PNC economists provide insight into key indicators that may have an impact on current business performance and the path ahead.
Employment
- The February jobs report showed little change compared to the labor market of recent months. The number of jobs, as measured in a survey of employers from the Bureau of Labor Statistics, increased by 151,000 from January. Over the past three months job growth has averaged 200,000, and for all of 2024 job growth averaged 168,000.
- The unemployment rate rose slightly to 4.1% in February from 4.0% in January. After falling to 3.4% for a couple of months in 2023, the unemployment rate has risen slightly and has been between 4.0% and 4.2% since May 2024.
- The February jobs report is a favorable one from the perspective of the Federal Open Market Committee. Inflation is still running higher than the Fed would like, at around 2.5%, but it is much lower than it was a couple of years ago. Progress on inflation could be uneven in the near term given the uncertain outlook on tariffs, but it should gradually subside. PNC expects two 25 basis point cuts in the federal funds rate in the middle of 2025, which would take the rate to a range of 3.75 to 4.00% by the fall, down from close to 5.5% in mid-2024.
U.S. Goods and Services Trade Deficit
- The U.S. goods and services trade deficit increased to a record high in January 2025. The seasonally-adjusted nominal U.S. goods and services trade deficit jumped 34% in January to $131.4 billion from $98.1 billion (revised downward from $98.4) in December. The three-month average trade deficit also reached the highest level in two decades. On a year-ago basis, the total trade deficit almost doubled (up 97%) in January.
- The larger deficit in January came from a 10% jump in imports, much larger than the 1.2% increase in total exports for the month. Speculative trade ahead of incoming tariffs pushed total imports to a record high of $401.2 billion. Specifically, merchandise imports jumped 12% to $329.5 billion, marking the highest level in the past two decades and one of the sharpest jumps made in a month during this period.
- Goods imports increased with all categories rising at least 2% on the month; services imports rose less than 1%. Goods imports increased the most in industrial supplies and materials (up 34%) on the month, and consumer goods also jumped 8% in January, with the largest increases in pharmaceuticals, cell phones, and other household goods. Even imports of autos increased 2% in January, reversing the decline (down 5.5%) in December last year.
- Total exports increased 1% on the month to $270.0 billion in January, with small increases in goods (up 1.6%) and services (up 0.6%). Civilian aircraft, semiconductors, computers, and pharmaceutical preparations contributed the most to the rise in goods exports on the month.
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PNC economists provide analyses and forecasts of national, regional, and global economic and financial trends. For more economic data and reports, visit www.pnc.com/economicrelease.
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