Signs of strain in the labor market

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**Kimberly Adams** (0:31)
Corporate earnings this quarter have been better than many expected, but the jobs report for last month was worse.
From Marketplace in New York, I'm Kimberly Adams. The latest jobs report for the month of July is just out, and while the labor market appears to be holding up, there are signs of strain beneath the surface. We lost 23,000 jobs compared to June, but that had a surprising impact on the unemployment rate. For more context, we've got Julia Coronado, founder and president of Macro Policy Perspectives. Good morning, Julia.

**Julia Coronado** (1:02)
Good morning.

**Kimberly Adams** (1:04)
Analysts were expecting something like 80,000-plus jobs to be created last month, but instead we got losses. Why is that?

**Julia Coronado** (1:11)
Well, we had one sector in particular that was the culprit here. Local governments shed 57,000 workers, but this is a time of year when we see a lot of contract rollover associated with the school year. So that might bounce back in August, and we should sort of take that with a grain of salt.

**Kimberly Adams** (1:32)
The unemployment rate was down just a touch to 4.1 percent. But how did the rate fall at the same time we were losing jobs?

**Julia Coronado** (1:40)
Yes, that's an excellent question. And the answer is that people continue to leave the labor force. We have an accelerated retirement trend amongst baby boomers, and that means there's no labor supply. Nobody's looking for a job. We're actually net shrinking the labor force. So you can see both job losses and a lower unemployment rate.

**Kimberly Adams** (2:01)
Julia Coronado, founder and president of Macro Policy Perspectives, thanks so much, Julia.

**Julia Coronado** (2:06)
My pleasure.

**Kimberly Adams** (2:07)
Stock market indices notched record highs again this week, in part due to strong quarterly corporate earnings reports that continue to come out. For more on what we saw this week, we're joined now by Russ Mold. He's investment director at the UK-based investment platform, AJ Bell. Russ, welcome back to the program.

**Russ Mould** (2:24)
Thank you so much, Kimberly. Hope you're keeping well.

**Kimberly Adams** (2:26)
I am. Thank you. We got dozens of financial results again this week from US businesses. Some of the big names were Uber, Palantir, McDonald, Disney, CVS. What stood out to you?

**Russ Mould** (2:37)
I think it's the general trend that earnings are generally surprising on the upside rather than the downside, and that the corporations who are reporting are then providing positive guidance, more upside surprises and downward surprises for the third quarter and for the rest of the year. So it's been very much a continuation of a trend that's persisted throughout 2026

**Kimberly Adams** (2:56)
Why do you think that is?

**Russ Mould** (2:58)
It's been a pleasant surprise because you would still worry about the possible impact of tariffs, where we've seen some fresh changes there and there may be more to come. You would certainly be worrying about oil and input costs and inflation, geopolitics. But overall, it seems that the US economy is hanging tough, the consumer is hanging in there, even if it may be giving the Americans giving their credit card a bit more of a squeeze rather than necessarily drawing down savings. And also you do have an underlying tailwind, it seems, for the economy from day one, say it, AI and artificial intelligence spending from the hyperscalers on everything from data centers through to silicon chips. And that does seem to be bringing a bit of a positive impact. America-wide, you've seen it worldwide with the Asian Airline Cafe Pacific talking about strong cargo shipments from Asia to the US and beyond because of artificial intelligence and components for that.

**Kimberly Adams** (3:46)
Can we just take a moment to remind folks why these earnings reports matter for the broader economy, even if you don't necessarily own stock in the particular companies that are reporting?

**Russ Mould** (3:58)
In many ways, they're acting as a barometer of US economic health. I think the S&P 500 gets around 60% of its profits from America. So it's a pretty good read into what's going on at home for Americans. And at the moment, the feedback is that the economy is doing fine. Thank you very much. Now, some of that is based on borrowing. Some of it is based on very heavy borrowing by the government, some of it by consumers on the credit cards, and some of it by corporations. But some companies are generating very strong cash flow as well. And it's intriguing to see the banks performing particularly strongly. Not everybody will be thrilled to see their bank making billions of dollars in profit, but it does overall mean that the, you know, if you look at the Main Street, Big Four, Wells Fargo, Bank of America, Citi and JP Morgan Chase, they had bumper earnings and that does, and loan growth is excellently strong, deposit growth is strong, which is, you would like to think, a reasonable sign for the health of the US economy.