Amazon Plans to Cut Corporate Jobs Across Core Departments

Summary

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Bloomberg Businessweek Podcast Summary

Episode: Amazon Plans to Cut Corporate Jobs Across Core Departments

Date: October 27, 2025
Hosts: Carol Massar, Tim Stenovec

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Episode Overview

This episode takes an in-depth look at Amazon’s reported plan to cut roughly 10% of its 350,000 corporate workforce—a significant move amidst broader corporate efforts to drive efficiency and adapt to an AI-driven economy. Top Bloomberg tech analysts and market leaders unpack the implications for Amazon, the wider tech industry, and the labor market. The episode also delves into the ongoing AI infrastructure boom, increasing tariff-related pressures on U.S. manufacturing, and how all these factors are shaping business strategy and economic outlook.

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Key Discussion Points & Insights

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1. Amazon’s Planned Corporate Job Cuts and Big Tech Workforce Trends

Segment: 02:07–06:56

• Scope & Cause of Layoffs

  • Bloomberg's Sarah Frier discusses Reuters' report of Amazon's intent to cut 10% of its corporate workforce (approx. 35,000 jobs).

  • The move is contextualized within a pattern seen across big tech companies, which is attributed to pandemic "over-hiring" and a sustained push for operational efficiency post-pandemic.

    Quote:

    “This is something that companies all across the board have been doing since the pandemic era... now they don't need as many people.”
    — Sarah Frier (02:33)

• AI & Anticipatory Investment

  • Sarah draws parallels between Amazon’s current approach and the anticipatory tech investments during periods of booming demand, notably data center buildouts for AI.

    Quote:

    “We do see a lot of anticipatory investment from tech companies... sometimes they need to pull back on in big tech.”
    — Sarah Frier (03:14)

• Cultural Shifts Post-Pandemic

  • Recent layoffs signal not just belt-tightening, but a new cultural focus on speed, efficiency, and reducing bureaucracy—especially with AI's influence accelerating industry competition.

• Broader Implications

  • Mergers of tech and retail: Amazon's role as both a tech and retail giant is juxtaposed with similar layoffs at companies like Meta and Target.
  • The group notes these moves may foreshadow how AI might eventually automate or augment more roles, though uncertainty remains about how much these tools truly drive efficiency yet.

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2. AI Investment Boom and Data Center Race

Segment: 06:56–09:55 | 30:08–39:41

• AI's Direct Business Impact

  • Qualcomm’s unveiling of new AI chips and surge in stock price is discussed as evidence of the white-hot AI infrastructure market, seen as a rare alternative to Nvidia’s dominance.

  • Even modest share gains in the $500B+ accelerated computing market could net billions in new revenue.

    Quote:

    “Any player that can get in on that buildout is… really significant. And the time is really now. Chips don’t last very long… three to five years before they’re obsolete.”
    — Sarah Frier (09:09)

• AI Capex as an Economic Growth Engine

  • Sean Donnan and Brooke Sutherland highlight that AI data center building is adding up to 1–1.5 percentage points to U.S. GDP growth—masking weakness in traditional manufacturing sectors.

  • Data center investment means higher returns and more stable capex than much of legacy manufacturing, which is facing sluggish growth.

    Quote:

    “There’s something like $400 billion in capex being spent this year… That’s significant in an economy growing at 2 to 3 percent.” — Sean Donnan (30:39)

• Labor, Manufacturing, and Energy Constraints

  • Massive AI investment is creating labor bottlenecks in construction and manufacturing, raising questions about the feasibility of reindustrializing the U.S. while simultaneously meeting AI’s needs.

    Quote:

    “Can you do that [reindustrialize] at the same time as you were building all of these data centers? Can we do both… from a worker and energy need perspective?”
    — Brooke Sutherland (32:20)

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3. Tariffs, Trade, and Uncertainty in U.S. Manufacturing

Segment: 20:12–26:59 | 33:26–35:23

• Tariff Impact on Businesses

  • Uncertainty over future tariffs is having a greater chilling effect than the tariffs themselves, as manufacturers struggle to make long-term investments.

  • Consumer technology and AI data centers have seen meaningful exemptions, unlike other manufacturing sectors, creating an uneven playing field.

    Quote:

    “What’s hard is when the rules of the game are constantly changing… That’s very difficult if you’re a CEO.”
    — Brooke Sutherland (33:45)

    Quote:

    “On the manufacturing side, all of the machinery that would go into those future factories now faces tariffs… That puts a real damper on investment plans.”
    — Sean Donnan (36:19)

• Tariffs vs. Profitability and Margins

  • Analysts debate whether companies can maintain profits with persistent input cost inflation and tariffs, or whether layoffs become the inevitable cost-cutting lever.

