U.S. LABOR MARKET — The U.S. hiring rate fell to its lowest level since 2020 in February, according to the Job Openings and Labor Turnover Survey, as employers across the country shed 92,000 jobs. The decline occurred as uncertainty tied to the Iran war grew.

The U.S. hiring rate had already slowed before the Iran war began. Since the conflict started, businesses have faced higher transportation costs and consumers have faced higher fuel costs. Airlines have also increased fares.

Matthew Martin, senior U.S. economist at Oxford Economics, pointed to uncertainty as a factor in the slowdown. "We're in a period of uncertainty, much like in 2025 with tariffs. Companies weren't sure what the policy, what their cost structure was going to be, which led them to delay hiring." Martin said.

Martin added that consumer behavior could shift. "Discretionary goods and services like travel and luxury items would be the hardest hit as people scale back and only spend on the essentials." He said some consumers may cut back on non-essential purchases, while others may spend more cautiously as they build savings.

Yelena Shulyatyeva, senior U.S. economist at The Conference Board's Economy, Strategy and Finance Center, said that higher energy prices could dent economic growth and thus lead to weaker hiring. "The slower the growth rate is, the lower the need for new employees." According to her analysis, oil prices would have to reach $140 per barrel, up from about $102 per barrel for Brent crude, for the U.S. economy to tip into a recession and negatively impact the labor market.

Goldman Sachs analysts wrote that higher oil prices typically reduce job growth and raise unemployment. The analysts projected the unemployment rate could increase by 0.2 percentage points to 4.6% by the end of September. They wrote that the arts and entertainment, accommodation, and food services industries may be most likely to scale back hiring due to higher oil prices.

Heather Long, chief economist at Navy Federal Credit Union, offered a near-term outlook. "The March jobs report is likely to show modest gains due largely to the ongoing strength of healthcare employment. Friday's data release will be too early to see the impact from the war in Iran." The U.S. March jobs report is scheduled for release on April 3 at 8:30 a.m. ET.