Nonfarm payrolls are expected to bounce back — barely — in March as the bar keeps getting lower for what constitutes a healthy labor market.

The U.S. economy is projected to show job gains of 59,000 for the month, an anemic rate by the standards of previous years this decade but enough to keep the unemployment rate at 4.4%.

If the estimate is reasonably accurate, it actually would represent above-trend job growth for a labor market that has created virtually no jobs over the past year.

Immigration restrictions, shifting demographics and geopolitical uncertainty have left companies eager neither to hire nor fire workers en masse, resulting in a static labor market and a series of ho-hum monthly counts from the Bureau of Labor Statistics. The BLS will release the number Friday at 8:30 a.m. ET, though the stock market will be closed in observance of the Good Friday holiday.

“We have to revise our idea of what a good or bad job number is,” said Guy Berger, chief economist at Homebase, which provides workforce management services for small businesses.

A report like February’s showing job losses “would have been raising alarm bells about the state of the labor market,” he added. “Now we’re like, yeah, that was a very bad report, but it doesn’t freak anybody out about the job market. I didn’t look at that report and say, wow, we’re on the verge of tipping into recession.”

Echoing views expressed by Federal Reserve Chair Jerome Powell and other central bankers, Berger said he’s more focused on the unemployment rate as a gauge of labor market stability.

In a recent report, the St. Louis Fed updated previous research on the breakeven level for job growth. The bank’s economists now think that number could be as low as 15,000, with a high end of 87,000.

That’s a steep drop from an estimate as recent as April 2025 that showed the breakeven level at 153,000, and an update in August of that year putting the number between 32,000 to 82,000.

In other words, the labor market needs nowhere near the job growth it required previously to keep the population near full employment.

“Things have been slowly getting worse each for the last few years,” Berger said, but added, “There’s no real sign of us tipping into a recession.”

Some economists on Wall Street disagree. Goldman Sachs, Moody’s Analytics and others in recent days have raised their odds of recession in the next 12 months, with a focus on threats from a slowing jobs picture and surging energy costs.

Earlier this week, BLS data showed that the rate of hiring as a share of the workforce fell to 3.1%, its lowest level since the Covid recession in 2020 and, before that, January 2011.

Still, Homebase’s data is consistent with other indicators, including the ADP private payrolls report for March, showing modest gains in payrolls. February’s loss of 92,000 jobs came in part due to a since-resolved strike at health-care provider Kaiser Permanente that sidelined some 31,000 workers in California and Hawaii.

Federal Reserve Chair Jerome Powell, in a wide-ranging talk at Harvard University, said Monday that he sees inflation expectations as grounded despite rising energy prices so the central bank doesn’t need to respond with higher interest rates.

As his term leading the central bank nears an end, Powell avoided questions about the longer-term direction of interest rates or inclinations his designated successor has espoused.

In the near term, he said the proper move is to look beyond the short-term gyrations of the energy market and focus on the Fed’s goals of stable prices and low unemployment.

“Inflation expectations do appear to be well anchored beyond the short term, but nonetheless, it’s something we will eventually maybe face the question of what to do here,” he said during a question-and-answer question with a moderator and students. “We’re not really facing it yet, because we don’t know what the economic effects will be, but we’ll certainly be mindful of that broader context when we make that decision.”

As he has in the past, Powell said he believes the current rate target, in a range between 3.5%-3.75%, is “a good place” for the Fed to sit as it observes events currently playing out, including the Iran war and the impact tariffs are having on prices.

The comments appeared to register in financial markets, with traders no longer pricing in a significant chance of a rate hike this year. As recently as Friday morning, markets were looking at a better than 50% probability of a quarter percentage point increase amid expectations the Fed would react to the surge in energy costs. However, odds of a hike by December fell to 2.2% after Powell’s appearance.

Powell said raising rates now could have negative effects on the economy later. He noted that Fed rate moves have a lagged impact on the economy, so tightening here wouldn’t help the inflationary impact of the Iran war.

“By the time the effects of a tightening in monetary policy take effect, the oil price shock is probably long gone, and you’re weighing on the economy at a time when it’s not appropriate. So the tendency is to look through any kind of a supply shock,” he added.

Market-based measures such as breakeven rates in Treasury yields indicate few fears of an inflation spike. Breakevens measure the difference between Treasurys inflation-indexed securities. The five-year breakeven rate most recently was around 2.56% and trending lower over the past 10 days.

Powell’s term ends in mid-May, and President Donald Trump has nominated former Governor Kevin Warsh as the next chair. However, Warsh’s nomination is being held up in the Senate Banking Committee as U.S. Attorney Jeanine Pirro continues her investigation into renovations at Fed headquarters.