    Quote:

    “If you do start to have things like tariffs, what do companies do? They get rid of costs. How do you get rid of costs? You get rid of people.”
    — Market Analyst (24:49)

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4. The Labor Market and Macro Risks

Segment: 15:11–27:16

• Persistent Unknowns

  • The labor market’s apparent resilience may be deceptive due to a lack of up-to-date hiring statistics, with rising layoffs in high-paying tech jobs increasing risks at the upper end of the income spectrum.

    Quote:

    “Even upper income consumers… if they’re being let go, then we’ve got a problem. Right. If the upper end of our economy is also… struggling.”
    — Carol Massar (25:23)

• Fed Policy, Deficit Concerns, and Investment Risk

  • Jan Van Eck flags the federal budget deficit as a “big piano hanging over our heads,” stressing the importance of not letting fiscal problems force the Fed into extreme measures, like yield curve control.

  • Despite these risks, strong tech sector profits and flat or shrinking employment costs (“profit dynamos”) keep supporting the market for now.

    Quote:

    “The only vulnerability I see isn't this sort of systemic thing. It's one company [OpenAI] that's spending a ton of money… Everyone else has got the revenue to cover their spend.”
    — Jan Van Eck (17:45)

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5. Second-Order Effects: AI, Manufacturing, & Productivity

Segment: 37:08–39:41

• AI-enabled Productivity… and Fewer Jobs?

  • Industrial leaders hope AI will eventually improve productivity in factories via automation and prefabrication, but it’s unclear how many new jobs will be created—or lost—in the process.

    Quote:

    “If the future of AI is as rosy as its backers paint it… ever more intelligent robots will boost productivity in American factories… [but] highly automated factories don’t lead to a lot of employment… right now the US is down 42,000 manufacturing jobs since April.”
    — Sean Donnan (38:30 and 39:01)

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Notable Quotes & Memorable Moments

• “We are seeing a drive for efficiency, for reducing bureaucratic bloat… it's not just a line they're throwing out there.”
  — Sarah Frier (03:27)

• “We don’t know if the AI tools are actually making people more efficient. Right now it’s more of a hope that that will be the case.”
  — Sarah Frier (05:27)

• “OpenAI is generating over 90% of [AI-driven website] traffic… completely dominating the other MAG7 companies…”
  — Jan Van Eck (17:03)

• “Chips don’t last very long… maybe three to five years before they’re obsolete.”
  — Sarah Frier (09:09)

• “Companies get rid of costs. How do you get rid of costs? You get rid of people.”
  — Market Analyst (24:49)

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Important Segment Timestamps

| Topic | Speaker(s) | Timestamp | |-------------------------------------------------------------|-----------------------------|---------------| | Amazon layoff details and tech workforce trends | Carol Massar, Sarah Frier | 02:07–06:56 | | Broader big tech layoffs and AI efficiency debate | Co-Host, Sarah Frier | 04:58–06:56 | | Qualcomm’s AI chip moment, Nvidia rivalry | Carol Massar, Sarah Frier | 06:56–09:55 | | Fed deficit, fiscal risk, and investment strategy | Jan Van Eck, Carol Massar | 13:25–14:52 | | AI boom, OpenAI vs. other tech, market risks | Jan Van Eck, Hosts | 16:15–17:59 | | Manufacturing, tariffs, and the double-edged sword of AI capex | Sean Donnan, Brooke Sutherland | 30:08–39:41 |

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Summary Takeaways

• Amazon’s layoffs are part of a major shift in big tech as companies move away from pandemic-era over-hiring and toward flat/leaner organizational models, spurred by AI’s rapid rise.
• AI infrastructure investment is driving U.S. GDP growth but raises the risk that manufacturing and other sectors are being crowded out, facing both labor and capital constraints.
• Tariffs and trade uncertainty disproportionately disadvantage traditional manufacturers compared to AI/data center investors, who often benefit from exemptions—complicating U.S. industrial policy goals.
• Labor market cracks may start to show, especially among higher-income tech workers, as companies cut costs not just via automation but also direct layoffs.
• Long-term economic gains from AI are uncertain—productivity may rise, but job creation in manufacturing remains elusive amid record AI and tech spending.

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For Those Who Haven't Listened:
This episode is packed with real-time analysis of high-profile tech layoffs, market reactions to the ongoing AI investment boom, smart debate over trade policies’ real-world impacts, and practical insights into how these forces will reshape both Wall Street and Main Street. The tone ranges from pragmatic to analytical, with flashes of humor and plenty of sharp, attributed commentary from leading journalists and market strategists.

Transcript

[Carol Massar]

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[Podcast Host/Producer]

This is Bloomberg Business Week Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg Business Week Daily podcast with Carol Massar and Tim Stanweck on Bloomberg Radio.

