Oil above $100. An airline gone under. Petrol at $4.55 a gallon. Inflation at 3.3% and rising. By every measure, the US economy should be cracking right now.
So why did employers just add 115,000 jobs in April – nearly double what anyone expected?
Here’s the full picture.
The Numbers
America’s employers added 115,000 jobs in April, beating the 65,000 forecasters had expected. The unemployment rate held steady at 4.3%. Hiring decelerated from the 185,000 jobs created in March, but the number still beat every major forecast by a significant margin. TheStreet
To put that in context, average job gains in 2025 were just 10,000 a month. So far in 2026, the average is 76,000 a month. America’s hiring recession appears to be over. TheStreet
Healthcare and social assistance led job gains adding 53,900 positions, followed by transportation and warehousing at 30,300, and retail at 21,800. Leisure and hospitality added 14,000. Bloomberg
Why the Economy Is Holding Up
Three things are buffering the labour market from the worst of the Iran war shock.
First, timing. Hiring decisions take a few months to come to fruition. The early economic data doesn’t yet show that Americans have made significant cutbacks. Consumers’ finances have been supported by larger tax refunds, wage gains, and wealth boosts. Bloomberg
Second, wages. In April, average hourly earnings rose 0.2%, putting the annual rate of pay gains at 3.6%, still above inflation for now. People still have jobs and their wages are still growing faster than prices. Bloomberg
Third, the tariff shock was less bad than feared. The import taxes Trump imposed last year haven’t turned out to be as high and as damaging as originally feared, which has given the labour market some breathing room. TheStreet
The Warning Signs Hidden in the Numbers
Here’s where it gets more complicated — and where most coverage stops short.
Economists cautioned that the solid-looking headline numbers mask underlying weakness. Half of the job gains came from retail and transportation and warehousing; sectors that do not consistently add jobs. The labour market remains in a “low-hire, low-fire” mode with no real momentum building. Bloomberg
The wage picture is also deteriorating fast. The April Consumer Price Index is expected to show inflation accelerating to 3.9% from 3.3% in March. That would put inflation above wage growth of 3.6% – meaning the average worker’s pay rise is now being wiped out by rising prices. Bloomberg
You still have a job. But your pay isn’t keeping up with what things cost. That’s the squeeze that eventually shows up in consumer spending data and consumer spending is 70% of the US economy.
What This Means For Interest Rates
The strong jobs number complicates the Fed’s position significantly.
The jobs data will likely keep the Fed on the sidelines, holding its key rate unchanged while it evaluates the impact of the Iran war. Fed officials are increasingly focused on inflation, which has risen quickly since the war, driven by spikes in gasoline prices. Inflation jumped to 3.3% in March — a two-year high and far above the Fed’s 2% target. TheStreet
Here’s the trap. Strong jobs means the Fed doesn’t need to cut rates to support employment. Rising inflation means the Fed can’t cut rates without making prices worse. And oil above $100 with petrol at $4.55 a gallon keeps pushing inflation higher every week the war continues.
The result: rate cuts in 2026 are now looking very unlikely unless a peace deal is reached and oil falls sharply. Kevin Warsh (who takes over as Fed chair in May) inherits one of the most difficult rate decisions in years.
The Bigger Picture
Two months into the biggest oil supply disruption in history, the US economy is battered but not broken. An airline has gone under. Petrol prices are at four-year highs. Inflation is accelerating. But 115,000 people still got a job in April.
“The labour market is not booming, but it is proving harder to break than many feared,” said Olu Sonola, head of US economic research at Fitch Ratings. TheStreet
That’s probably the most accurate summary of where things stand. Not fine. Not broken. Somewhere difficult in between and getting harder to sustain the longer the war goes on.
The April jobs report buys the economy some time. Whether that time is used to negotiate a deal with Iran and bring oil prices down or squandered while the war drags on, this will determine whether May’s jobs report looks anything like April’s.
The Bottom Line
The US added 115,000 jobs in April during a war. That’s genuinely impressive. But wages are now losing the race against inflation, rate cuts are off the table, and the full economic impact of the Iran war hasn’t fully shown up in the data yet.
The jobs market is the last strong pillar holding the US economy up. For now, it’s holding.
The question is for how long.
