Lots More on the Growing Risks to the US Labor Market

A week from today we will get the February jobs report and there are growing concerns that the US labor market is slowing. Already, the number of sectors adding jobs in this economy is on the decline. Meanwhile, the housing market continues to struggle. Add in the Department of Government Efficiency and worsening fiscal conditions in the state and local sector, and the government may prove to be a drag on employment. To talk about this and other macro developments, including possible tariffs, we brought back Jon Turek, founder and CEO of JST Advisors, to break it all down on this episode. Read more: US Initial Jobless Claims Hit Highest of 2025 Odd Lots is coming to Washington, DC! Get your tickets here. See omnystudio.com/listener for privacy information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  Finance is increasingly being built on digital rails. But as the adoption of virtual assets, tokenization and stable coins grows, can regulation not only keep pace but help accelerate it? Find out more later in the podcast.

• 0:16Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and hiring practices.

• 0:59Speaker 01

  But according to recruiters, advisors and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company. And Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at chatgpt.com.

• 1:41Speaker 01

  Bloomberg Audio Studios, podcasts, radio, news.

• 1:46Joe Weisenthal?

  Tracy, did you read our newsletter contributions this week from Neil, Deta and Skanda?

• 1:52Tracy Alloway?

  It would be terrible if I didn't. Not only did I read them, I lightly edited them.

• 1:57Joe Weisenthal?

  That's right, you did, you did, you did. I think I uploaded the text of them and then you edited them.

• 2:05Joe Weisenthal?

  I did a deadlift.

• 2:06Tracy Alloway?

  I am both the most popular trader and most successful trader at Citadel.

• 2:11Joe Weisenthal?

  Feta's going viral.

• 2:12Tracy Alloway?

  Uh, barges.

• 2:13Joe Weisenthal?

  This is an after-school special, except... I've decided I'm going to base my entire personality going forward. On campaigning for a strategic pork reserve in the US. Black gold.

• 2:22Tracy Alloway?

  These are the important questions. Is it robots taking over the world?

• 2:25Joe Weisenthal?

  No, I think that like in a couple of years, the AI will do a really good job of making the odd lots podcast. One day that person will have the mandate of heaven.

• 2:35Tracy Alloway?

  How do I get more popular and successful?

• 2:37Joe Weisenthal?

  We do have.

• 2:40Joe Weisenthal?

  Welcome to lots more where we catch up with friends about what's going on right now.

• 2:45Tracy Alloway?

  Because even when odd lots is over, there's always lots more.

• 2:49Joe Weisenthal?

  And we really do have the perfect guest.

• 2:55Tracy Alloway?

  I have to say, though, they were both great and I'm not just plugging our newsletter. Those were outstanding contributions and they sort of build on something that Scanda pointed out earlier in the newsletter about how embedded or how important AI is becoming to the US economy.

• 3:12Joe Weisenthal?

  Yeah. And like this idea, like there are signs of slowing.

• 3:15Tracy Alloway?

  Oh, yeah.

• 3:15Joe Weisenthal?

  I feel like we're in a moment where actually there just aren't really many people talking about the economy because we're either so transfixed by the goings on in Washington or certain big tech stories like AI that we're in a period where there's this lull of like, just the meat and potatoes of like, what's happening with initial claims? What's happening with housing starts? What's happening with the jobs report? And there's actually signs of a slowdown.

• 3:42Tracy Alloway?

  Yeah. And there's also signs. Well, there's also signs of inflation picking back up. And so that kind of raises the question about what's the Fed's reaction function here? We thought it was sort of skewed towards preventing a recession a little while ago, but now like, maybe they start caring about inflation again. I don't know.

• 4:02Joe Weisenthal?

  But you know, the other thing that's happened over the last week is that we have had this pretty substantial drop in 10 year yields. As of the time we are recording this, which is March 27th, we touched 4.25 yesterday. We had been at 4.65 on February 12th. So it's like.

• 4:20Tracy Alloway?

  I think the curve inverted again as well.

• 4:22Joe Weisenthal?

