Beneath the Headlines
By Peter Navarro | RealClearMarkets | February 11, 2026
January’s above-estimates jobs report tells two very different stories.
One is about the Trump month. The other is about the Biden inheritance.
Start with the month. The U.S. economy added 130,000 nonfarm jobs in January, nearly double consensus expectations of roughly 70,000. Even more important, private-sector payrolls surged by 172,000, handily beating forecasts. At the same time, government employment fell by 42,000, including a 34,000 decline at the federal level.
That composition matters—to investors, businesses, and workers alike.
We are not watching a debt-financed government hiring binge. We are watching a private-sector expansion paired with a right-sizing of Washington. Federal employment has fallen to its lowest level since 2014—and to one of the lowest shares of total nonfarm employment on record.
That is not austerity. That is productivity—Washington shrinking while Main Street produces, and resources shifting from administrative overhead into competitive markets where innovation, capital investment, and efficiency drive real output growth.
Meanwhile, the unemployment rate ticked down to 4.3 percent, beating expectations. The labor force participation rate rose to 62.5 percent, and prime-age participation climbed to 84.1 percent—its highest level since 2001. Prime-age men and women both moved higher.
That combination is powerful. When unemployment falls as participation rises, the economy is not merely tightening through labor scarcity—it is expanding. Employers are not just competing for a fixed pool of workers; they are pulling new workers into productive employment.