[Carol Massar]

With us is a Bloomberg News big tech team leader Sarah Fryer, also author of no Filter the Inside Story of Instagram. She joins us from the Bloomberg San Francisco News bureau. So much going on, Sarah. But let's talk about Amazon. That feels like a pretty big number. 10% of the company's roughly 350,000 corporate employees. It's a report from Reuters citing unidentified people. We haven't yet confirmed it, but what's your thought initial thought on this?

[Sarah Fryer]

Well, first of all we are chasing it but but this was this is something that the companies all across the board have been doing since the the pandemic era, what they call over hiring. A lot of these companies saw the growth and how people were relying on tech during the pandemic. When they were home, they were Obviously ordering a lot more from Amazon because they didn't want to go to the grocery store if they were at home. Workers and the company hired to accommodate that. And now they don't need as many people. But you know, I heard your earlier point Carol, about. I think that's part of it. But I also think that part of it is when these companies go through periods of opportunity where they see a lot of growth, they're seeing that trend line and they're hiring for the future. We're seeing it right now with AI. People are building out, these companies are building out data centers. They don't know if they're actually going to need all that capacity long term. But they better make that deal today or else they might not have it when they need it. So we do see a lot of, of anticipatory investment from these tech companies over time that sometimes they need to pull back on in, in big tech. We haven't seen as big a pullback as we have in the past few years since the pandemic has really been a change in the culture. This drive for inefficient, for efficiency, for reducing, you know, bureaucratic bloat in. It's not just, you know, a line they're throwing out there. We are seeing. My, my colleague Matt Day wrote a really interesting story. I encourage everyone to read about us and how us was at the forefront of cloud, really inventing the market. And in the era of AI they have, they have fallen back in, in preference for startups. They had, they had that big outage we talked about last year on this show and some of the employees are attributing that to bloat to this, this bureaucratic culture. Too many people working on the same things and things aren't getting done fast enough. So I think, you know, although I hate to see people lose their jobs, I think that that is where a lot of this is coming from. The idea that we need these companies in the age of AI to, to be working faster, to try to catch their competitors.

[Co-Host/Interviewer]

You know, I see a headline like this, Sarah, and I immediately think back to the prominent other headlines that I saw in the last week about big layoffs or mid sized layoffs at a tech company. Metal platforms, laying off 600 people who work in AI and then target retail, not necessarily tech, but Amazon straddles that. Right. And we don't know the details of these layoffs yet, but target to cut 1800 roles, 8% of its headquarters team taken together. Is there a story with these three headlines?

[Sarah Fryer]

Well, I think that, that the Meta headline and the Amazon headline are certainly related because they're all attributed to this idea of trying to move faster to cut a lot of the maybe unnecessary workforce, maybe workforce that they do expect one day will be augmented by AI tools or are already starting to be augmented by AI tools. But like we've said before, we don't know if the AI tools are actually making people more efficient. That right now it's more of, more of a hope that that will be the case. Certainly encoding, it's had a big role. I'm not sure because we haven't been able to confirm the report just yet. I'm not sure if these are roles in coding when it comes to Meta and I it's really interesting because they are still shuffling around the leadership and therefore the direction of this very exciting expensive superintelligence team that they pulled together over the course of a few months earlier this year. And it seems like that is, is, you know, something that could give the potential of a slowdown for that company. But a lot is riding on Meta's AI efforts. Both companies, Amazon and Metta. I think we are going to have a lot to learn from this week in their earnings which are coming Metta on Wednesday, Amazon Thursday. So I think that that is going to be very key.

[Carol Massar]

Yeah, totally agree with you that I feel like the earnings this week are a big deal to see that those investments are paying off. Hey, in the meantime we're watching very closely what's going on with Qualcomm. They don't report until November 5th, but I'm looking at a stock Sara that is up 12% at its highs, was up nearly 22% today. And this is after unveiling some chips and computers for AI data center market. We know this is something that has made Nvidia just on fire and at the center of the AI universe. What do we know about Qualcomm?

[Sarah Fryer]

Well, they already have a major customer for these trips for these chips in the form of Humane, the, the Saudi company. And so I think that that is giving investors a lot of hope that this can not only give them a very strong position in the AI growth as an alternative to Nvidia, but also help make up for some of the revenue lost by Apple who was a major customer going to in house chips. So I think they see it as a very positive for Qualcomm. Of course, you know this, this chip is also getting a lot of buzz for its ability to hold quite a lot of of DRAM memory. So I Think, you know, any time that someone can make inroads in chips versus Nvidia of the stock market is going to reward it. But we'll have to see if they're able to take on some of those big tech customers over time or what their customer base is going to evolve into if this, if this becomes a big part of their portfolio.

[Carol Massar]

Yeah, I mean, time will tell. I mean, I was looking at our BI analyst in the Ian King story, basically saying, you know, it's too soon to call this a serious challenge.

[Market Analyst]

Right.