  The curve. It's a weird time. John Turek, what do you think? Why? What happened that we were at 4.65% on the 10 year February 12th? And right now we're at 4.2886.

• 4:33Speaker 04

  Yeah, I I I think it's it's an interesting one. I mean, as you guys kind of noted, I mean, I think we came into this year with a lot of excitement in terms of, you know, what the policy impulse would mean for the economy. It seemed that the animal spirits were going to lead to a more meaningful real growth impulse. I mean, I think the famous Dan Drucker Miller said in a note or on a TV interview that he hadn't seen the business community this excited in like his forty years in the business. And, you know, I think that we've had a little bit of a transition in like what that policy impulse means and the fact that it seemingly is two sided, you know, as we're seeing today, tariffs are also a big part of that policy impulse.

• 5:16Speaker 04

  And as we've seen over the last few weeks, it has a very unevenness into either both the implementation and the scope. So I think, you know, the the market kind of has had to adjust to, you know, a a policy impulse that seemed to be unambiguously positive to one that's more mixed. And I think the tenure is just, you know, kind of a reflection of that. I would also note as as Tracy pointed out about, you know, sort of inflation pricing, you know, a lot of the moves, especially since the middle of January is has been in real yields lower, as in ten year break events have actually stayed pretty firm. So, you know, I think that the yeah, the economy is having to, the the market is sort of having to deal with you know, economy that's a little more confusing. And, you know, the policy impulse

• 6:00Speaker 04

  is is more muddled this time around where you have, you know, the potential for tax cuts deregulation on one side and just a lot of tariff uncertainty that is potential and scope much more drastic than we saw in Trump one point O. Yeah. So, you know, I I I I I think that that is, you know, sort of at the nexus of what's going on here. And, you know, just to add one more thing, you know, you guys kind of made it up like the meat and potatoes of the economy. I think that, you know, for the last two years, we've been in a very stable nominal GDP regime. It's kind of oscillated between high fours and high fives. And, you know, the economy seems to be running on a few less cylinders than it has been in the last couple of years. You know, consumption is much more uneven and very biased towards the high end.

• 6:45Speaker 04

  Outside of the AI capex cycle, there really isn't that much capex. And we've seen that housing has, you know, been in a wall now for a while and, you know, hiring isn't that high. So it's, it's, it's just a much more, you know, a lot more cross currents than I think the market probably had anticipated six weeks ago.

• 7:02Tracy Alloway?

  Hmm. So we are recording this on February 27th. In about a week, we are going to get US payrolls for February. We just had initial claims, as Joe mentioned, showing that they jumped to the highest level so far this year. I think increasing by 22,000. A lot of that is the cuts in DC. What are you seeing on the labor side of things?

• 7:28Speaker 04

  Yeah, I think that, you know, from the labor market perspective, I still think the economy is in a decent equilibrium in terms of that we have a pretty stable unemployment rate. We're still churning out pretty respectable levels of payroll growth per month. And that that's, you know, sort of been noted by the Fed now that, you know, they're much less worried about the labor market side of their mandate than they were, say, in Q3. You know, but I think what's a little bit worrying is that the labor market is kind of coming into this, you know, whatever the DC impulse is, you know, I, I would say a little bit more vulnerable to shocks than it's been maybe over the last few years. And I would, I would namely say that because the hiring rate is still quite low,

• 8:07Speaker 04

  which means it doesn't take much in terms of, you know, negative payroll impulses to sort of lead to more drastic jumps in the unemployment rate. So, you know, I, I, I don't necessarily look at it right now and say, you know, there's an obvious threat to three months, the labor market being materially weaker than it is now. I, I, I, I still kind of get the sense that it's pretty stable. But I would say that we kind of, we feel a bit more vulnerable, given that we don't have the cushion of a decent hiring rate. So we're probably a bit more vulnerable. You know, if this, you know, DC impulse is more of a shock, that could, you know, it, it could spiral a little quicker now than, you know, say. A year or two ago.

• 8:48Joe Weisenthal?