Though a judge threw out a subpoena Pirro’s office issued to Powell, she has appealed the decision. While the case is being adjudicated, Sen. Thom Tillis, R-N.C., has vowed to prevent the nomination from going through.

For his part, Warsh has stated a preference for lower interest rates than the current level. Asked to comment on his successor’s plans, Powell said, “I’m not going to swing at that pitch.”

Regarding private credit, Powell noted rising defaults, investor withdrawals and concerns about wider issues in the $3 trillion sector.

“I’m reluctant to say anything that suggests that we’re dismissive of the risk, but we’re looking for connections to the banking system and things that might result in contagion. We don’t see those right now,” he said. “What we see is a correction going on, and certainly there’ll be people losing money and things like that. But it doesn’t seem to have the makings of a broader systemic event.”

Federal Reserve Governor Stephen Miran on Monday continued his campaign for lower interest rates, telling CNBC that policymakers should disregard the current energy price spike unless there are signs it will have longer-lasting impacts.

“If I saw a wage-price spiral, or I saw evidence that inflation expectations are starting to pick up, then I would get worried about it,” he said during a “Squawk on the Street” interview. “There’s no evidence of it thus far, and you can move the monetary policy rate all you want — today tomorrow — but it’s not going to affect inflation the next couple of months.”

Citing market-based indicators, Miran said inflation expectations remain well anchored, despite the jump in oil to more than $100 a barrel and a price shock at the pump that has pushed gasoline higher by more than $1 a gallon.

Monetary policy works with a lag and isn’t geared toward short-term market gyrations, he added.

Miran has dissented at each of the meetings he has attended since September 2025. He told CNBC that he continues to think “we could be about a point easier, gradually done over the course of a year.”

The fed funds rate is currently targeted in a range between 3.5%-3.75%. Market pricing is implying no moves in either direction before the end of the year.

Miran’s term has expired, but he continues to serve as the nomination of former Federal Reserve Governor Kevin Warsh is held up in the Senate Banking Committee. If confirmed, Warsh will take over as chair for Jerome Powell when the latter’s term expires in May.

Private sector hiring was a bit better than expected in February, though most of the job creation came from just two sectors, ADP reported Wednesday.

Companies added a seasonally adjusted 63,000 workers during the month, an improvement from the downwardly revised 11,000 in January and better than the Dow Jones consensus estimate for 48,000, according to the payrolls processing firm’s latest update.

Though the total beat expectations, the issue of breadth continued to be a problem for the labor market.

Education and health services, an industry that has been the primary driver for job creation, added 58,000 jobs for the month, easily leading all sectors. After that, construction contributed 19,000, with the two industries offsetting stagnant growth across most other sectors.

Professional and business services saw a decline of 30,000 positions, manufacturing lost 5,000 and trade, transportation and utilities was off 1,000. Other than a gain of 11,000 in information services, there was little movement elsewhere. Manufacturing continued to decline despite President Donald Trump’s efforts to use tariffs to reshore jobs in the industry.

On the wage side, pay grew 4.5% for those staying in their jobs, unchanged from January. However, the wage gains for job switchers moved down to 6.3%, a 0.3 percentage point decline from the prior month. Those results reduced the incentive for changing jobs to the lowest level since ADP began tracking the metric.

“We’ve seen an increase in hiring and pay gains remain solid, especially for job-stayers,” said ADP chief economist Nela Richardson. “But with hiring concentrated in only a few sectors, our data shows no widespread pay benefit from changing jobs.”

In a switch from recent months, job creation was concentrated at businesses with fewer than 50 employees. That group saw gains of 60,000, while big businesses with 500 or more workers added 10,000 and medium-sized firms reported a drop of 7,000.

Job growth has taken a step down over the past year as the Trump administration has clamped down on illegal immigration and as the pace of post-Covid hiring has slowed. While companies have been reluctant to add workers, layoffs have remained low as well.

The report comes with questions over the state of the labor market as well as worries about stubbornly higher inflation, the latter coming even more into view with the fighting in Iran and the Middle East.

Recent statements from Federal Reserve officials indicate somewhat higher confidence that the jobs picture is stabilizing. At the same time, worries are increasing that a bump in oil prices will drive inflation higher. Traders are now indicating the next Fed interest rate cut won’t come until at least July and have lowered the probability for a second cut this year, according to the CME Group’s FedWatch tracker.