[Carol Massar]

To Nvidia's dominance. Even modest share gains though, in the over $500 billion accelerator market could translate into billions in incremental revenue. I mean, right. Even this pie is so big and it just seems to grow at this point, Sara, that even a piece of it, or a decent piece of it, it could be a lot for Qualcomm if it all plays out.

[Sarah Fryer]

No, absolutely. There's, there's so much data center build out happening right now and happening over the course of the next few years. I think we're going to continue to see these multibillion dollar deals across the US and around the world. So I think that, you know, any player that can get in on, on that build out is, it's really significant. And I think that the time is, is really now. Chips don't last very long once they are unveiled. You know, they maybe last three to five years before they're obsolete. So I think, you know, for those deals that are in the making in the moment, we're, we're very interested to see what Qualcomm is going to cook up.

[Carol Massar]

Sarah Fryer, thank you as always. She is Bloomberg News big tech team leader. She's out there in our San Francisco bureau. Sarah Freyer, also the author of no Filter, the Inside story of Instagram.

[Co-Host/Interviewer]

Stay with us. More from Bloomberg businessweek Daily. Coming up after this.

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[Carol Massar]

Great to have back with us Jan Van he is Chief executive officer VanEck. It has about 133 billion under management AUM and he joins us back here in our Bloomberg Studio. John, great to have you back with us. There is a lot coming out investors. There is this laundry list. What's most important to you when you think about the investment environment and what shapes your strategy right now?

[Jan Van Eck]

Well just keying off of this monetary policy discussion, I just have to say that the big Piano hanging over our heads to me is the federal budget deficit. And since I saw you last, we actually got some pretty good news for fiscal 25 that as a percent of GDP the budget deficit had fallen from six and a half percent to 5.9%. I've been focusing very much on the year that we just started on October 1st because I think, you know, that's the big risk. Right. The Fed, you know, the federal government has to borrow or pay a trillion dollars a year. Yeah, as sure the Fed governor affects that. But what the markets think matters a lot too. And if we can reduce that pressure by having better finances, that's really good news for the market, I think.

[Carol Massar]

But that's not an argument for having not an independent Fed. Right. You still want a Fed. No, no, that does monetary policy according to inflationary pressures and labor pressures.

[Brooke Sutherland]

Right.

[Jan Van Eck]

But what, what you know, these, the wonky economists on Wall street don't want is to have so much debt that you basically are forcing the Fed to use something like Japan did yield curve control or some really extraordinary measures that would, that would really be unwelcome. So you know, we can talk about the personalities and everything, but right now the direction of movement is good compared to coming into the year where we had a lot of fiscal concerns and the Fed chair would have had a lot more on his plate, you know, younger plate.

[Co-Host/Interviewer]

When you were on with us last, it was about a month ago is just before the government shutdown and we asked you about whether or not a government shutdown actually matters to markets. Well, here we are a month later and it's amazing. It is amazing. I mean it's the second longest shutdown in, in history entering, you know, it's, it's remarkable to see. Do you, you said it didn't matter.

[Jan Van Eck]

Right.

[Co-Host/Interviewer]

Do you stand by it?

[Jan Van Eck]

Yeah, I mean, I don't think there's any evidence it has mattered. I think what's really worrisome though is the fact that it's a dysfunctional government.

[Carol Massar]

Washington doesn't care of the government that.

[Jan Van Eck]

Isn'T working, that they don't care. Neither party really cares if something bad is happening, if they feel like the other party can get the blame. And again, you know, I don't mean to only talk about the debt problem, but you know, that's really what we all worry about at the end. Like will we never solve Social Security? Will we cut Social Security payments in 2033 like we're scheduled to? Yeah, I mean, you know, those are the longer term concerns.

[Carol Massar]

When you look at this market environment, the other things that are coming, and these are obviously the ones that we just talked about, are super, super big. But I do think about our focus on, you know, these max seven earnings. We get a big drop this week and we'll learn once again whether these investments are paying off. Last time around, we saw it with Metta and some of the other big hyperscalers that these investments seem to make sense at this point. The AI trade, where are you on that?

[Jan Van Eck]

It's going to. We have a compute shortage that's. That's very visible to the whole world. And you know what's really interesting? I did some research on this since we last talked, and OpenAI is really emerging as the giant in this area. So they have 800 million monthly active users. The next biggest, Gemini, has 450, but much more interesting. So your average website is now getting basically traffic coming from the AI chats, somewhere between, let's call it 1% at the low end and 17% at the high end of the traffic that's going to your average website, like the Bloomberg website or the VanEck website.

[Carol Massar]

We're not average.

[Jan Van Eck]

I can't believe I said that.

[Co-Host/Interviewer]

But.

