U.S. jobs and inflation shift

The U.S. economy entered April with slower hiring, higher unemployment and faster inflation in the same set of reports. (bls.gov 1) (bls.gov 2) The Labor Department said employers added 178,000 jobs in March, down from the stronger gains seen in late 2025, while the unemployment rate held at 4.3% with 7.2 million people unemployed. Long-term unemployment rose by 322,000 from a year earlier to 1.8 million. (bls.gov) A week later, the Consumer Price Index showed prices rose 0.9% in March and 3.3% from a year earlier, up from 2.4% in February. Gasoline jumped 21.2% in the month and accounted for nearly three quarters of the monthly increase, while core inflation, which strips out food and energy, rose 0.2% in March and 2.6% over the year. (bls.gov) Those numbers matter to the Federal Reserve because its job is to balance maximum employment with 2% inflation over time. At its March 17-18 meeting, the Fed said job gains had remained low, inflation was still elevated, and it left its benchmark rate at 3.5% to 3.75%. (federalreserve.gov 1) (federalreserve.gov 2) Growth had already cooled before the March jobs and inflation reports landed. The Bureau of Economic Analysis said real gross domestic product rose at a 0.5% annual rate in the fourth quarter of 2025, and the average of real gross domestic product and real gross domestic income slowed to 1.5% from 4.0% in the third quarter. (bea.gov) Energy prices are a big part of the shift. The Energy Information Administration said in its April outlook that U.S. retail gasoline prices are expected to average $3.70 a gallon in 2026 after averaging $3.10 in 2025, as oil prices rose with supply disruptions tied to limited flows through the Strait of Hormuz. (eia.gov) The Fed’s own March projections pointed to the same split: slower growth and firmer prices. Policymakers projected 2026 real gross domestic product growth of 1.7%, unemployment of 4.4% at year-end, and personal consumption expenditures inflation of 2.7%, which is the Fed’s preferred inflation gauge. (federalreserve.gov) The next big tests are already dated. The Bureau of Labor Statistics is scheduled to release April consumer inflation on May 12, 2026, and April employment on May 8, 2026, reports that will show whether March was a one-month shock or the start of a broader slowdown with hotter prices. (bls.gov)