Is AI creating jobs?

Katie Martin (0:06)

Pushkin. In the good old days, you knew where you were with the most important economic data on planet Earth. I'm old enough to remember when the first Friday of the month, 1.3 London time was proper US jobs data o'clock. But people of the internet, we live in interesting times. The latest data came out on Wednesday of all days. Today on the show, what's actually going on and how this all matches up with the mystery of the great American consumer. This is Unhedged, the Markets and Finance podcast from the Financial Times. I'm Pushkin. I'm Katie Martin, a markets columnist here at FT Towers in London, where it has not rained for fully an hour at the time of recording, the first time in ages. And I'm joined down the line all the way from over there in New York City by the iceman Robert Armstrong off of the Unhedged newsletter. Rob, I gather it is slightly warmer over there.

Robert Armstrong (1:03)

We have broken the freezing point several times in the last couple of days. And now the snow, which is all the color of gray flannel now, is slowly starting to melt, revealing the horrors hidden within it. I will leave what those are to the imagination of our listeners.

Katie Martin (1:23)

How delightful. Okay, so what was in these jobs numbers, and why were they coming out on a Wednesday of all stupid days?

Robert Armstrong (1:33)

It was delayed because there was a semi-government shutdown for a couple of days. It was supposed to come out Friday. They came out Wednesday. Things are a bit of a mess over there in Washington. Let's just move on.

Katie Martin (1:45)

Yeah, it's all a bit higgledy-piggledy.

Robert Armstrong (1:47)

Because the numbers themselves are complicated enough to read. Let's start with the headline, which is 130,000 jobs added, which is the biggest single month total in more than a year.

Katie Martin (2:02)

Yeah.

Robert Armstrong (2:02)

And that is very good.

Katie Martin (2:04)

And people have been expecting something more like 70,000. Yes.

Robert Armstrong (2:08)

So it was a blowout on the headline. And the White House immediately went to bragging. And it will surprise you to know that their comments about the jobs report were not subtle. In other words, they did not peel back the onion very much. So let me start peeling it back. Big fact number one. As often happens with the first report of the year, there were a lot of backward facing revisions of old numbers. This is not...

Katie Martin (2:43)

Yeah, that's kind of how it goes, right?

Robert Armstrong (2:45)

It's how it goes because actually trying to measure... They're not making mistakes over there at the Bureau of Labor Statistics. It's just hard to measure an economy in real time, and as more data comes in, they revise. And the revisions were mostly down. So 2025 looks even worse than it looked at the time now. Right? So bad stuff happened last year. The lows are lower, the highs in terms of job creation, the good months are not as good. That happened. That's point number one. But January was still very good. The second big asterisk to put by this excellent number, and it's only a partial asterisk. That's a hard word to say asterisk.

Katie Martin (3:28)

It is.

Robert Armstrong (3:28)

Yeah, it is a hard one. Anyway, the second asterisk is that of the 130,000 net jobs added, 123,000 were in health care and social assistance.

Katie Martin (3:46)

Yeah, what's going on with that?

Robert Armstrong (3:48)

Katie, I do not know. You know, it could be a bit of a quirk. It could be there's annual contracts that hire people on for the new year, it could be, you know, it could be, you know, in any case, but there was a ton of jobs created in these two areas. Now, a couple of things to say about that. Health care is a productive part of the economy. It's not like you say, oh, it's health care, so the economy is not good. It's good that people are getting hired, whatever they're doing. Social assistance, you know, these helping professions, these are good things. The reason that's a bit bad news is because what you want to see is the cyclical parts of the economy growing. In other words, the parts of the economy that respond to economic expansion, you want those to be adding jobs. The last year has been terrible on that basis. So like cyclical private sector job creation has been at, or even slightly below zero for a year. But the trend since October, and I don't know why October is the magic date, is slightly up. So if you take out government, take out health care, take out social care, look at cyclical sectors, there's a little upward movement since October, which is good news.