The US Labor Department reported March nonfarm payrolls adding a surprisingly strong 178,000 jobs — three times market expectations — with unemployment falling to 4.3% from 4.4%. But Oxford Economics Chief US Economist Nancy Vanden Houten poured cold water, calling the figure a 'significant overstatement of the sustainable pace of job growth.'
March Data Shines but Unsustainable
In a research note, Vanden Houten argued the number was a short-term noise mirage, citing three temporary drivers: post-strike rehiring, seasonal adjustments, and natural rebounds from a harsh winter — all one-off boosts with no staying power.
According to CNN, the University of Michigan consumer sentiment index slid to 53.3 in March (from 56.6), and the average gasoline price hit $3.98 per gallon — a full dollar higher than before the conflict. Diesel surged 50%. The Strait of Hormuz blockade continues to push energy costs higher, with ripple effects spreading.
War Impact Delayed, Not Absent
Vanden Houten stressed that while inflation hits immediately, the negative effects of war on consumer spending, business investment, and hiring will only show up fully in the coming months. Today's jobs numbers haven't yet accounted for the worst part.
Businesses are stuck in a 'no-hire, no-fire' limbo — neither expanding nor cutting staff. Oxford Economics describes this as a stagnant state that leaves little buffer when external shocks arrive.
Fed Rate Cut Outlook Under Pressure
Vanguard economist Adam Schickling has already raised his year-end unemployment forecast from 4.2% to 4.6%, warning that coming months will look bleak.
Oxford Economics predicts the Fed will treat oil price rises as a one-time inflation event and ignore them, cutting rates twice this year to head off labor market weakness. But if the war escalates and energy stays elevated, that room for maneuver may not last.