The Iran war has triggered the most severe disruption to global oil supplies in history, pushing average U.S. gasoline prices above $4.50 per gallon this week. However, the conflict has yet to inflict significant harm on the American job market, though economists warn the impact may be delayed.
April Jobs Report Expectations
When the Labor Department releases its April hiring and unemployment data on Friday, forecasts compiled by FactSet indicate that U.S. businesses, nonprofits, and government agencies added 65,000 net new jobs last month. This would represent a decline from the surprisingly robust 178,000 jobs added in March.
Under normal circumstances, 65,000 new jobs per month would be considered lackluster. Yet current conditions are far from ordinary. The retirement of Baby Boomers and President Donald Trump's stringent immigration policies have reduced the pool of available workers, meaning the economy requires fewer new positions to maintain stability.
Matthew Martin of Oxford Economics notes that the break-even point—the monthly job creation needed to prevent the unemployment rate from rising—is now close to zero. The jobless rate is anticipated to have held steady at a low 4.3% in April, according to FactSet.
War's Impact on Energy and Economy
Following the joint U.S.-Israeli attacks on February 28, Iran closed the Strait of Hormuz, a critical chokepoint for about one-fifth of the world's oil and liquefied natural gas. This disruption has driven energy prices sharply higher, prompting many economists to lower their growth forecasts for both the global and U.S. economies.
Nevertheless, the labor market has not yet felt the full brunt. Payroll processor ADP reported on Wednesday that private employers added 109,000 jobs in April, the fastest pace since January 2025. While ADP data is not always a reliable predictor of the official figures, it suggests ongoing hiring momentum. Additionally, the Labor Department reported Tuesday that gross hiring—before accounting for separations—was stronger in March than at any point in over two years.
Support from Tax Refunds
The economy is receiving a temporary boost from larger tax refunds this spring, a result of Trump's tax cut legislation passed last year. These refunds are enabling consumers to spend more freely, encouraging companies to hire in response to rising demand.
Uneven Recovery After a Weak 2025
The job market is showing intermittent signs of recovery after a dismal 2025, when employers added an average of just 9,700 jobs per month—the lowest outside of a recession year since 2002. High interest rates and uncertainty over Trump's economic policies had previously suppressed hiring.
Progress in 2026 has been erratic: strong gains in January (160,000 jobs) and March (178,000 jobs) were offset by a loss of 133,000 jobs in February.
Healthcare has been the dominant driver of employment, adding 360,000 positions over the past year to meet the needs of an aging population. In contrast, all other sectors combined have shed 120,000 jobs during the same period.
Concerns About Healthcare Hiring
Diane Swonk, chief economist at KPMG, warns that the healthcare hiring spree may not be sustainable. The Republican Congress allowed subsidies for health insurance under the Affordable Care Act to expire last year. Trump's tax bill also cut Medicaid funding for the poor, and his administration imposed a $100,000 fee on H-1B visas. "Rural and poor urban hospitals rely most on H-1B doctors and nurses to fill open positions," Swonk wrote in a commentary. "They cannot afford the new $100,000 fee for visas. Many rural hospitals have already closed."
Future Outlook
Looking ahead, Oxford's Martin noted in a commentary Wednesday, "the question is whether the war will reverse hiring momentum. Heightened uncertainty impacts the labor market with a lag, and the fiscal stimulus from higher refunds will eventually wane, particularly as gas prices remain elevated."
