Jobs report: Fed can’t do ‘much more’ to help the labor market

Yahoo Finance Video and Julie Hyman

Wed, February 11, 2026 at 11:25 PM GMT+9

The January jobs report saw the US labor market grow by 130,000 nonfarm payroll jobs last month, far surpassing economists’ forecasts of 65,000.

Annex Wealth Management chief economist and strategist Brian Jacobsen sits down with Morning Brief host Julie Hyman to discuss how the jobs report impacts the Federal Reserve’s path forward with interest rate cuts.

To watch more expert insights and analysis on the latest market action, check out more Morning Brief.

Video Transcript

00:00 Kathy

just in case people are wondering where the job gains were coming from, they continue to come from healthcare. That has been such a consistent um adder of jobs here. 82,000 jobs added in healthcare in January. We’re going to get more details and dig into these numbers a little bit later on. Social assistance also higher by 42,000 in January and construction actually adding 33,000 jobs. So that’s interesting as well. Um, non-residential specialty trade contractors uh seeing a big gain there. I don’t know if that’s data center construction, if that falls into that category. We’ll have to dig into that a little bit. But Brian, um, you weigh in on this on all all of this discussion here on your read on the report.

00:38 Brian

Yeah, I think that really what it’s showing, especially if we look at the pattern of the revisions, right? We actually started January 2025 with minus 48,000, previously it was reported to be positive 111,000. But then for all of 2025, it was just one shock after another. So we didn’t start the year quite as strong as what we thought we did in terms of the labor market. And then piling on top of that, all the uncertainty around you had the tariffs and then you had the government shutdown. It was actually surprisingly resilient labor market. And I agree with Kathy where she’s saying that maybe we’re going to get some traction from here. Right? We had good GDP numbers in the Q3, probably going to get a good Q4 GDP number, and that should hopefully pull the labor market along in its wake. So, I’m actually viewing this as saying that, yeah, maybe the Fed should have not been on pause, but that’s Monday morning quarterbacking, right? We they had to go based on the data that they had. And now it says, maybe they can afford to keep pausing, but maybe it does actually increase the possibility that they’re going to start cutting a little bit sooner than June in my mind.

1:31 Kathy

Well, it’s interesting that you bring that up, Ryan, because I was looking at some notes from Ed Yardeny, um economist and and strategist before the report and he said, you know, this was ahead of time. He said downside surprises could put pressure on Powell to back a rate cut later this month. But then he said this, even though we don’t believe that the Fed can fix what ails the job market. Brian, what do you make of that statement?

1:53 Brian

Oh, I think he’s spot on correct that the Fed can’t really do much to create jobs. They can create conditions, credit conditions, monetary conditions that are conducive to growth.

2:03 Kathy

But are but are those monetary conditions and credit conditions the reason why job growth is not hotter right now?

2:08 Brian

Well, I believe that the rapid tightening of policy coming out of the inflation shock is the reason why we have seen the labor market struggle. It wasn’t because of Chat GPT, it wasn’t because of artificial intelligence. It was because of aggressive monetary tightening. And we’re I think that’s showing up in the data. It’s what you would expect to happen when they go from 0% to above 5% on the policy rate, and we know that it does operate with some legs, but they then held the policy rate there, probably for a little bit too long. And that probably did create the weakness in the labor market. Now, we just have to deal with the hand that we’ve been dealt with, which is one where they maybe made a mistake there, but then again, we also had the policy shocks on the fiscal side with tariffs and the such. Thankfully, we did get the one big beautiful bill Act passed that can create some business incentives. So looking forward, I think that the Fed, they’re kind of close to a neutral rate, maybe they’re, you know, plus or minus 50 basis points of it. So I’m not sure there’s much more that monetary policy can do to help the labor market, but instead their philosophy should be maybe do no harm.

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