The ADP release precedes Friday’s nonfarm payrolls report from the Bureau of Labor Statistics. Wall Street is looking for a February increase of 50,000 jobs from the report, which unlike ADP also includes government hiring. Economists expect the unemployment rate to hold steady at 4.3%.

There were plenty of reasons for investors to be on edge in the current setup for stocks even before the U.S. and Israel launched a major military campaign against Iran over the weekend.

The month of February, and midterm election years in particular, have a history of being bad for stocks. The cash drain among the mega-cap tech stocks that have led the market for years has been stressing heady market valuations, with Amazon headed back to a negative free cash flow situation and Alphabet dipping deeply into the bond market to finance its data center buildout — and it is far from alone in seeking debt market financing related to AI. The threat from AI to sectors across the market was walloping companies from software to trucking to commercial real estate as new worst-case scenarios were theorized on an almost daily basis.

All of that resulted in an S&P 500 that has gone nowhere this year, with a return of less than one-half of one percent for an index that is likely to see more volatility in the week ahead. But after three years of gains — and even before the uncertainty of a prolonged war in the Middle East and the prospect of $100 oil tipping the global economy into recession — a few months of sideways trading was not a shock to investors. They have been increasingly moving away from bonds as the primary hedge against the stock market and it’s not just gold, up another 20% this year, that has boomed. Investors have been turning to options-based exchange-traded funds in increasing numbers over the past few years as a result of fears about the sustainability of the stock market’s run combined with the need to generate income among many older Americans.

According to ETF Action founding partner Mike Akins, one of the most notable splits in the ETF world is between the heavy use of “the big box categories,” core stock and bond index funds, by institutional investors — where as much as 60-70% of ownership is institutional — versus the ownership of “non-traditional” ETFs in areas that have now grown to include many options-based ETF strategies and has been one of the biggest product development trends in recent years. There has been an estimated $170 billion invested in “synthetic income” ETFs which use options to focus on generating income, and $100 billion in “buffer” ETFs that use options to focus on downside protection — with most of the assets coming from retail investors or investment advisors for their individual investor clients, Akins said on the most recent episode of CNBC’s “ETF Edge.”

According to Tidal Financial Group senior vice president of product development Aga Kuplinska, the market is in the “overlay everything” phase as issuers take any underlying asset class or strategy and layer on options for income and hedging. It’s no longer just in areas where the search for income has long been a focus, such as dividend stocks, but for areas of the market long associated more typically with the search for growth, like tech stocks. “Income has been the No. 1 selling point and will remain so going into future because the demand for yield just doesn’t go away and during uncertain market conditions the added benefit of income seems to resonate well with investors,” she said on “ETF Edge.”

While institutions have long used similar strategies, the availability of the options-based strategies in an ETF wrapper has made it more efficient for retail investors to access this approach, and Akins warned that “in some respects, with synthetic income in particular, we’ve gotten to the Wild West in terms of what we can do.”

The ETF experts said there are successful examples of fund companies generating both maximum income for investors from these strategies and those generating a more conservative level of income. In the tech stock-concentrated Nasdaq 100 synonymous with the Invesco QQQ ETF (QQQ), for example, there are options-based ETFs that have performed well amid the tech tumult and have been a “nice solution for investors to generate income off a more volatile strategy while still getting upside,” Akins said.

Nevertheless, Kuplinska added that investors need to start from the understanding that “there is no free lunch in options income. The more income, the more upside you typically give up.”

Akins said that some of the yields on offer are so high investors need to understand what it means for a fund’s net asset value. With some ETFs indicating yields or distribution rates at almost 100%, in effect that means almost equivalent erosion of the fund’s net asset value — otherwise known as a “yield trap.” The range of yields in this growing strategic ETF niche is wide — with some ETFs targeting 5-8% and others 8-12%, as well as those verging on 100% — but it is a signal that “lots of education has to be done,” Akins said.

Kuplinska said with any derivatives-based income or hedging ETF strategy, what is taking place behind the scenes at the investment manager running the fund is very important, from regulatory and compliance protocols to the sophistication level of the trading desk. “These are incredibly difficult strategies to back test,” she said on the podcast portion of “ETF Edge.” She noted these ETFs are all subject to regulatory requirements to calculate risk on a daily basis, but she added, “Anything can be a weapon of mass destruction if not used as intended or properly.”

After the the past few years of rapid launches within this ETF category, “white space is much harder to find,” Kuplinska said. Options-based investing has “been done on everything out there,” she added. But she does think one more wave of options-based ETFs is coming and it will be less about the chase for maximum yield levels and designed more to focus on income stability and risk control. 

You can watch their conversation from the most recent “ETF Edge” above to learn more about proper use of options-based ETFs.

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