Tariff concerns fuel uncertainty in York labor market

• York County’s unemployment rate rose to 3.5% in March 2025

• Inflation dropped to 2.4%, but tariff worries remain

• Consumer economic optimism dropped 23% in Q1 2025

York County’s Q1 labor report shows rising unemployment, steady housing growth, and concerns over inflation tied to shifting national tariff policies, according to a Q1 report released by the York County Economic Alliance (YCEA).

Employment levels in York County aligned with 2023 levels, dropping below the Q1 peak recorded in 2024. The labor market, while still tight, began to loosen slightly as March’s unemployment rate reached 3.5%, an increase from the same period in 2024.

York County’s residential construction industry maintained steady with an increase in housing unit permits approved in Q1, per the release. Shifts in national tariff policies fueled uncertainty for local businesses with potential for project delays, increased input   costs, and lost export demand.

“The first quarter of 2025 showed optimism for our strained housing market,” York County Economic Alliance President and CEO Kevin Schreiber said in a statement. “Residential construction maintained a steady pipeline, with an increase in housing unit permits approved. Far from addressing the total market demand, but a positive sign nonetheless.”

The YCEA noted that increasing the supply of attainable housing was identified in the Housing Action Plan. York County tracked 411 units approved, 101 units over the quarterly average of 310 in previous years.

“Continuation of this will largely be tied to the potential rising costs with fluctuating national tariff policies,” said Schreiber. “A similar correlation is evident on the consumer side. York County saw increased spending but coupled with declining confidence in the economy.”

The YCEA also noted that national inflation dropped to 2.4% in March, a half-percentage-point decline over Q1 2025. Headline and core inflation experienced declines during Q1, with headline inflation moving closer to the Federal Reserve’s 2% target. Still, uncertainty remains as potential tariff increases could drive inflation higher due to elevated costs of imported goods.

The Federal Open Market Committee (FOMC) maintained interest rates at a range of 4.25% to 4.50% during both the January and March meetings. Given uncertainties surrounding national tariff policies, the FOMC is expected to adopt a cautious stance as it evaluates how inflation and unemployment are impacted.

A substantial 23% decline in economic optimism among the nation’s consumers was recorded by the University of Michigan’s monthly Surveys of Consumers. The 17-point drop, from an index score of 74.0 in December to 57.0 in March, marks the second-largest quarter-to-quarter dip in the index since monthly tracking began in 1978. The decline was broad-based, spanning across all demographics and political affiliations in March.

Increasing concerns regarding inflation and unemployment contributed to the declining economic outlook. Year-ahead expectations for inflation reached 5% in March.

Economic intelligence reports for York County are produced on a quarterly basis by EDC Lancaster County‘s Center for Regional Analysis. The reports are designed to equip local businesses with insights on the local economy.