 3% in the prior month and the highest in nearly two years.
Every month, prices rose 0.3% in January, while core prices jumped 0.4% for the second straight month, a pace that, if sustained, would lift inflation far above the 2% annual target set by the Fed.
The data has since been overtaken by the war with Iran, which began Feb. 28 and has shut down the Strait of Hormuz, cutting off one-fifth of the world’s oil supply. Oil prices have soared more than 40% since the war began and gas prices have jumped to $3.60 a gallon from just under $3 a month earlier, according to AAA. Those figures will likely cause inflation to spike in March and potentially April, economists forecast.
The inflation-fighters at the Fed have kept their key interest rate elevated to slow borrowing, spending, and growth in an effort to cool inflation further. Fed policymakers meet next week and are widely expected to keep their rate unchanged, given that the conflict in the Middle East will raise inflation, at least in the short run.
The report also showed that consumers lifted their spending at a solid 0.4% pace in January, matching December’s rise and a sign that Americans are still able to drive steady growth. Consumer spending powers about two-thirds of the economy.
Incomes also rose 0.4%, a positive sign that consumers didn’t have to dip into savings to propel spending in January. After-tax incomes jumped 0.9%, fueled by a large increase in Social Security benefit payments after a high cost-of-living adjustment took effect at the start of the year.
Friday’s report includes the personal consumption expenditures price index, which is separate from the more widely followed consumer price index, which was reported on Wednesday. The PCE index is running hotter than the CPI, largely because it puts much less weight on rental costs, which have been cooling steadily in recent months.
The PCE index typically runs below the CPI, but has pulled ahead of it just in the past few months.
The Middle East conflict, after nearly two weeks, has rattled markets and pushed up oil prices to the highest levels in nearly four years. Gasoline and diesel prices have shot up in response, already up 65 cents and $1.13, respectively, since the war started, according to AAA.
Nonetheless, the U.S. economy is less exposed to oil shocks today than in prior decades and is more able to absorb a short-term rise in energy prices. In fact, as a major oil producer, U.S. energy companies and regions such as West Texas stand to profit from surging oil prices. Consumers and businesses are another matter. If global oil disruptions stretch for months because of shipping logjams and damaged infrastructure, they will weigh on a domestic economy that is already under strain.
“All eyes are on the Strait of Hormuz,” said Jason Thomas, head of global research and investment strategy at Carlyle.
Airlines, farms, autos
Airlines, where fuel counts as one of the top costs, are quickly exposed to soaring energy prices. Analysts at TD Cowen recently lowered their earnings targets for major carriers, and airline shares have been down since the start of the war.
Rising fuel costs also ripple through the economy, hitting businesses that rely on fuel for transportation or operations, such as Strata Critical Medical, a medical service and logistics company that recovers and transports human organs for transplant. “If we see a surge in pricing, that’s going to be passed through to the customer,” co-Chief Executive Melissa Tomkiel said on an earnings call last week.
Concrete Pumping Holdings, which offers concrete pumping services and waste management, is passing higher fuel prices on to customers through surcharges. “We do hope it’s short-lived, no telling just how long we’ll deal with that, but we’ll do the best we can to recoup some of those additional costs,” Chief Executive Bruce Young said on an earnings call this week.
Rising gas prices also threaten to hit the U.S. auto industry, which has partially pulled back from electric-vehicle production. Shares of Ford and General Motors have been down since the start of the war.
Then there are farmers, who are exposed to a different war-related supply disruption. The Persian Gulf is a major source of fertilizers, and the conflict sent fertilizer prices surging at a bad time—just ahead of the spring planting season.
“We are deeply concerned that failure to act could lead to disruptions to the food supply chain not seen since 2022,” Zippy Duvall, president of the industry group American Farm Bureau Federation, wrote in a letter to President Trump this week.
Fueling inflation
Costlier fuel is an especially big burden for lower-income households because they tend to spend a bigger share of their income at gas stations. But fuel hikes work their way into other goods and services, too. Pricey diesel makes it costlier to ship groceries around the country, potentially boosting prices in stores. Those jet-fuel costs end up making flights more expensive.
Inflation has been above the Federal Reserve’s 2% annual target for five years, and analysts warn that added pressure on already-stretched household budgets might cause consumers to rein in their spending, the main driver of U.S. economic growth. Spending on travel, hotels, restaurants, electronics, and appliances tends to take a hit when oil prices surge and stay high for many months, said Pooja Sriram, senior U.S. economist at Barclays.
Barclays estimates that a 10% oil-price increase raises U.S. inflation by around 0.2 percentage points within one to two months. If the price of oil stays at or above $100 a barrel for two to three months, inflation could rise to an annual rate of 3.5% in the summer and finish the year slightly above 3%—up from a prewar projection of 2.7%.
On the other hand, a short-lived surge will be “like a blip,” with virtually no impact on the U.S. economy, Sriram said.
Slowdown
Economists at Goldman Sachs estimate that a $10 increase for a barrel of oil reduces annual growth in gross domestic product by around 0.1 percentage point, if prices remain at that higher level through the end of the year.
