AI, labor market, and inflation (with Jonathan Ferro, Lisa Abramowicz, Annmarie Hordern)

6/1/2026 7:36:19 PM	medium term up	20 days later	+1.21%	+1.21%
6/1/2026 7:02:14 PM	medium term up	20 days later	+1.21%	+1.21%
5/5/2026 6:12:22 PM	short term cautious up	5 days later	+1.24%	+0.62%
4/3/2026 7:31:50 PM	medium term up	21 days later	+0.02%	+0.02%
3/27/2026 8:49:47 PM	medium term up	21 days later	-2.12%	-2.12%
3/27/2026 7:30:29 PM	medium term up	21 days later	-2.12%	-2.12%
3/6/2026 4:48:14 PM	short term sharp up	5 days later	+3.68%	+5.52%
12/23/2025 11:03:06 PM	long term up	61 days later	-2.59%	-2.59%
10/28/2025 5:15:14 PM	medium term cautious up	20 days later	+1.60%	+0.80%
10/13/2025 6:26:53 PM	medium term cautious up	20 days later	+2.09%	+1.04%
10/9/2025 2:13:08 AM	medium term sharp up	20 days later	+1.04%	+1.56%
8/29/2025 2:18:36 PM	short term sharp down	6 days later	-5.40%	+8.10%
8/15/2025 11:30:11 PM	medium term cautious down	21 days later	-6.80%	+3.40%

Introduces Torsten Slok and the topic: Nvidia's Jensen Huang says AI job loss concerns are overblown, and Torsten Slok agrees, noting nonfarm payrolls could be significantly higher than the ~90K expected.

Jonathan Ferro

Torsten Slok

The macro level shows it's become much easier to open a business, with new business creation exploding higher. This aggregate effect will result in more jobs, not just displacement at the micro level.

Cites Census data on weekly business creation and Stripe data on solo founders as evidence.

Asks about the 'white-collar washout' narrative and what the message is to those workers.

Annmarie Hordern

Torsten Slok

Despite predictions of layoffs, ADP has produced 30-40k jobs weekly for 8 weeks, jobless claims are low, and ISM is above 50. The economy has strong tailwinds from AI spending and fiscal policy, creating both strong growth and upward inflation pressure.

Notes that if AI results in more job growth, it would be a 'miracle drug' for both productivity and employment.

Points out that white-collar jobs can decline as a proportion of total jobs, as seen in job growth concentrated in construction, manufacturing, healthcare, and education, not finance or media.

Lisa Abramowicz

Torsten Slok

The unemployment rate for 20-24 year olds has gone down in the last 6 months, showing young people can find jobs, though perhaps not the entry-level jobs they expected.

Suggests there may be an issue with expectations of younger workers entering the labor force.

Discusses the trend of young people considering trades like plumbing over white-collar work, and asks if this is the future of job creation.

Annmarie Hordern

Torsten Slok

White-collar workers who lose jobs will likely start businesses using their connections and skills, aided by large language models and agents. This business formation will ultimately result in more job growth.

Criticizes the idea that displaced workers will simply give up.

Asks if younger generations are choosing not to enter the workforce or start businesses because jobs don't meet their expectations.

Annmarie Hordern

Torsten Slok

Young people can find jobs, but the discussion may stem from them not getting the jobs they expected, pointing to an expectations gap.

Asks if the Federal Reserve has been undergoing a 'stress test'.

Lisa Abramowicz

Torsten Slok

Acknowledges the situation with the Fed chair transition, noting the outgoing chair is giving the new chair a chance to run with policy. The new leadership will do the right things.

Notes it's noteworthy the outgoing chair brought up issues just after midnight.

Asks about Kevin Warsh's view that AI would be disinflationary and allow for easier monetary policy.

Annmarie Hordern

Torsten Slok

The AI boom will be initially inflationary due to higher semiconductor, energy, and labor costs for data center construction, plus the lagged effects of tariffs and higher energy prices.

We have to wait for the disinflationary impact.

Asks if CEOs will have second thoughts about replacing human labor with AI when they realize the actual cost.

Lisa Abramowicz

Torsten Slok

Businesses are trying to figure out token demand and whether the price of AI will be worth it relative to the cost of labor. The endpoint may be higher productivity and more labor, not less.

Token usage is not the same as higher productivity.

Given the inflationary backdrop and a potentially hot labor market report, asks what the Fed's response will be, given no one has the appetite to raise rates.

Annmarie Hordern

Torsten Slok

Markets are beginning to price in a potential hike, and hiking cycles never come alone. The risk is that rates stay higher for longer due to low unemployment and upward inflation pressure.

The dot plot has long expected cuts, but this is changing.

Asks for Torsten's base case going into 2027, given the inflationary AI buildout and expanding labor market.

Lisa Abramowicz

Torsten Slok

With 3% inflation and a very strong labor market, there is a higher likelihood of a stronger economy. The AI boom and fiscal stimulus are not sensitive to interest rates, unlike housing and autos, so they will continue to support GDP regardless of Fed policy.

This opens up a much higher likelihood of a rate hiking cycle.

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