  I saw someone make this point on Twitter. I wish I could remember who so I could give them credit. He said, "One encouraging thing that we've seen lately in the markets is that at long last, there are hints of the inverse correlation between stocks and treasuries reemerging." That was the famous condition of the 2010s, that if stocks went down that day, your treasuries probably did well and you got that beautiful hedging effect from that. And then it famously blew up in the immediate wake of COVID, where you'd have these big down days in stocks and also big down days in treasuries as inflation took center stage as the main source of economic worry, et cetera. In recent days, are we potentially looking at signs that we might go back to something resembling more pre-COVID

• 9:33Joe Weisenthal?

  patterns? And is that a sign that the price on the so-called Fed put is not so, not as far out of the money as it had been in recent years?

• 9:44Speaker 04

  Yeah, it's a good question. I'm not sure. You know, I think that, you know, the simple empirics that have kind of come out is that when core P C is printing below three, you'll get a decent buffer from treasuries in the way of a growth shock that will, you know, cushion, get the risk asset side of your portfolio. And when, you know, core P C is above three, you don't have that and you can stare worlds as we saw in 2022. You lose on both. I think that it's a little early on in terms of kind of getting a sense for like what the tariff impact on spot inflation is going to be because, you know, I think that what's different to me about this time versus, you know, Trump 1.0 is the psychology of price setting is totally different.

• 10:28Joe Weisenthal?

  Yeah.

• 10:29Speaker 04

  And as we see every Q1, you know, even in an economy that's, you know, much more balanced in terms of inflation, where we, you know, we've noted that, you know, companies don't feel the same ability to pass through price. But we see every Q1 that price resets have still been pretty strong, especially as it's places now like Canada, who are, you know, being inflicted in all this. It seems that you kind of have to keep an open mind that, you know, spot inflation could move a decent amount. If the price setters feel that in the post-COVID world, it's much easier to pass through any pain on their input side to the output side. So I think from like a base case, I think it's fair to say that, you know,

• 11:09Speaker 04

  we're not durably going to a core P C plus three world so that treasury should sort of. You know, the underlying fundamentals of 6040 should be okay, but I wouldn't say it's all, you know, it's, it's kind of all clear for return to the pre-COVID world. We just don't really know yet how price setters are going to internalize this past third.

• 11:31Tracy Alloway?

  Yeah, Joe, I remember Tom Barkin over at the Richmond Fed making exactly this point, this idea that one of the things companies learned from the post-COVID world was just how fast and perhaps just how far they could push on price. And so that's still lingering in their minds, even if they're not doing it as much as they were back then. So it seems like they could raise them very quickly if they, if they saw a chance.

• 11:58Joe Weisenthal?

  No, I'm fascinated by that. The reminder that price increases can be part of the corporate playbook is not going to be forgotten. By the way, I should mention John Turek is the founder and CEO of JST Advisors. Been a few years since we had him on. It's nice having him back. Um, you, let's talk about the DC impulse. So I think right now, these cuts that we've seen towards federal employment, you know, very few people would say they're going to meaningfully change the dial on, you know, deficits or et cetera at this point. But they're real and they're happening and there's a lot of anxiety and there are a lot of people who are out of a job that never expected to be. And there are a lot of stories. We saw in a recent, um, there was, I think it was the conference board survey, respondents

• 12:42Joe Weisenthal?

  saying that expectations of fewer jobs existing six months from now, that spiked in the survey highest level now, I think since like 2013. Talk to us like a little bit about like how you are thinking about the sort of macro impulse from the labor market cutting that's happening in DC.

