US jobs market faces huge slowdown over next six months after stock markets lost $4trillion in ‘Trump slump’, economists warn

The US jobs market is facing a huge slowdown over the next six months as President Donald Trump‘s economic policies push America towards a recession, economists have warned. 

The job market is still showing stable hiring at the moment and the economy ended last year running at a solid rate, but analysts predict non-farm payroll in the US will drop ‘close to zero in the next six months’.

Mohit Kumar, chief Europe economist at Jefferies, told The Telegraph that American unemployment risks rising to 4.3 or 4.4 per cent in the coming months.

Non-farm payrolls increased by 151,000 jobs last month, after rising by a downwardly revised 125,000 in January, according to latest figures from the Department of Labor. Economists had forecast payrolls to advance by 160,000 jobs. 

Elon Musk and his Department for Government Efficiency (DOGE) have also been cutting jobs as they aim to slash the size and cost of the federal bureaucracy and what they have called ‘wasteful, unnecessary spending’.

Trump, in the wake of weaker than expected jobs and inflation data, could not say on Sunday if his protectionist policies could lead the US into a recession, sending shockwaves through global markets.

The US stock market sell-off deepened on Monday, wiping out $4trillion from the S&P 500’s peak last month – when Wall Street was cheering much of Trump’s agenda.

European and Asian benchmarks were mixed on Tuesday, with many experiencing a tiny bounce back after shares plummeted Monday amid fears about the ripple effects of Trump’s tariffs on regional economies and companies.

The US jobs market is facing a huge slowdown over the next six months as President Donald Trump’s economic policies push America towards a recession, economists have warned

US stock indexes inched up in premarket trading Tuesday following the biggest one-day drop of the S&P 500 this year. The stock market sell-off on Monday wiped out $4trillion from the S&P 500’s peak last month

US stock indexes inched up in premarket trading on Tuesday,with the Nasdaq 100 rising 0.5 per cent

The Dow Jones Industrial Average rose 0.3 per cent in premarket trading Tuesday

US stock indexes inched up in premarket trading Tuesday following the biggest one-day drop of the S&P 500 this year. 

The Dow Jones Industrial Average rose 0.3 per cent in premarket trading, while the S&P 500 gained 0.4 per cent and the Nasdaq 100 rose 0.5 per cent.

European shares were largely flat on Tuesday as investors took a breather following a global stock market rout triggered by concerns that US trade policies could dent economic growth and lead to recession.

The pan-European STOXX 600 was down 0.1 per cent as of 09.40am GMT. The benchmark had dropped to its lowest in nearly a month on Monday, while Wall Street’s tech-heavy Nasdaq sank 4 per cent to a near six-month low.

Germany’s DAX gained 0.6 per cent to 22,764,82, while the CAC 40 in Paris added 0.7 per cent to 8,102.82. Britain’s FTSE 100 lost less than 0.1 per cent.

Japan‘s benchmark Nikkei 225 sank 0.6 per cent, its lowest close in six months but was up from a more than 2 per cent loss earlier in the day.

China’s Shanghai Composite index picked up 0.4 per cent to 3,379.83 as the country’s annual national congress wrapped up its annual session with some measures to help boost the slowing economy. 

In Hong Kong, the Hang Seng was nearly unchanged at 23,782.14. Australia’s S&P/ASX 200 lost 0.9 per cent to 7,890.10. South Korea‘s Kospi declined 1.2 per cent.

Traders work on the floor of the New York Stock Exchange (NYSE) on March 07, 2025 in New York City

The pan-European STOXX 600 was down 0.1 per cent as of 09.40am GMT. The benchmark had dropped to its lowest in nearly a month on Monday

Britain’s FTSE 100 lost less than 0.1 per cent in early trading Tuesday

Germany’s DAX gained 0.6 per cent to 22,764,82 on Tuesday

The CAC 40 in Paris added 0.7 per cent to 8,102.82 early Tuesday morning

Trump is expected to meet with DC-based Wall Street bosses at the White House on Tuesday after stock markets plummeted worldwide on Monday. 

The business round table is expected to include executives from some of Wall Street’s banking giants, Bloomberg reports.