A slowdown could put more pressure on a struggling labor market that has averaged a slight jobs decline over the last six months, punctuated by a 92,000-job reduction in February. A new government estimate on Friday showed the economy closed out last year with slower growth than previously reported.
Meanwhile, a sustained stock market hit would threaten to curb spending by high-earning households, which have been powering the economy as asset valuations soared in recent years.
Energy shocks have hurt before: The Iranian Revolution of 1979 and the Gulf War of 1990 sent oil prices surging, contributing to U.S. recessions that happened around the same time. In both cases, oil production was severely affected in a couple of countries at most.
A doubling of oil prices, if sustained, could cause a recession, according to Bank of America. Still, oil prices remain far off from such a mark thus far, and the U.S. has some defenses it didn’t have decades ago.
The fracking revolution has turned the country into a net energy exporter. And heavy manufacturing—which generally consumes more oil and gas than services—is a much smaller part of the economy today than in past decades, meaning rising energy bills sting less.
Housing
Mortgage rates fell in the second half of 2025 and dropped below 6% last month for the first time since 2022. That sparked hopes that would-be buyers would jump into the market at the start of the spring selling season.
But mortgage rates started rising again this month on concerns that the war in Iran could lead to higher inflation. Elevated inflation raises the odds that the Federal Reserve will keep interest rates higher for longer to cool prices, filtering through to higher Treasury yields and higher mortgage costs. The average 30-year fixed mortgage rate stood at 6.11% as of March 12, according to Freddie Mac, the second week in a row that rates have risen.
Jake Krimmel, senior economist at Realtor.com, said the increase to date wasn’t big enough to affect the housing market. The greater danger is that uncertainty from the war hits the economy and financial markets, leading potential home buyers to hold off on purchases.
“The housing market is really susceptible to consumer confidence,” he said.
US January PCE Index Takeaway
One can observe turn-of-the-year pricing in the service sector, which increased 3.5%, which is an apt description of inflation anxieties that underscore what the public identifies as an affordability crisis.
That will all be exacerbated due to the energy shock, fuel surcharges, and rising prices that will arrive at the pump, checkout lines, and in utility bills in the coming months. Note the super core PCE is standing at 3.514%, and that will rise in the coming months.
We expect that both the topline CPI and PCE price indexes will move to or above 3.5% in the coming months due to the combined impact of sticky service prices and rising energy costs.
The major questions that need to be answered: how will this impact short- and medium-term inflation expectations, will topline energy costs bleed through to core prices, and how will the Fed respond if both occur?
We expect the Fed to temporarily look through volatility in energy costs. However, should those inflation expectations start moving higher, the American central bank will be reluctant to make the same policy error it made during the pandemic era, which featured an energy shock following the Russian invasion of Ukraine.
The U.S. economy, hobbled by last fall’s 43-day government shutdown, advanced at an unexpectedly sluggish 0.7% annual rate from October through December, the Commerce Department reported Friday in a big downgrade of its initial estimate.
Growth in gross domestic product — the nation’s output of goods and services — was down sharply from 4.4% in last year’s third quarter and 3.8% in the second. And the fourth-quarter number was half the government’s first estimate of 1.4%; economists had expected the revision to go the other way — and show stronger growth.
Federal government spending and investment, clobbered by the shutdown, plunged at a 16.7% rate, hacking 1.16 percentage points off fourth-quarter growth.
For all of 2025, GDP grew 2.1%, solid but down from an initial estimate of 2.2% and from growth of 2.8% in 2024 and 2.9% 2023.
In the fourth quarter, consumer spending grew at a 2% clip, down from 3.5% in the third quarter and the 2.4% the government had initially estimated. Business investment, excluding housing, increased at a healthy 2.2% pace, likely reflecting money being poured into artificial intelligence, but the increase was down from 3.2% in the third quarter and from the 3.7% advance in the Commerce Department’s initial estimate.
Exports fell at a 3.3% annual rate in the fourth quarter, a bigger drop than the government first estimated.
A category within the GDP data that measures the economy’s underlying strength came in weaker than previously reported, growing at a 1.9% clip, down from 2.9% in the third quarter and from the first estimate of 2.4%. This category includes consumer spending and private investment, but excludes volatile items like exports, inventories, and government spending.
“Following two consecutive strong readings for the second and third quarters, the economy was expected to soften heading into year-end. It’s now increasingly clear that the economy not only slowed but stumbled into the finish line,” Jim Baird, chief investment officer at Plante Moran Financial Advisors, said in a commentary. “The government shutdown was certainly a major factor in the loss of momentum, but a sharp decline in consumption growth also played a role.’'
The U.S. economy — the world’s largest — has shown surprising resilience in the face of President Donald Trump’s policies, including sweeping import taxes and mass deportations. But the war with Iran has driven up oil and gas prices and clouded the economic outlook.
Meanwhile, the American job market is in a slump. Last month, companies, nonprofits and government agencies cut 92,000 jobs. In 2025, they added fewer than 10,000 jobs a month, the weakest hiring outside recession years since 2002.
Friday’s GDP was the second of the three estimates of fourth-quarter growth. The final report is due April 9.