January’s Split Signal
What has President Trump said this week?
〰️
What has President Trump said this week? 〰️
1. January Mixed Labor Signal
Early 2026 is showing a split labor picture: better-than-expected hiring in January alongside evidence that 2025 was far weaker than initially believed. Employers added 130,000 jobs in January, exceeding forecasts, and the unemployment rate dipped to 4.3% from 4.4% (NPR, 2026). However, annual benchmark revisions show the labor market cooled far more sharply last year than previously reported. The updated figures indicate there were nearly 900,000 fewer jobs in March 2025 than initially estimated, and employers added an average of just 15,000 jobs per month in 2025. Federal Reserve Governor Chris Waller described the revised data as inconsistent with a healthy labor market and warned of “considerable doubt about future employment growth” (NPR, 2026).
At the same time, layoff announcements surged. Employers reported roughly 108,000 job cuts in January, the highest January total since 2009 (AP News, 2026). Reuters documented multiple large restructuring moves across technology, finance, and industrials, underscoring a wave of cost discipline and margin protection efforts (Reuters, 2026, reprinted by Blue Water Healthy Living). This dynamic, cautious hiring paired with targeted layoffs, suggests companies are reluctant to fire broadly but equally hesitant to expand payrolls.
In macro terms, this does not yet resemble a systemic downturn like 2009. The unemployment rate remains historically low, and hiring continues in select sectors. But the combination of downward revisions, slower wage growth, falling job openings, and elevated layoff announcements suggests a labor market that is losing momentum rather than stabilizing. The key question for policymakers is whether this cooling remains contained, or begins to spill over into broader consumer spending and economic activity (AP News, 2026).
2. The Rate Cut Debate
January’s labor report has reshaped expectations for Federal Reserve policy. Employers added 130,000 jobs, unemployment dipped to 4.3%, and wages rose 0.4% month-over-month, signaling a labor market that may be stabilizing after a sharply weaker 2025 (Bloomberg, 2026; NPR, 2026). The strength of the data immediately complicated the outlook for interest-rate cuts, reinforcing the Fed’s recent decision to hold rates steady and pushing market expectations for the next cut from June to July 2026.
For the White House, the report offers political momentum, but for the Fed, it raises the bar for easing. After delivering three rate cuts late last year, policymakers have signaled there is no urgency to cut further while inflation remains above the 2% target and the labor market shows resilience. President Trump reiterated his call for lower rates, but traders interpreted the jobs surprise as making aggressive easing less likely in the near term (Bloomberg, 2026). As one strategist noted, the Fed would likely need to see clearer and sustained weakening in employment before resuming cuts.
Markets reacted accordingly. Treasury yields rose, gold retreated toward ~$5,060 per ounce, and rate-sensitive assets recalibrated to a “higher-for-longer” scenario (Yahoo Finance, 2026). While economists still expect one or two cuts later this year, much of the easing cycle may ultimately fall under incoming Fed nominee Kevin Warsh, unless data deteriorate before Chair Jerome Powell’s term ends in May (Fortune, 2026). The central question now is whether January marks stabilization, or simply a temporary rebound before further cooling forces the Fed’s hand.
3. US–India Trade Deal
The United States and India moved closer to a bilateral trade pact, releasing an interim framework aimed at lowering tariffs, reshaping energy ties, and deepening economic cooperation as both countries seek to realign global supply chains (The White House, 2026; Reuters, 2026). The framework reaffirms that negotiations are still underway toward a broader agreement, but signals near-term momentum on trade facilitation, technology cooperation, and supply-chain resilience.
A central economic element is tariff relief: the deal would apply an 18% U.S. tariff on most Indian imports (down from 50%), after President Trump removed an additional 25% tariff that had been imposed over India’s purchases of Russian oil. Under the executive order, that 25% levy could be reinstated if India resumes oil procurement from Russia (Reuters, 2026). India also committed to purchase $500 billion in U.S. goods over five years, spanning energy (oil, gas, coking coal), aircraft and parts, precious metals, and technology products including GPUs used in AI and data centers (Indian Express, 2026).
On market access, India agreed to reduce or eliminate tariffs on U.S. industrial goodsand a wide set of agricultural products, while protecting sensitive sectors like dairy and restricting genetically modified crop imports. The framework also targets non-tariff barriers, including a push to align safety and licensing standards within six months, alongside cooperation on export controls and actions addressing “non-market policies of third parties” (widely interpreted as China). Politically, the deal lands amid rising tariff tensions at home: the U.S. House recently voted 219–211 to advance a resolution aimed at rescinding Trump’s Canada tariffs, a rare bipartisan rebuke that highlights growing congressional unease with tariff-based trade strategy (The Guardian, 2026). For investors, the clearest upside is in energy trade, AI-linked hardware supply chains, and logistics, while the key risk remains execution and domestic political pushback.