There was no clear fresh trigger behind Monday’s slide apart from ongoing trade tariff uncertainty and the softening jobs market, with Trump and administration officials acknowledging that an economic downturn was a risk in the first quarter.

The New York Federal Reserve’s latest consumer survey highlighted growing concerns about deteriorating household financial situations. 

And the percentage of those expecting unemployment to be higher a year from now rose to its highest level since September 2023.

Even though the Fed has made it clear that interest rates are on hold for the foreseeable future, a dash for safety in Treasuries saw two year yields hit their lowest point since October, and traders nudged 2025 Fed easing bets up to 85 basis points.

The dollar also slipped again on Tuesday to another 2025 low.

The S&P 500 has given up all gains recorded since Trump’s November 5 election, and it is down nearly 3 per cent in that time. 

Hedge funds reduced exposure to stocks on Friday at the largest amount in more than two years, according to a Goldman Sachs note released on Monday.

Investors are also watching whether lawmakers can pass a funding bill to avert a partial federal government shutdown. A US report on inflation looms on Wednesday.

China’s Shanghai Composite index picked up 0.4 per cent to 3,379.83 as the country’s annual national congress wrapped up its annual session with some measures to help boost the slowing economy

CJapan ‘s benchmark Nikkei 225 sank 0.6 per cent, its lowest close in six months but was up from a more than 2 per cent loss earlier in the day

In Hong Kong , the Hang Seng was nearly unchanged at 23,782.14

South Korea’s Kospi declined 1.28 per cent on Tuesday

Australia’s S&P/ASX 200 lost 0.9 per cent to 7,890.10

Market analysts have warned that Trump’s ‘cavalier approach to economic policy’ is ‘rattling sentiment’ and ‘the prospect of a recession in the US is lurking‘.

‘The recent $4trillion market plunge underscores growing fears about Trump’s tariffs and broader economic agenda,’ George Narinyan, the CEO of Value Sense, told MailOnline.

‘Historically, Trump used stock market performance as a benchmark for his success, but his focus now appears to be shifting.’

Narinyan added: ‘With global markets, including Asian benchmarks, feeling the impact, investors are left questioning whether Trump’s populist approach will stabilize or further disrupt the economy.’

Kyle Rodda, senior financial markets analyst at Capital.com, echoed the sentiment saying that unlike Trump’s first term – when signs of cracks in the economy or stock market would have seen a pivot on trade policy – this time around, Trump seems determined to stay the course.

‘That’s raising these fears about a major growth slowdown, possibly recession, caused by this very aggressive approach to trade. I think investors are coming to the shocking realization that Trump doesn’t have their back,’ Rodda added.

‘Heightened anxiety surrounds both existing and incoming US tariffs, along with retaliatory measures from trading partners, and China’s newly effective tariffs will continue to weigh on equities,’ said Anderson Alves, a trader at ActivTrades.

Peter Orszag, CEO of Lazard, warned: ‘The amount of uncertainty that has been created by the tariff wars with regard to Canada, Mexico and Europe, is causing boards and C-suites to reconsider the pathway forward,’

‘People can understand ongoing tensions with China, but the Canada, Mexico, and Europe part is confusing. Unless that gets resolved over the next month or so, this could do real damage to the economic prospects of the US and M&A activity.’

Elon Musk and his Department for Government Efficiency (DOGE) have also been cutting jobs as they aim to slash the size and cost of the federal bureaucracy and what they have called ‘wasteful, unnecessary spending’

Some analysts, however, claim that while initial market fears were sparked by Trump’s tariffs, ‘what really spooked markets this week were the US president’s comments over the weekend that he cannot rule out a recession’.

Trump over the weekend admitted there was a ‘period of transition’ taking place but dismissed concerns about the stock market. 

He also refused to rule out a recession in an interview with Maria Bartiromo on ‘Sunday Morning Futures’ on Fox News.

‘I hate to predict things like that,’ Trump said. ‘Look, we’re going to have disruption, but we’re OK with that.  

‘There is a period of transition, because what we’re doing is very big. We’re bringing wealth back to America. That’s a big thing… It takes a little time, but I think it should be great for us.’