US Jobs Surge in January Far Exceeds Forecasts; Budget Deficit Narrows Sharply on Tariff Revenue Windfall

The U.S. economy added a robust 130,000 jobs in January, the Labor Department reported on February 11, 2026, significantly outperforming market expectations of 65,000 and marking the strongest monthly gain since April 2025; the unemployment rate also unexpectedly edged down to 4.3%. The release of the stronger-than-expected labor market data prompted a sharp reduction in market bets for near-term Federal Reserve interest rate cuts. On the same day, the Congressional Budget Office released its Budget and Economic Outlook for 2026 to 2036, revealing that the federal budget deficit for the first four months of fiscal year 2026 (October 2025 through January 2026) narrowed by 17% year-over-year to $697 billion.

The CBO attributed the deficit reduction primarily to a surge in revenue, which grew 12% compared to a 2% increase in outlays; a key driver was a dramatic 304% jump in tariff collections, which totaled $124 billion over the four-month period. Under current law, the CBO projects a full-year deficit of $1.9 trillion for 2026, equivalent to 5.8% of GDP.