Fed's labor market reality check

Last week wasn’t about a single data point. It was about a shift in tone from policymakers: the labor market may be weaker than the headlines imply, and the economy is increasingly being supported by a narrower set of households and sectors. This week, that narrative gets tested in two places: the February jobs report on Friday, and markets’ evolving assessment of geopolitical risk involving Iran – an oil producer in a region where worst-case scenarios can change the global macro outlook fast. What Fed speakers said last week: Waller put the labor market in the crosshairs The most important Fed remarks last week came from Governor Christopher Waller, who delivered a substantive economic outlook speech on Feb. 23. His message was sobering on the labor market. First, Waller highlighted the annual benchmark revisions to payrolls, which dramatically changed the story of 2025. The revisions turned last year into one of the weakest years for job creation in decades outside of a recession: 18