The jobs report may have looked strong, but under the surface there’s no escaping the threat that artificial intelligence poses to the labor market. It might be safer to be a nurse than a software developer.
Investors should generally be
happy about January’s figures showing the strongest jobs growth in more than a year. A spluttering labor market looks to be strengthening, with unemployment dipping to 4.3% and workers’ wages rising. The Federal Reserve looks unlikely to have to cut interest rates in the near future.
But there were a few worrying signs. Firstly, the gains were almost all in healthcare jobs or positions related to the sector, which is relatively insensitive to the wider economy as the U.S.’s aging population drives
demand for medical assistance and social care. Meanwhile, additions from previous years were revised lower, meaning the American economy added roughly 1.68 million jobs over 2024 and 2025, compared with the previous estimate of about 2.58 million.
The revisions were expected, so the effective loss of around 900,000 jobs didn’t unduly shock traders. But it suggests the labor market might still be fragile just as AI threatens to transform everything from software to legal services. With 34,000 jobs lost across the financial activities and information sectors in January, there is some evidence of automation beginning to hit white-collar workers. Analysts at Goldman Sachs put tech-related information employment at its lowest level since May 2022. Companies like Amazon.com are slashing their corporate workforces back to levels not seen since the Covid pandemic, although it’s not clear if this is due to genuine AI improvements or using ‘AI-washing’ to cut bloated teams.
Current Fed Chair Jerome Powell might now be able to see out the rest of his term with no more interest-rate cuts. But his nominated successor Kevin Warsh is likely to have to figure out how to support an economy
upended by the effects of AI.
—Adam
Clark
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Jobs Report Complicates White House’s Rate-Cut Push
Wednesday’s stronger-than-expected jobs report means the Federal Reserve is likely to keep interest rates on hold when policymakers meet in March. The jobs numbers did little to build a case for a rate cut, and recent commentary from voting officials reinforce a pause-for-longer stance.
- President Donald Trump has consistently called for the Fed to cut rates, even though inflation has remained stubbornly above the central bank’s 2% target level. Kevin Warsh, Trump’s nominee to replace Jerome Powell as Fed chair in May, has also called for lower interest rates.
- But January’s jobs rose 130,000 and wage growth firmed. Average hourly earnings for all employees on private nonfarm payrolls rose by 3.7% from a year ago. That’s a tick higher than December’s annual wage growth but still below the more than 4% growth seen in 2024.
- Fed
officials have pushed for patience. Cleveland Fed President Beth Hammack said rates could remain on hold “for quite some time,” and Dallas Fed President Lorie Logan warned that cutting too soon could reignite price pressures. Inflation hasn’t been below 2% since early 2021.
- The Fed has lowered its benchmark rate to a range of 3.5%-3.75%. Officials now appear focused on waiting for clearer evidence that inflation is sustainably returning to the bank’s target.
What’s Next: There is still one more jobs report and more inflation data due before the Fed’s March 17-18 rate-setting
meeting. But with the labor market holding up and policymakers emphasizing caution, the bar for a March cut has risen, complicating the White House’s push for lower rates.
—Nicole Goodkind and Megan Leonhardt
Ackman Reveals New Stakes in Meta, Amazon, and Hertz
In the race to harness artificial intelligence, Meta Platforms looks to be a stand-out winner in the eyes of Bill Ackman. The hedge fund billionaire has made a fresh bet on Meta, calling it one of the clearest beneficiaries of the integration
of artificial intelligence into its business platforms.
- Ackman, who runs Pershing Square, said in an investor presentation on Wednesday that the fund began buying shares in November and that they made up about 10% of Pershing’s capital as of the end of December. It also has new investments in Amazon and Hertz.
- Pershing outlined its investment thesis for Meta, the parent of social-media platforms such as Facebook and Instagram. It said concerns around Meta’s AI-related spending initiatives are “underestimating the company’s long-term upside potential from AI.”
- It called out
Meta’s “high quality” advertising business model, saying the tech giant’s visibility into consumer behavior and interests enables it to be precise with ad targeting, making it attractive to advertisers.
What’s
Next: Meta has said it expects to spend between $115 billion and $135 billion on capital projects this year, including the facilities that power AI and hiring AI researchers. That’s nearly twice what it spent last year. Pershing said this planning spending boost positions Meta for “significant upside potential.”
—Liz Moyer
McDonald’s Affordability Push Paying Off In Same Store Sales
