Waller: zero job growth does not seem like a stable employment environment

Waller: zero job growth does not seem like a stable employment environment

Federal Reserve Governor Waller Cautions on Labor Market Fragility Amid Mixed Economic Signals

Federal Reserve Governor Christopher Waller emphasized on February 23, 2026, that the U.S. labor market remains fragile despite a strong January jobs report, warning that "zero job growth" in recent years does not reflect a stable employment environment according to his speech. Speaking at a National Association for Business Economics (NABE) conference, Waller highlighted the risks of overinterpreting recent data, noting that 2025—the weakest year for job creation since 2002—casts doubt on whether the January rebound signals a sustained recovery as he stated.

The January employment report showed 130,000 jobs added, with private-sector gains at 172,000, far exceeding expectations. However, Waller cautioned that the gains were concentrated in sectors like healthcare and construction, and conflicting data from private firms (e.g., ADP's 22,000-job estimate) and a record 108,000 layoff announcements in January underscore the uncertainty according to his analysis. He stressed that "one month is not a trend," particularly after a year marked by low hiring and labor force contraction due to reduced immigration as he noted.

Waller also addressed inflation, noting that underlying inflation—excluding tariff-driven effects—remains near the Fed's 2% target. While headline inflation softened in January, core PCE inflation was estimated at 3%, reflecting persistent pressures. He argued that the Fed should "look through" temporary tariff impacts, which he believes do not alter long-term inflation expectations as reported.

Looking ahead, Waller outlined a pivotal March 17–18 FOMC meeting, where February labor and inflation data will determine policy direction. If February data confirm January's strength and inflation progress, he may support maintaining current rates. However, if labor market gains reverse, he advocates for a 25-basis-point rate cut.

Waller's remarks align with broader concerns about labor market stability. A separate analysis warns that demographic shifts and immigration policies could lead to "no growth in workers at all" over the next five years, compounding challenges for economic expansion.

As the Fed navigates these uncertainties, investors will closely watch upcoming data and policy decisions for clues on the path to sustained economic resilience.

Federal Reserve Governor Waller's speech, February 23, 2026: Federal Reserve Governor Waller's speech, February 23, 2026.
LinkedIn analysis, February 2026: LinkedIn analysis, February 2026.