by Louis Navellier
March 10, 2026
Last Friday’s jobs report from the BLS shocked the market by claiming 92,000-jobs were lost in February, after the economists’ consensus called for +55,000-new jobs. Two-days previously, ADP had reported 63,000 private-sector payroll jobs being created in February – the strongest monthly private payroll gain reported by ADP since last July. ADP chief economist Nela Richardson explained this surge in jobs: “We’ve seen an increase in hiring and pay gains remain solid, especially for job-stayers,” adding this caveat: “But with hiring concentrated in only a few-sectors, our data shows no widespread pay benefit from changing jobs. In fact, the pay premium for switching employers hit a record low in February.”
Following this bullish ADP jobs report, the market rose on Wednesday, but then it reversed those gains for the rest of the week when the Labor Department reported 92,000-fewer payroll jobs in February, a miss of -147,000 from the expected gain of 55,000-jobs. Furthermore, the Labor Department revised the previous two-months down by 69,000 – from +48k in December to -17k, then a small drop from +130k to +126k in January. Put it all together and payrolls have declined in two the past three-months, and five of the past nine-months. Also, the unemployment rate rose to 4.4% in February, up from 4.3% in January.
The good news is hourly earnings rose by 0.4% (a 5% annual rate) to $37.32 per-hour, but the severe winter weather curtailed construction jobs and there was a strike by Kaiser healthcare workers (as 28,000-healthcare jobs disappeared), so due to negative payroll reports in December and February, the Federal Open Market Committee (FOMC) may be more inclined to cut key interest rates at its meeting next week.
Another impact of the jobs report came when 10-year Treasury bonds briefly fell below 4% and mortgage rates fell below 6% for the first time since 2022. A flight to quality is clearly underway as some nervous investors flee stocks. The market is also fighting a severe bout of “AI derangement syndrome,” based on fears unemployment will continue to soar as AI replaces many types of workers. Although Nvidia’s founder Jensen Huang said Wall Street was mistaken (by saying AI is bad for software stocks), the media continue to perpetuate these AI fears, perhaps because these pundits are worried about layoffs themselves.
The other big news on Friday came from the Commerce Department, which said retail sales declined by 0.2% in January. Excluding autos and gasoline, retail sales rose 0.3%, but only seven of 13-categories fell in January, so retail sales continue to sputter and may help convince the Fed to cut key interest rates.
Speaking of the Fed, Minneapolis Fed President Neel Kashkari said one or two key interest rate cuts would be appropriate this year, if inflation cools. He also said the war in Iran could justify an extended pause. Kashkari described the labor market as steady to soft. Kashkari is open to further key interest rate cuts, but he implied they would have to be triggered by weak payroll data and/or favorable inflation data.
In other economic news, the Institute of Supply Management (ISM) said its manufacturing index came in at 52.4 in February, down slightly from 52.6 in January. This was the second-consecutive month the ISM manufacturing index rose above 50, signaling an expansion. The new orders component came in at a healthy 55.8 in February (down from 57.1 in January), while the production component was 53.4 (down from 55.9 on January). The best news was the “backlog of new orders” component surging to 56.6, up from 51.6 in January. (It is possible severe winter weather in February helped to boost the new order backlog.) Overall, fully 12 of the 17-industries ISM surveyed reported an expansion during February.
On Wednesday, ISM reported its non-manufacturing (service) index rose to 56.1 in February, up from 53.8 in January. This represents the 20th straight month the ISM service index has been over 50 and signaling an expansion. The business activity component surged to 59.9 in February (up from 57.4 in January), while the new orders index soared to 58.6 in February (up from 53.1 in January). The largest jumps were in the “backlog of orders” component, rising to 55.9 in February (up from 44 in January) and the “new export orders” component, which surged to 57.2 in February (up from 45 in January), as fully14 of the 17-service industries ISM polled had reported an expansion in February.
All this tells me the job losses reported last Friday may be temporary or misleading, as the economy is doing just fine. I expect fourth-quarter GDP growth to be revised upward, since the Labor Department on Thursday reported productivity rose at an annual pace of 2.8% in the fourth-quarter, which was substantially higher than the economists’ consensus estimate of 1.9%. The Labor Department also revised productivity up to 5.2% in the third-quarter, which is truly stunning. If such robust productivity growth persists, my prediction of 5% annual GDP growth should arrive soon, perhaps by the second-quarter!
One last item, the European Union (EU) is trying to take budget planning away from EU members with more than 115% debt-to-GDP ratio. This has Italian Prime Minister Giorgia Meloni reportedly furious at Brussels and Germany, where this budget planning threat originated. I stand by my prediction Italy could become our 51st state, since the U.S. could offer to assume the Italian debt and have Italy abandon the euro in favor of the U.S. dollar. As the value of the dollar continues to strengthen, this will make an Italian switch to the U.S. even more attractive, plus all tariffs against Italian products would be removed. Since approximately 40% of Americans have some Italian heritage, Italy would be welcomed to the USA!
However, Spain will not become the 52nd state! In a press meeting with German Chancellor Merz at the White House, President Trump said the U.S. is going to “cut off all trade with Spain.” Trump is furious after socialist Spanish Prime Minister Pedro Sanchez refused to allow U.S. planes at NATO bases in Spain to participate in the attack on Iran, which Sanchez opposes. After Sanchez called the U.S. operation a “disaster,” President Trump threatened to take over Spanish bases. Also, Spain is not meeting its NATO obligations. Trump said, “Spain has been terrible” (although the U.S. enjoys a trade surplus with Spain!).
Navellier & Associates; own Nvidia (NVDA), in managed accounts. Louis Navellier and his family own Nvidia (NVDA), via a Navellier managed account and Nvidia (NVDA), in a personal account.
All content above represents the opinion of Louis Navellier of Navellier & Associates, Inc.
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A Look Ahead by Louis Navellier
Friday’s Downbeat Jobs Report May be Misleading
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Will AI Really Destroy America’s Job Market?
Global Mail by Ivan Martchev
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Don’t Let Market Volatility Upset You
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