[Jan Van Eck]

But of that traffic, OpenAI is generating over 90% of that traffic. They are completely dominating the other MAG7 companies when it comes to, you know that. Now, on the flip side, they are trying to build out a ton of this compute and they don't have the money. Right. All the other hyperscalers have a lot.

[Carol Massar]

Of revenue, not public.

[Jan Van Eck]

Right. And the revenue is only 40 to 50 billion. So. And they want to spend hundreds of billions on compute. So that's the one thing that I look at as a potential weakness in this AI trade. But otherwise, we've got at least two calendar years of demand to deal with.

[Co-Host/Interviewer]

So you're not seeing ghosts of the late 90s tech crash here.

[Jan Van Eck]

As I said, the only vulnerability I see isn't this sort of systemic thing. It's one company that's spending a ton of money and so far they've been able to raise it. Everyone else has got the revenue to cover their spend. Right. I mean, they've got the cash flow.

[Co-Host/Interviewer]

And I'm sure in OpenAI can keep raising money, it seems like there's plenty of demand or maybe even do. Are you, Are you doing chat GPT right now?

[Carol Massar]

No, no, no. I was actually. No, no, no, no.

[Co-Host/Interviewer]

I just grabbed the phone.

[Brooke Sutherland]

Just gr.

[Carol Massar]

Which is such a no no when you're on air. Lisa Abramowicz, who we all. She's incredible on surveillance on the TV side. And she said the Mag 7 stocks have accounted for almost half of the S&P 515% gain this year. Microsoft, Alphabet, Amazon, Met are expected to post a combined 360 billion in capex in their current fiscal years and nearly 420 billion next year. So what I'm just wondering is the market we've talked about that we feel like in the earnings season we're seeing breadth expand. But again, these companies are still so important right, to the trade.

[Jan Van Eck]

They're really, I mean, we want to ask ourselves why do they have such a high percent of the S&P 500? And we have an answer. Because they're profit dynamos. Not only is their revenue going up, but their, their, their employee bases are flat if not shrinking. So rising revenue, flat costs because one of the big beneficiaries obviously are software companies.

[Co-Host/Interviewer]

We have 30 seconds on gold.

[Carol Massar]

This is, you are going to go there.

[Co-Host/Interviewer]

Yeah. Is that where you're going to go? Qualcomm so down 8% from its peaks, from its peak. Further to go.

[Jan Van Eck]

Yeah. 20% correction in the bull market would be my base case.

[Co-Host/Interviewer]

That's your call. 30, $500.

[Jan Van Eck]

Yes.

[Co-Host/Interviewer]

Okay.

[Carol Massar]

Still not a bad year. Right?

[Jan Van Eck]

Great. Great year. I think the question is, you know, everyone's impatient. They're already looking at their phones and during interviews. The question is how long does consolidate.

[Carol Massar]

For the goodness of the show, 12.

[Jan Van Eck]

A whole 12 months of consolidation would bore the market. So we may have one of those situations. But still I, you know, we'd like it long term, you know, for the next decade.

[Carol Massar]

Yeah. VAN he is, of course, chief executive officer of an act joining us here in studio.

[Podcast Host/Producer]

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[Co-Host/Interviewer]

I want to know how Sarah Hunt is looking at all this. She's partnering at chief market strategist at Alpine, Sachs and Woods. The Firm has about $850 million in assets under management. She's here in the Bloomberg Interactive Brokers studio. I guess we should probably start with trade because that is what is pushing this market higher today. Dare I say or ask you, is it getting ahead of itself given that we don't know if this deal will happen?

[Market Analyst]

I think that that's been one of the biggest questions all year because when you had the meltdown earlier in the year, in April and then you started to see those deadlines move around and all those things change and markets got really were much happier with that.

[Carol Massar]

Right.

[Market Analyst]

Because they didn't want to hear that draconian, those draconian numbers. They didn't want to see that happen immediately. So you've seen things continuously move around. So I'm sort of surprised that there's enough surprise in the headlines every time we get one that it does do that. But in the end, if we can get things sorted out so that you don't have pecuniary tariffs anywhere or at least not as bad as we thought they were, there is a relief to that. And I think that that's part of what you're seeing. And I do think that there's a de escalation of tensions because the rare earths thing has really been an issue ongoing for the last several months. So I think that, I think that all those things together and the low CPI print on Friday really helped.

[Carol Massar]

But we still have, as we mentioned earlier, Sarah, China still faces effective U.S. tariffs of around 40%, about 25 percentage points above the global average. I mean we are in a different tariff environment. So I agree that I think, you know, flooding the zone, we're all exhausted. So we just want things to land and we almost don't care where they land, which is kind of crazy because they're landing at different marks that are going to impact profitability. It sounds of companies. So that's going to have an impact and I'm not quite sure when it starts to really, really show.

