Prior to President Donald Trump’s second stint at the White House, a large share of the US economy’s stellar job growth since the pandemic had been driven by the government. Today, the private sector accounts for all of the payroll gains. While hiring momentum has slowed since the second half of 2025, employment conditions could be turning a corner, at least based on the January jobs report that topped everyone’s expectations – including the White House’s.
Making the Private Sector Great Again
The Bureau of Labor Statistics released the delayed January nonfarm payrolls report on Feb. 11. At first glance, the headline numbers could be best described as blockbuster. A peek underneath the hood reveals a noticeable rebound in the US labor market.
To kick off 2026, the country added 130,000 new jobs, up from the previous month's downwardly revised 48,000. This also came in above economists' expectations of 70,000. The unemployment rate dipped to 4.3%, down from 4.4%, which was below the consensus forecast.
Average hourly earnings rose at a better-than-expected pace of 0.4%. The labor force participation rate ticked up to 62.5%. Average weekly hours jumped to 34.3. Even the U-6 unemployment rate, which includes the underemployed and those working part-time for economic reasons, slid to 8%.
The top job creators? Health care (82,000), social assistance (42,000), and construction (33,000). Government employment fell by 42,000, with federal workers leading the drop by 34,000. Since hitting an October 2024 peak, federal employment is down by 327,000.
This means that the private sector created 172,000 new jobs in January, more than double the market forecast and well above the upwardly revised 64,000 registered in December.
January’s numbers were so good that they quashed the nagging feeling from the revisions.
Looking in the Rearview Mirror
Liberty Nation News has regularly spotlighted the bureau’s massive revisions, which have been largely concentrated on the downside. The latest jobs report was no exception.
Officials confirmed two things. First, job growth from April 2024 to March 2025 was overstated by 898,000, slightly lower than the preliminary estimate of 911,000. Second, employment gains for all of 2025 were substantially adjusted downward, from 584,000 to just 181,000.
While this has captured the attention in recent years, market watchers seemed indifferent this time. Stocks were up across the board, the US dollar strengthened, and Treasury yields climbed.
It makes sense, too. Wall Street is forward-looking, so why would investors care about the past? Instead, they might be worried that the Federal Reserve will keep pressing the pause button on interest rates. The January jobs report buys the central bank time before it has to cut interest rates as inflation remains in check and the labor market is not spiraling out of control.
It is a Catch-22 for the administration. On the one hand, the White House wants a solid labor market. On the other hand, the Fed might not act until employment conditions deteriorate further.
For now, the administration can take a victory lap. That is, until there are revisions in the February jobs report!
Reprivatizing the Economy
The biggest story from the January jobs report was private-sector payroll growth, which aligns with the Trumponomics 2.0 agenda. Be it President Trump or Treasury Secretary Scott Bessent, the objective has been to reprivatize the economy, no longer relying on outlandish government spending or public-sector payrolls to juice the data.
“Private sector employment is growing, and public sector jobs are shrinking. That's exactly what we want to see. We want to see the government shrink and private sector jobs grow. And by the way, this is the exact opposite of what we saw under Biden,” economist Stephen Moore said on Fox Business shortly after the bureau published the data.
Surveys suggest employers are hesitant to expand operations due to economic uncertainty, the administration’s tariffs, and slowing consumer spending. But that was last year. This year, confidence might be resurrected. Still, it remains to be seen if businesses can maintain the momentum as they transition from winter to spring. Early numbers suggest they will.
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