The latest on jobs, GDP, consumer sentiment and the excitement of AI IPOs.
As Charles Dickens put it, “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.”
It feels like we are in a Dickens novel these days because, as we all navigate unsettling headlines about deteriorating peace talks, rising energy prices and AI jobs displacement, we are just as excited about the promises of new technology, the hype around a new cycle of IPOs and buoyant financial markets.
Today we learned from the Bureau of Labor Statistics that the U.S. economy added a stunning 172,000 jobs in May! This number blew past expectations of 105,000 jobs created, as the education, health care, and leisure and hospitality sectors all had strong hiring. Prior job reports were also revised to add 93,000 jobs to earlier government reports.
Notably, there was a net loss of 2,000 jobs in the tech and media sectors, and the financial sector lost a whopping 22,000 jobs. Many view losses in these areas as early signs of the coming “AI jobs apocalypse,” although numbers like these do not really demonstrate that AI technology is significantly reshaping the labor market (yet). The three-month average of job gains in the U.S. was 188,000, which is unabashedly strong; the break-even job creation rate to maintain equilibrium in the labor market today with reduced immigration, aging demographics and a low birth rate is only 50,000 a month.
The unemployment rate remained steady at 4.3%, perhaps reaffirming what many economists are describing as a “slow-hire, slow-fire” equilibrium. However, the unemployment rate for recent college graduates (ages 22 to 27) was 5.7%, and “underemployment” for that contingent, meaning those working in jobs that typically do not require a degree, remains high at 41.5% as of the end of March according to the Federal Reserve Bank of New York.
As is often the case in the financial markets, there is a plot twist: good news like this report is bad news for stocks, because investors want the Federal Reserve to hold or cut interest rates and not raise them. Given their dual mandate of maximum employment and stable prices, new Fed President Kevin Warsh is stuck between a rock and a hard place now to justify not raising interest rates to combat inflation.
Stock prices are retreating today following a week of volatility as progress with Iran stalled and valuation fatigue threatened recent momentum in tech and communication stocks. Meanwhile, bond yields are also rising, causing prices to fall, as worries mount with such strong jobs data and rising energy prices that the Fed is behind the curve on taking steps to curb inflation.
Other economic data released this week further extends the idea of the strength of the economy, as barometers on manufacturing from S&P Global and the Institute of Supply Management hit four-year highs. Likewise, the JOLTS report (Job Openings and Labor Turnover Survey) showed 7.62 million job openings. The quits rate (people voluntarily leaving a job) fell from 2.0% to 1.9% to mark a two-month low, while the layoffs rate ticked down from 1.2% to 1.1% in April, also a two-month low. Additionally, the ratio of job openings to unemployed people—a figure watched closely by Fed officials as a proxy of the balance between labor supply and demand—rose from 0.95 to 1.03 in April, the highest ratio since January 2025, suggesting that there are more jobs available for each unemployed person.
But on the flip side, Q1 GDP was revised lower from 2% to 1.6%, and all consumer sentiment barometers have collapsed, bringing them to historically low levels.
Meanwhile, if this “tale of two cities” is not complicated enough, we have the other shiny object in the room—IPOs. SpaceX, Anthropic and OpenAI debuts are dominating headlines and hopes and dreams, as investors contemplate the potential of these companies and how their public trading will allow all of us to get in on a potential piece of the action. With that, the S&P Dow Jones Indices said it will keep its eligibility criteria for benchmarks (such as the S&P 500), rejecting proposals that would have allowed mega-caps to be added more quickly to the indices after going public.
The decision means Anthropic, OpenAI and other upcoming mega-cap IPOs would have to wait at least a year to be included in the S&P 500. Other benchmarks like the NASDAQ 100 have indicated they will take a different approach and fast track the inclusion of SpaceX for example. Whether they get early index inclusion or must wait, the public debut of these companies will once again change the landscape of the financial markets.
Which brings me back to A Tale of Two Cities. If you recall—spoiler alert—one man dies so that a family and future can be saved. The masterpiece ends not in despair, but in hope through sacrifice. As changes happen all around us, and as we consider how many times in history we have gone through upheaval and yet emerged stronger, I ask you to regard these changes shaping our markets and our world with curiosity and hope. With careful consideration, and with a hard focus on facts and data, we will parse the sensational headlines to plot the course that matters for you and your family, keeping it all in balance as we manage these best and worst of times.
Written by a human.