[Market Analyst]

And I think that that's also the million dollar question because that has been the issue going forward. What's going to happen to margins, what's going to happen to pricing, what can consumers absorb? What can companies absorb? And the truth of the matter is we haven't really seen the effects of a lot of those tariffs because a lot of them came and went and, or they get suspended or you get carve outs or you get different pieces. It's very difficult to pinpoint exactly who's paying that 40% rate this minute.

[Sarah Fryer]

Right.

[Market Analyst]

And right until you start to see it come through earnings and until companies start to talk about it, it becomes more and more difficult for people to put in their numbers. So right now numbers look very good and I think the third quarter is going to be pretty good. This week is going to be a very big week because we have a lot of people reporting and that's going to be very important how that comes out. But where we go with those and what that does to margins, I think is the biggest question that we still don't have an answer or two is.

[Co-Host/Interviewer]

That when, not if, these companies start to see the effect of these tariffs.

[Market Analyst]

It is definitely a when and not an if, but the when keeps moving around and that's why it's hard to take a victory lap, which some have done and said, well, there's no real effect of this because you've seen the earnings still be very strong when in reality we don't really know what the effects are going to be because you keep pushing things around and inventories have been pulled in.

[Co-Host/Interviewer]

So then how do you position for that?

[Market Analyst]

You try to find places where you think you are not in as much risk as you would be if the inventory picture is not good enough and or changes and you don't get a chance to reduce that or to put that inventory back in. So a lot of the places are going to be obvious. The technology stocks are part of that. Although you have seen Nvidia have issues with being able to sell and then not sell chips and everything else. It's the cash generative areas, the places where you know that there might be some pain. It's. It's almost more to avoid it. I mean, I wasn't thinking about Mattel when I started, when I started this. But if you think about something like Mattel, that was a very bad situation for them and that you are seeing that now and you will see that in other areas.

[Co-Host/Interviewer]

But it's not like we're going to see Barbies built here in the U.S.

[Market Analyst]

No, that's one of those things where you'd almost think that like certain things are going to need a carve out because you're not going to bring them back. Whether or not toys are going to end up getting that. It doesn't look like it right now, but no, there are certain things that it doesn't make any sense to do that with.

[Co-Host/Interviewer]

Well, maybe Barbie's a good example because what did the president say about Barbie earlier this year? Maybe if we only get one Barbie.

[Carol Massar]

At Christmas, kids, girls, something like that, Whoever don't need two.

[Co-Host/Interviewer]

Two Barbies instead of 30.

[Carol Massar]

I don't know. When I was growing up, I was. What he said more Barbies.

[Co-Host/Interviewer]

Thank you.

[Carol Massar]

Are Merrier's chief.

[Co-Host/Interviewer]

I was going to say he's chief Barbie buyer in his house.

[Carol Massar]

Well, he's got a daughter. He's got a daughter. What I'm wondering is, are we though moving towards an environment where we're not going to have companies that are as profitable as they were before, which is kind of mind blowing because we just saw the banks being really profitable. The earnings season. We're seeing it broaden out that a lot more companies seem to be coming in with some strong profit numbers, revenue numbers too.

[Market Analyst]

It's one of the biggest conundrums because in the end, to maintain that profitability, if you do start to have things like tariffs by what do companies do? They get rid of costs. How do you get rid of costs? You get rid of people. So what do we not have right now? We don't have any employment stats.

[Carol Massar]

Right.

[Market Analyst]

We don't have any statistics on what's going on.

[Carol Massar]

Amazon is cutting what, 10%, 12% of its corporate 10% workforce. We just got that today.

[Market Analyst]

I saw that note before I came in here and I thought this is one of those, this is one of those issues because you end up with having unemployment problems and that is going to be fine potentially for margins for some period of time. But they can't do that forever.

[Carol Massar]

Right. Because we're the people who spend. Right. And if we're not working, we're not spending. You know, it's interesting, Drew Mattis, chief market strategist over at MetLife Services and Solutions was on with us last week and he talked how looking at the K shaped economy, but just saying it's not okay. And he was really talking about the upper rung of the K that even upper income consumers like maybe these corporate folks at Amazon who have had good salaries and good benefits, but if they're being let go, then we've got a problem. Right. If the upper end of our economy is also going to maybe be struggling. Well, we know the lower end has been.

[Sarah Fryer]

Right.

[Carol Massar]

So I'm sorry, go ahead.

[Market Analyst]

Well, no, I was just going to say and it's harder to get another job too, because people stay in jobs longer and there isn't as much movement right now. And that's an issue as well. And I'm sure that there are a lot of people who are going to be surprised by that in Amazon because nobody was looking at Amazon saying, oh, we really think that they're about to lay off a bunch of people. Like when metal laid off a bunch of people on the side, 600 people last week it was announced on the side. Now those guys were not getting paid very little. They were probably getting paid quite a bit.

[Carol Massar]

Right.