• 13:03Speaker 04

  Yeah, I, I, I mean, I think that, you know, as a, as a baseline, you know, it's hard to see that it being a, you know, an outsized factor in terms of like kind of the status quo in the labor market. But I think, you know, kind of as I said, I think you have to kind of take it in the context of the hiring rate in the economy is lower now. So I think the labor market as a whole is more vulnerable. To things that, you know, kind of net net shouldn't be as big of a deal. And I, I, I think that's kind of, you know, gotten the market's attention as we, you know, we've kind of like, you know, for the last few weeks entertained more left tail risks is that, you know, the starting conditions really matter when you're dealing with exogenous variables. And, you know, the starting conditions for the labor market are, you know, it's steady,

• 13:48Speaker 04

  but it's not bulletproof. And it has been bulletproof, you know, probably for the last three years, maybe truly since COVID. So yeah, I, I, I think, you know, you, it's hard to say, you know, it's hard to map out the sort of the, the spillover in terms of like, you know, what number claims will be in four weeks. But I, I, I think you, you really have to keep an open mind to the left tail side, given that the starting point isn't great.

• 14:25Speaker 00

  What's next for virtual assets? I'm Jacob Greece, host of Economy Scale, a series exploring growth in key global sectors. And in this episode, we're diving into the digital forces shaping finance. Sean McHugh from Dubai-based Virtual Assets Regulatory Authority has this to say.

• 14:40Speaker 05

  We're seeing a lot of institutional players come in, digital asset dedicated hedge funds, high frequency traders and that sort of thing, and folks who service institutional clients.

• 14:49Speaker 00

  As more capital enters the market, adaptive regulation is likely to become increasingly key. Reece Merrick of Ripple says.

• 14:57Speaker 06

  A lot of regulators globally would like to keep the industry at arm's length. That's the opposite here. I think also what you'll find is that regulation and frameworks can come out, but some of them are maybe a slight iteration on some 80-year-old policy and not actually in line with what the technology can do and offer. And again, that's very different in Dubai.

• 15:16Speaker 00

  Listen to the full episode wherever you get your podcasts. This series is brought to you by Bloomberg Media Studios and the Dubai Department of Economy and Tourism.

• 15:26Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Millions of Americans are taking peptides, short strings of amino acids that can act as biological signals for cells. Peptides like insulin can occur naturally in the body, or they can be synthetically introduced to induce a biological process, as happens with semaglutide, the active ingredient in Ozempic. Now Bloomberg's Anika Inamputi reports peptides may be exploring their next frontier, the brain. People are taking peptides for mental clarity and cognitive benefits as alternatives to psychiatric medications and to gain a competitive edge or stave off the effects of aging. Both insulin and semaglutide are approved by the U.S. Food and Drug Administration. Because importing or selling

• 16:11Speaker 01

  unapproved peptides for human use is not legal in the U.S., many people turn to online forums for guidance and overseas vendors with questionable credentials to obtain them. Unapproved peptides, which are marketed as research chemicals, have been circulating in what's become a billion-dollar gray market amid the rise of do-it-yourself medicine as people increasingly turn to social media or artificial intelligence for medical help. Doctors warn against self-experimentation and advise talking to providers before trying any new therapies. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 16:49Joe Weisenthal?

  By the way, Tracy, for people listening who want to understand this sort of why some of the engines that are not that were growing are not there anymore, I thought, you know, so Neil's four points, real incomes aren't rising anymore, the housing market is no longer showing the signs of life, local government spending is clearly, there is a fiscal retrenchment, clearly, it's not just what's happening at Doge, it's also state and locals, which are no longer flush with money. So like, they're like, this is when, when John here is talking about, you know, the not as many engines are firing, there are some pretty big forces that sort of give people caution or why the hiring rate is not great right now.

• 17:29Tracy Alloway?

  Yeah, absolutely. And John, you brought up earlier the tariffs, and I think some of those are slated to start as soon as next week. How long would you expect it would take for the effects of those to feed into the U.S. economy, either in terms of corporate earnings or the inflation rate?

• 17:48Speaker 04

  You know, I think the interesting thing about tariffs as opposed to a lot of other policy measures is the impact is like fairly mechanical. So, you know, immediately it has its FX impact, it immediately has its, you know, direct trade impact. And I think, you know, kind of the, the, the deeper questions will be like, what are like the broader externalities? Cause I, I, you know, something that like really fascinated me was Governor McLemore gave us, the Bank of, Bank, Bank of Canada gave a speech last week. And he was talking about sort of like what these numbers would mean for the Canadian economy. And he was saying, well, you know, they're huge because, you know, trade is 25% of national income in Canada. Trade with the US, excuse me. What will that impact be? Cause it'll eventually sort, sort of, you know, feed back into the US.

