?Paradigm Shift or Myth: Can we have a Strong Economy without Job Creation?
Payrolls increased 73k, with the prior two months revised down by 260k which equates to a 3-month rolling average of just 35k new jobs per month, the weakest job growth in 5 years.
This begs a few questions: – First half ’25 GDP slowed to +1.2%, will fewer jobs result in lower growth? – Why has employment slowed, how connected is slower job growth to immigration policy. – How will the Fed interpret this data, does it push them toward faster rate cuts, or will they dismiss it as statistical noise as Powell’s focus has been on tariffs and its potential impact on inflation? – Will slowing labor growth impact earnings expectations, or will markets cheer the potential for more dovish policy? – Is the U.S. economy so well diversified and fortified that slower job growth does not imply an economic slowdown? Is the U.S. economy approaching a paradigm shift where robotics and AI has become so transformative, creating greater productivity for the economy allowing for more output without adding additional jobs? Case point: Amazon deploys 1+ million robots doing manual labor in its warehouses, exceeding the 700k human workers. Developing a detailed analytical heatmap showing the impact to industries, companies, showing their margins, earnings, CapEx is critical analysis needed to re-evaluate equity and debt investments as technological advancements continue as a breakneck pace.
Despite weakening job growth, the economy may be entering a new era where productivity gains from automation and AI decouple labor from output, redefining traditional measures of economic strength. If a paradigm shift is underway, investors and policymakers may begin to reassess long-held assumptions about employment as a proxy for economic health. “
AI won’t replace workers, but the worker who uses AI will replace the worker who doesn’t.”– Jensen Huang, the CEO of NVIDIA |