[Market Analyst]

And that's a very. So yes, you're into that layer of the people who are getting paid quite a bit of money who are now looking at losing their jobs.

[Co-Host/Interviewer]

So just 30 seconds on the labor market.

[Carol Massar]

It's okay, weak, it's not weakening a Fed cut.

[Market Analyst]

Is a Fed cut gonna save the labor market too? Right? Is the other question. But it's also there's been less movement and it's hard to tell what's going on because you also have the immigration story behind that too. So what is the right number? What's the break even number? And all of those. We don't know the answers to all those questions and now we don't have any data. So it just makes it much more complicated.

[Carol Massar]

20 seconds. Do people want to still put money to work in this environment?

[Market Analyst]

They have to to a great degree, right? Because sitting in cash, especially if we're going to cut rates, that lower end of the money market is going to start to come down and people are going to start looking at it. And also when the market moves up like this, people feel like they want to participate.

[Co-Host/Interviewer]

Stay with us. More from Bloomberg Businessweek Daily Coming up after this.

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[Podcast Host/Producer]

You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5pm Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.

[Carol Massar]

Sean Donnan and Brooke Sutherland are two of the writers, the team behind this feature. Sean is Bloomberg News Senior Economics writer and Brook is Bloomberg News Boston Bureau Chief and Writer for the Bloomberg Industrial Strength Newsletter. Sean joining us, Tim from The Bloomberg Washington, D.C. bureau. Brooke out there in our Boston bureau.

[Co-Host/Interviewer]

So Sean, I just want to start with you and put this $4 trillion number into context when it comes to economic growth here in the US over the last few years and those estimates moving forward. How does AI spend figure into growth and sort of where would we be without it?

[Sean Donnan]

Yeah, look, the answer, and we hear this from all sorts of analysts and economists right now, is that the US Economy would look a lot weaker right now if it wasn't for this investment boom. There's something like $400 billion in capex being spent this year that's adding as much as a percentage point to growth, or that's certainly what it added in the first half. People are thinking about next year and, and thinking that it's going to add 1.5% percentage points to growth next year. That's significant in an economy that's growing at 2 to 3% percent. And, and it's just this thing that is enormous, that's historic, but it's also something that's masking weakness in other parts of the economy and may in fact be, some people think, causing Weakness in other parts of the economy like manufacturing.

[Carol Massar]

And that's what we want to talk about this on a day. I got to say guys, I feel like every day there are multiple stories, are multiple headlines about the air spend and it just ties into what we're talking about. One crossing the Bloomberg and video and Deutsche Telekom plan, a 1 billion euros data center in Germany, not the US economy. But this is happening around the world. Sean, come on. Excuse me, Brooke, come on in on this conversation because the President was very clear on the campaign trail about wanting to bring manufacturing jobs back to the United States. But we keep asking guests, is the AI spend squeezing out capex spending in a lot of other areas or just spend overall in other areas including manufacturing?

[Brooke Sutherland]

I mean, I think that's the real question. And you know, to Sean's point, the just the flood of capital into these AI data center construction projects is really just staggering. And what you constantly hear in the US is that we do not have enough workers in the construction and the manufacturing field. And so from a construction standpoint, as you talk about wanting to re industrialize the U.S. i think there's a legitimate question of can you do that at the same time as you were building all of these data centers? Can we do both at the same time and not just from a worker perspective, but also from an energy need perspective? And then in terms of where the capital is going to your point, I do think the return is a lot better on data center projects right now than it is for much of the manufacturing industry, which really has been in a slump for the better part of three years outside of those industries that cater specifically to data centers. So things like electrical equipment or gas turbines are seeing really robust demand from those technology comments, whereas everything else has been really, really sluggish and also hit harder by the impact of tariffs and the uncertainty that that unleashes.

[Co-Host/Interviewer]

Okay, Brooke, I'm glad you brought up tariffs because there's a really important paragraph in this story that talks about the effect that some of the companies in the industrial space have had as a result of these tariffs. I mean, we're talking billions of dollars here of the companies that that you cover in the industrials world. Brooke, how have tariffs affected them?

[Brooke Sutherland]

I mean, I think tariffs have really kind of put a hold on a lot of things from manufacturers perspective. What I hear over and over again from CEOs is it almost doesn't matter what the actual rate is. Of course it does matter, but they just want to know what it is and then they can adapt to that. They can move their factories or they can rejigger their supply chain and shift certain things around to try to mitigate the impact. What's hard for them is when the rules of the game are constantly changing. And we're seeing that continue to play out where there's new tariffs announced or taken off or different deals struck with different countries. And that's very difficult if you are a CEO and trying to figure out what to do with your business, especially in an industry like manufacturing, where these investments are very long term. And you need to sort of forecast what the world is going to look like a few years down the road. And if you don't really know what the world looks like today, it's a lot harder to think that far ahead. And you know, one of the things that's interesting here is that, you know, the Trump administration has been more willing to look at exemptions for certain things that play into the data center market, but not everything. And you know, the electrical equipment manufacturers, you know, have pushed back against some of these tariffs that do hit them because they're already struggling to keep up with all this supply that we're seeing from data centers. And tariffs make doing so even more expensive.

