Patrick Johnson @PJohnsonNHN

Not sure I’ve seen a more beautiful thread on the labor economics of AI.

Soumitra Shukla @soumitrashukla9

2 weeks ago

🧵1/10 Given the recent reactions of mathematicians over rapid advances in AI, I think it is important to remember that technological change has historically been a very personal event for people. Over the history of technological progress, looms have fallen silent,

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The Federal minimum wage was effectively repealed over the last 17 years.

This is a rough September inflation report. -Biggest monthly jump since May -Higher than expected inflation AND core inflation -Core Inflation for the past 3 months is running at well over a 3% annualized pace...that's problematic -Inflation (3.7%) totally wiping out wage gains (3%) Yes, high gas and diesel prices are the major driver, but also big jumps in airfares, used car prices, recreation, medical and apparel. The energy shock is spreading.

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I'm not sure who saw this coming, but so far nearly all the jobs created during the second Trump administration have gone to women.

And so it continues... Our economic debates seem utterly disconnected from the reality. That reality: This is an economy mostly creating healthcare jobs, and it does so month after month, and everything else is just noise.

JUST IN: A medicore September jobs report. The US economy added only 29,000 jobs in September (well below ~80k expected). On top of that, there were downward revisions: July was revised down to -10k and August to 133k. Unemployment rate: 4.2% (up from 4.1% in August) The biggest sore spot = wage growth of 3% in past year. That’s a new 5-year low and it’s wiped out entirely by ~3.4% inflation.

Yikes. The Conference Board's Consumer Confidence Index just fell to the lowest level since early 2014. Yes, confidence is now *worse* than during the 2020 pandemic. That's how worried many Americans are with high gas/diesel prices, spiking borrowing costs and low hiring. September 2026 = 81.9 April 2020: 85.7 April 2014: 81.7 (remember this was the sluggish recovery from the Great Recession) "Over the next six months, consumers expected both business conditions and the labor market to weaken."

JUST IN: The Federal Reserve did it. The Fed hiked interest rates a quarter point to 3.75 to 4%. This is the highest interest rate since late 2025. The vote was unanimous (12 to 0) The statement says: “Inflation remains elevated. Today's policy action will support a timelier return to the Committee's 2 percent goal. The Committee will deliver price stability.” ***Big news = The “Dot Plot” forecasts 1 more hike this year and then a lot of uncertainty for 2027 (most anticipating rates the same or lower next year).

JUST IN: America still has an inflation problem. CPI inflation was 3.4% (y/y) in August. Core inflation came in at 2.4%. The big news is inflation rose 0.4% in the month of August alone (up from 0.1% in July). And "core inflation" (excluding food and energy) rose 0.3% in August -->that's above expectations. Higher gas price accounted for a third of the increase in August, but shelter, eating out, transportation and new & used vehicles all had significant price increases as well.

JUST IN: Wow. A huge August jobs report. The US economy added +162,000 jobs in August. On top of that June and July were revised higher by a total of +55k. There were big rebounds in hiring in hospitality and education. Also solid hiring in manufacturing and construction (AI data centers). Unemployment rate: 4.1% (unchanged from July) ***The other big news is wage growth was just 3.1%. That's lowest in 5 years and below ~3.5% inflation***

August was a 'wow' jobs report. August jobs added: 162,000 (3x expectation of 55k) July: +21,000 (up from the original report of -23,000) June: +31,000 (up from 20,000) Unemployment rate: 4.1% (unchanged from July) Labor force participation rate: 61.6% (up from 61.4%) And it wasn't just healthcare hiring. Hospitality (+59,000) Education (+42,000) Construction (+22,000) Manufacturing (+16,000) So far in 2026, the economy is averaging +80,000 job gains a month. That's a big rebound from 10k/month in 2025.

Introducing the new $20 bill, with its advanced and dynamic security features. You’ll start seeing this $20 bill in circulation early next year! Learn more: bit.ly/4ygIUkO #vertical20

Renting vs. Owning Your Home Which is the better financial choice, owning or renting your home? This question includes plenty of things to consider. Price is a clear one, which FRED data can help illuminate. 1. Choose a house price index. Say, the U.S. Federal Housing Finance Agency all-transactions house price index. 2. Choose a rent price index. Say, the CPI for rents. 3. Place the house price index as the numerator and the rent price index as the denominator. Now you have a ratio that tracks the ups and downs of the relative cost of owning a house, with values for each point in time. A high ratio means house prices are growing faster than rents, making homeownership a relatively more expensive proposition. A lower ratio means the opposite — that buying a home is a comparatively better deal. Visit the FRED Blog for all the data and details, including how inflation affects rent and house prices differently. bit.ly/4cnVM0h

JUST IN: PCE Inflation for July was 3.7%. That's slightly worse than expected (and still close to a three-year high). The monthly increase was +0.2% (vs. 0.1% expected). Core PCE which excludes food and energy was 3.3%. The monthly increase was +0.2% Bottom line: The war in Iran impact is still in effect. Inflation didn't get any better in July, according to PCE.

The big problem: Inflation is wiping out all wage gains. This has been happening for 4 months now This is why people are dipping into their savings and/or turning to credit. Yes, consumption has looked pretty good lately. But can that continue? For middle-income and lower-income Americans, this is the key issue. There will likely be some belt-tightening ahead.

JUST IN: Inflation eased a bit in July. CPI inflation cooled slightly in July to 3.4% (down from 3.5% in June and 4.2% in May). But beware: Rising gas prices due to the war in Iran remain a key risk. The monthly gain was +0.1%. Energy costs, restaurant costs and medical commodities were all down slightly according to the gov't calculations. Shelter/rent prices also continue to moderate. Core CPI inflation (excluding gas and energy) came in at 2.5% (down slightly from 2.6% in June and 2.9% in May).

The U.S. labor force participation rate dropped sharply in the first half of 2026. Except for 2021-22, when the COVID-19 pandemic disrupted the labor market, June's rate reached its lowest level since 1976. What factors drove this decline? bit.ly/4pX9HzX

This worries me... Over 2.1 million people have left the U.S. labor force since November. Labor force participation rate November: 62.5% Labor force participation rate now (July): 61.4% Some of this is due to lower immigration. Some due to Baby Boomers retiring, but it also likely signals job seekers becoming discouraged. Prime-age labor force participation for workers ages 25 to 54 looks a little better, but even that has fallen sharply

JUST IN: A surprisingly bad job report. The US economy LOST -23,000 jobs in July (way below expectations of +80k). May and June were revised DOWN by a combined -103,000. Unemployment rate: 4.1% ->This went down for the WRONG reasons. Over 260,000 left the labor force Wage growth: 3.2% -->this is entirely wiped out by inflation

Good to hear new Fed Chair Kevin Warsh say the 2% inflation target remains firmly in place. "There is no soft inflation target. There is no soft implicit target, not on this committee’s watch. There’s only a target, and it’s 2%," Warsh says.