Surprisingly Strong Jobs Report Hints at an Improving Labor Market

0:00Justin Lahart:Between tariffs, geopolitical shocks and everything else, 2026 has been a lot so far. The Dow Jones Risk Journal podcast delivers inside analysis from our expert newsroom to help you navigate the uncertainties of risk and regulation with new episodes every Friday.

0:19Elizabeth Findell:January's job numbers were the strongest in more than a year. Plus, in South Texas, immigration raids mean half-finished houses are sitting idle and empty. The effects of it trickle down because it affects the banks where builders and others are getting loans. It affects people who are waiting to buy homes or move into homes. It affects the material suppliers. And the federal deficit is expected to deepen by trillions of dollars over the next decade. It's Wednesday, February 11th. I'm Alex Osola for The Wall Street Journal. This is the PM edition of What's News. The top headlines and business stories that move the world today.

1:03Elizabeth Findell:The delayed January jobs report is here, and it's better than investors and economists had expected. The U.S. economy added 130 ,000 jobs in January, its strongest growth in more than a year. The unemployment rate fell to 4.3 percent from 4.4 percent. It's a sign that the labor market is shaking off its recent slump, but can it continue? For more Behind the Numbers, I'm joined by WSJ economics reporter Justin Layhardt. Justin, the jobs numbers were more than double the 55 ,000 jobs economists had expected. Why were these numbers so surprising to economists?

1:35Justin Lahart:I think because of what they had seen over the past several months, which was very, very, very slow job growth. And also, we just don't expect to see very high job growth these days because we have such lower immigration in the country and the supply of workers is much lower than it was before.

1:56Elizabeth Findell:What are the sectors that we're doing well versus not so well?

1:59Justin Lahart:I mean, it's mostly health care and social services are sort of adjacent to one another. There are other sectors that we saw growth in. Construction, that could reflect the data center construction going on. Manufacturing did a little better. But it's really, you know, health services, health services, health services, which has really been powering the job market for a long time now.

2:23Elizabeth Findell:And just thinking ahead to the rest of the year, can we expect this jobs growth to continue?

2:29Justin Lahart:We have an aging population. We have more health care needs. So it is natural to expect that we're going to see demand for these health care jobs continue.

2:41Elizabeth Findell:That was WSJ economics reporter Justin Leihart. Thanks so much, Justin.

2:45Justin Lahart:Thank you.

2:46Elizabeth Findell:The Solid Jobs report weakens the case for more interest rate cuts and made investors more confident that the Federal Reserve will keep rates on hold. Stocks rose today after the jobs report, but the major indexes surrendered their small gains in later trading. They ended flat or slightly lower.

3:04Elizabeth Findell:Kraft Heinz is pumping the brakes on its breakup plan. In September, the company announced that it was splitting its condiments and grocery staples businesses. Now, Kraft Heinz says that isn't happening. Its new CEO Steve Cahillane says he's focused on returning the business to growth next year. The company is investing hundreds of millions of dollars in marketing and product development.

3:24Justin Lahart:We want to put 100 percent of our focus, 100 percent of our time, our people, our investment against returning the company to growth and not be distracted by the massive amount of work that's required in this operation.

3:39Elizabeth Findell:The company today announced a drop in sales for the ninth straight quarter. Shares closed up 0.4 percent. And employees of American Airlines are calling for its CEO to step down. This week, directors of American's Flight Attendance Union issued a vote of no confidence in American Airlines CEO Robert Isom. And last week, the pilots' union said it no longer believed management was improving the company's operations and financial performance. Executives at American have pledged to get the airline back on track and get delays and cancellations under control. Isom, through company representatives, declined to comment.

4:18Elizabeth Findell:A new estimate out from the Congressional Budget Office today projected that the annual U.S. budget deficit will worsen over the next decade. It's expected to deepen from$1.85 trillion this year to$3 trillion by 2036. WSJ U.S. tax policy reporter Richard Rubin says there are three big factors behind this.

4:37Justin Lahart:There is really just this growth in three big things, in Social Security, Medicare, and interest. This big interest cost that covers all the debt that we've racked up in the past. And so those things are just growing faster than everything else. We're running deficits, 5.8 % of GDP heading towards 6.7 % of GDP. We've done that before, but those are deficit levels that we haven't hit outside of emergencies and wars and recessions. We're not in the middle of some emergency.

5:10Elizabeth Findell:Rich says the CBO estimates that Republicans' tax cuts will also contribute to a bigger deficit.

5:15Justin Lahart:We had all these tax cuts that were scheduled to expire at the end of last year, the end of 2025. And so for a long time, CBO, the Congressional Budget Office, has looked at that and said, oh, we're going to get all this revenue. And Congress and President Trump extended basically all of those tax cuts permanently and created some new tax cuts. That tax law, which also had some spending cuts, increases deficits by about$4.7 trillion compared to had they just let the tax cuts expire.

5:42Elizabeth Findell:He says having such a deep hole in the country's budget comes with risks.

5:46Justin Lahart:The risk is that you run into a sort of crisis where interest rates go up or the federal debt is crowding out private investment or the debt is so burdensome that bond investors demand we pay more in interest rates to service that debt. You just run increasing risks the larger and larger that these debt and deficit numbers go.