[Carol Massar]

No, but it's interesting, right? I mean, Sean, I mean, this idea that the big beautiful act that was passed, one big beautiful bill act that was passed, I mean, there were a lot of folks within the manufacturing sector, if I think about the national association of Manufacturers that you guys include in this story that campaigned in favor of this legislation, but as it's turning out, they're maybe not so necessarily sure that it's going to be that helpful.

[Sean Donnan]

One of the things that they found was that manufacturers as a group were planning only a 1% increase in CapEx over the next year, which is kind of right in line with what we've seen in previous years. And that's not even adjusted for inflation. I think one of the key points if you talk to manufacturers is in the one big beautiful bill act, there are these provisions that would allow them to claim back the cost of capital investments and that there's kind of beneficial tax treatment. There's. But at the same time, this is an administration that has tariffs in place on a lot of machinery from overseas that would be needed to kind of fulfill that capital investment to come in. So if you're bringing in machinery from China, you're facing a 50% tariff on a multimillion dollar machine going into an American factory. That's a huge cost and that's very different from what you've seen on the AI and data center side. So April 9, sorry, April 11, a few days after Liberation Day, the administration quietly, on a Friday night put out some pretty significant exemptions for consumer technology, but also things like AI servers and other components that go into, into data centers. So that AI investment boom is also largely, although not entirely, as Brooks says, a tariff free boom. Whereas on the manufacturing side, all of the machinery that would go into those future factories now faces tariffs, whether it's coming from Europe or Japan or China. And that is as is also something that puts a real damper on investment plans and raises questions over the costs. And those are kind of constantly moving costs as well.

[Co-Host/Interviewer]

Brooke, I'm so curious about the way that in your world of industrials, the way that AI, you know, if we, if we look at like second order effects here, okay, if this stuff gets built, and if maybe American machines and manufacturing equipment to a certain extent are used to build it, then do we get to a world where the companies in your universe are able to increase productivity as a result of the technology that they helped bring to fruition?

[Brooke Sutherland]

I mean that, that's sort of the goal. And if you talk to industrial CEOs, they will say that yes, there are short term constraints here, particularly around people and power, but it's also an opportunity to rethink the way we do things. And maybe we don't need to keep doing everything the same way that we always have and we can sort of push technology to that next frontier, whether that's relying more on sort of free fabricating prefabricating parts of a building off site to help improve productivity and reduce the risk of errors, whether it's leaning more on automation in the factories. Although of course automation in the factories does sort of raise the question of, well, how many jobs is this re industrialization effort going to provide? And so, you know, I do think industrial companies will rise to the challenge and try to figure out how to solve for some of these shortages. But I think there are bigger questions about the longer term ramifications of that, especially if your goal is to create a bunch of manufacturing jobs problems in.

[Carol Massar]

The U.S. well, just got about a minute or so left here and Sean, back to you. I mean, you guys like, I guess time will tell because there is a line in this reporting that you guys did in the story. If the future of AI is as rosy as its backers painted, that a broader swath of manufacturers will eventually reap benefits from the technology to ever more intelligent robots will boost productivity in American factories, you know, you're going to need lots of things to build out these data centers and that plays into the manufacturing economy. But John, time will tell on this and only got about 40, 45 seconds here.

[Sean Donnan]

Yeah, look, time will tell. And the big question and the big kind of political economy question is how will people make out? How will workers make out in this? Right. We think about AI as something that could make a lot of us obsolescent at some point. Hopefully not. But in the manufacturing environment, you can envision kind of highly automated factories that don't lead to a lot of employment. And you know, that is the big promise from Donald Trump going back to his first term is, you know, to bring the factories back, to bring the jobs back. And right now on the manufacturing side, you know, the US is down 42,000 jobs since April. That's just not happening.

[Carol Massar]

All right. I got to say though, you guys, the way you kick it off and weave through the GM plant.

[Co-Host/Interviewer]

Exactly. That is the place to that is the perfect anecdote.

[Carol Massar]

Highly recommend everybody read it because you weave through it and how it tells this story so, so well, as you both did. Shawn dawn and Brooke Sutherland, thank you so much.

[Podcast Host/Producer]

This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify and anywhere else you get. Your podcasts listen live weekday afternoons from 2 to 5pm Eastern on bloomberg.com, the iHeartRadio app tune in and the the Bloomberg Business app. You can also watch us live Every weekday on YouTube and always on the Bloomberg Terminal.

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