• 18:31Speaker 04

  So I, you know, I, I, I think that, you know, in terms of the scope, I think that the two things now that are, are sort of critical are, you know, in terms of who eats sort of the cost. Will corporations really, you know, take a, a, a bigger share of it or will they try to pass it on? And then I think, you know, sort of the, you know, the next, the next big domino will be the question of like, what is the bigger impact? The mechanical effect on price or the more psychological effect on growth where it just becomes very hard to operate in an environment where, you know, we're a, you know, a tweet away from, or, or sorry, whatever platform uses now, um, from like a, you know, you, it's very hard to plan in that sort of world. You know, we had two weeks ago, we thought we were delayed until April and then today

• 19:15Speaker 04

  it comes out that they start next week. You know, I think those are kind of the, the two like very immediate questions that will get a real feel for, I think, pretty quickly. And then, you know, kind of zooming out, the bigger questions is like, how does the global economy absorb this? Because some of these numbers, this time around, I, I, I think it's a big point to emphasize where like a lot of the tariffs last time were really focused on China and substitution effects like kicked in pretty quickly and also the. Companies had time to sort of digest that this was coming, where this time around, both in terms of scope and who it's applicable to, seems much more vast. So I, you know, I think that will be really crucial to watch.

• 19:52Joe Weisenthal?

  Tracy, something I've been thinking about a lot is that if you want to find like this sort of, first of all, admire the fact that Trump still posts primarily to Truth Social, even though Twitter is sort of now that-

• 20:05Speaker 04

  I guess that's what it's called.

• 20:06Joe Weisenthal?

  The spiritual home of Trumpism is on Twitter. So the fact that he's sticking to Truth Social, I sort of admire it.

• 20:13Tracy Alloway?

  Do you think Elon talks to him about that?

• 20:15Joe Weisenthal?

  I was just like wondering, like, what does Elon think about this, that he's still holding out on Truth Social? Anyway, you know, I always think like, you know, there's sort of like a core pillar of the sort of Trump coalition in the United States is like small business owners and small business optimism, you know, has been through the roof since the election, but they don't like tariffs by and large. And if you look at any regional business survey, et cetera, you'll find a lot of clearly politically inclined respondents who are excited about the Trump administration and then say, but we're worried about trade. And I'm actually, for the first time, especially assuming these tariffs go into effect, extremely excited about the headline numbers of the NFIB survey in the coming months, where you see you have this core Republican constituency, which is totally on board, generally with

• 21:00Joe Weisenthal?

  everything except tariffs. I think that's going to be something interesting.

• 21:03Tracy Alloway?

  No, it's going to be really interesting to see whether, I guess, political allegiance trumps some of the feelings around business effects. Ooh, I said trumps. There's a pun for you.

• 21:14Joe Weisenthal?

  It's crazy his name is Trump. Sorry, I always think, like, what an amazing apt name. Anyway, I mean, he owned a casino and his name is Trump. I know, this has been observed hundreds of times, but it still always blows my mind.

• 21:25Tracy Alloway?

  Thank you, Joe, for reminding us.

• 21:26Joe Weisenthal?

  It's his real name. That blows my mind all the time.

• 21:33Tracy Alloway?

  Lots More is produced by Carmen Rodriguez and Dashil Bennett with help from Moses Andam and Kale Brooks.

• 21:39Joe Weisenthal?

  Our sound engineer is Blake Maples. Sage Baum is the head of Bloomberg Podcasts.

• 21:44Tracy Alloway?

  Please rate, review, and subscribe to All Lots and Lots More on your favorite podcast platforms.

• 21:50Joe Weisenthal?

  And remember that Bloomberg subscribers can listen to all of our podcasts ad-free by connecting through Apple Podcasts. Thanks for listening.

• 22:01Tracy Alloway?

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• 22:37Speaker 05

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• 23:04Speaker 05

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