6:07Elizabeth Findell:That was WSJ U.S. tax policy reporter Rich Rubin. In other news out of Washington, we're exclusively reporting that the Pentagon has told a second aircraft carrier to prepare to head to the Middle East. Trump hasn't yet given an official deployment order, and plans could change. After his meeting today with Israeli Prime Minister Benjamin Netanyahu, President Trump posted on social media that he preferred to make a deal with Iran. Flights over El Paso resumed this morning, just a few hours after the airspace had been closed for, quote, special security reasons. We've learned that the Pentagon used a high-energy laser against what officials thought was a drug cartel drone.

6:44Elizabeth Findell:The closed airspace was the result of a miscommunication between the FAA and the Pentagon. And a grand jury has refused to sign off on criminal charges for several Democratic lawmakers who told people in the military that they could disobey illegal orders. The lawmakers who prosecutors tried to indict include Arizona Senator Mark Kelly and Michigan Senator Alyssa Slotkin. It's the latest setback for the Trump-era Justice Department in its attempts to prosecute the president's perceived enemies. Coming up, the fallout from the Epstein files reaches the L.A. Olympics Committee. That's after the break.

7:57Elizabeth Findell:The organizers of the 2028 Los Angeles Olympics said today that Casey Wasserman will remain the committee's chairman. Several members of the city's leadership called for the L.A. businessman to step down from the Olympics committee after his name surfaced in the most recent batch of the Jeffrey Epstein files. After a review with outside counsel, the Olympics board found that Wasserman's relationship with Epstein and Ghislaine Maxwell quote, did not go beyond what has already been publicly documented. There's also been fallout in his business. Singer Chapel Roan and retired U.S. women's soccer star Abby Wambach have left Wasserman's talent agency.

8:31Elizabeth Findell:Wasserman issued an apology after the emails were disclosed.

8:38Elizabeth Findell:In South Texas, half-built homes are sitting empty. Federal immigration agents have hit building sites, in some cases picking up entire work crews. That's putting projects months behind schedule and having a cascading effect on the industries that feed into it. Elizabeth Vindel is a reporter based in Texas who joins us now. Elizabeth, why is the housing industry in South Texas being hit particularly hard here? Well, it's just an area where we have seen repeated immigration raids, sometimes hitting the same developments over and over again. So builders can't find anyone to work because they're afraid they're going to be picked up.

9:16Elizabeth Findell:And that includes people who are in the country legally and working legally. Two guards that I spoke with at a nearby detention center said they now have a significant proportion of men in their care who have valid work permits. And that's something that they had not seen under previous administrations. You visited a development called Monticello in Westlaco. What's been going on there? Yeah, that's one of the bigger developments in Westlaco, which is a town of about 40 ,000, 45 ,000 people. They have gotten raided by ICE numerous times. I heard estimates of at least six or more times in the last few months.

9:57Elizabeth Findell:And so workers really just don't want to work out there. And it was pretty empty when we were there. And builders are trying to do things like put up temporary fencing around their lots because ICE agents aren't supposed to go onto private property or they can be blocked from private property if they don't have a judicial warrant. But that only helps so far because the workers have to trust that the agents are going to abide by that. And they don't in all cases. What did ICE have to say about this? They did not respond, unfortunately, to our requests for comment. Got it. And it sounds like it's not just the housing developers that are feeling the impact here.

10:37Elizabeth Findell:The effects of it trickle down because it affects the banks where builders and others are getting loans. It affects people who are waiting to buy homes or move into homes. It affects the material suppliers. We spoke with a concrete supplier who filed for bankruptcy protection after he saw demand for his concrete fall some 60 percent, laying off employees as well. And their CEO, Iliod Cavazos, from 57 Concrete, he told me about seeing raids occur when they would go to drop off their concrete and builders would be left with half-poured foundations.

11:21Justin Lahart:You know, you put the concrete in this foundation. So you're in the middle and the eyes show up. So grab everyone. So the owner of that house has half empty, half full foundation. So it's not my problem. They need to pay me, number one. But you cannot use that foundation because it's wrong. They need to tear the foundation out and do it again. And that costs him like$30 ,000,$40 ,000 to do that.

11:49Elizabeth Findell:Elizabeth, some of the stuff you're talking about seems kind of specific to South Texas. Are we seeing this in any other parts of the U.S.? It is happening in other places in the country, especially places where we've seen increased immigration enforcement activity, like in Minnesota. My colleagues spoke with builders in Minnesota and heard the exact same types of stories that we're hearing in South Texas, that they can't find people to work. So projects are on hold, and it's costing builders a tremendous amount of money. That was WSJ reporter Elizabeth Findel. Thanks, Elizabeth. Thank you. And that's what's news for this Wednesday afternoon.

12:28Elizabeth Findell:Additional sound courtesy of S &P Global Market Intelligence. Today's show is produced by Pierre Bien-Aimé and Alexis Moore with supervising producer Tali Arbel. I'm Alex Osola for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.

13:13Justin Lahart:Transcription by CastingWords to The Wall Street Journal.

13:16Elizabeth Findell:Visit subscribe.wsj.com slash takeontheweek to subscribe now.