Wall Street Traders on Hold in Run-Up to Jobs Data

Summary

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Bloomberg Businessweek Podcast Summary

Episode: Wall Street Traders on Hold in Run-Up to Jobs Data
Date: December 15, 2025
Hosts: Carol Massar and Tim Stenovec
Guests: Michael McKee (Bloomberg Economics/Policy Correspondent), Megan Robson (Head of U.S. Credit Strategy, BNP Paribas), Sally Librera (President, National Grid New York), Sri Natarajan (Bloomberg Chief Wall Street Correspondent)

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Episode Overview

This episode examines the uncertainty rippling through Wall Street as traders and policymakers await delayed and incomplete U.S. labor and inflation data following the government shutdown, and how these delays complicate market and Federal Reserve decisions. The hosts welcome expert guests to discuss economic outlooks, the state of the Fed's dual mandate, risks in credit and energy markets, and broader business trends, including major shifts among consulting firms like McKinsey.

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Key Discussion Points and Insights

1. The Messy State of Jobs Data and Market Uncertainty

(02:28–08:42)

Delayed Data and Impact on Markets

• Wall Street is preparing for a foggy December as key employment data releases are delayed and incomplete due to the government shutdown.
• Michael McKee highlights that tomorrow’s job data will offer only a “partial picture”; essential components like the household survey and unemployment rate will be missing.
  • “We’re getting October and November, but not half of the October report… We’re not going to get the household survey, so we don’t get the unemployment rate, which is what matters to the Fed.” (03:13, Michael McKee)
• Federal worker furloughs and severance expirations are set to skew numbers: “We could have like a big negative number, but you drop the federal workers out and it’s slightly positive.” (04:41, Michael McKee)

Investor Perspective

• Megan Robson (BNP Paribas): “I think the market does want to see some employment data… Even if it’s backfilled and will be noisy, I think it’s good to have that data.” (05:00, Megan Robson)
• These quirks make it hard for investors and policymakers to draw firm conclusions: “We’re not happy when we’re not getting data and then we’re not happy when we’re getting kind of weird data.” (04:48, Carol Massar)

2. Fed Policy Dilemma: Balancing Unemployment and Sticky Inflation

(05:27–11:48)

Fed Reaction and the Dual Mandate

• The Federal Reserve is in a holding pattern, waiting for clearer employment and inflation data before making rate decisions.
• Inflation is expected to accelerate into 2026, driven by tariffs:
  • “We’re actually forecasting inflation to accelerate a bit into 2026... We have inflation target around 3%. And so we do think there also will be some bumpiness in the labor market.” (07:09, Megan Robson)
• Sticky inflation vs. labor slack is the core challenge:
  • “Right now, they think that’s going to be unemployment because they had been making progress on inflation until we got the tariffs and things started to turn around.” (10:04, Tim Stenbeck)
• On the Fed's 2% inflation target: “2% has always been their goal, but every year they move it two years out. Right now, we’re not going to see 2% until 2027.” (10:04, Tim Stenbeck)

Which Mandate Wins?

• Megan believes, “They will protect the labor market. And so we think they are biased towards more cuts… that’s partially why you’re seeing asset prices so elevated.” (11:11, Megan Robson)
• Fed strategy, per Tim: “You look at the one that is farthest away from the goal, that will be the hardest to bring back to where you want them to be.” (09:52, Tim Stenbeck)

3. Credit Market Dynamics and the "K-Shaped" Economy

(11:48–16:34)

Transition in Corporate Borrowing and Risk Sectors

• 2025 saw corporate America move from deleveraging toward some renewed borrowing in late Q3, especially among “hyperscalers” and M&A activity.
• “For next year we do think there will be a pickup in supply and an end to the ‘bond scarcity’ story.” (12:04, Megan Robson)
• The credit market mirrors the broader K-shaped economy: tech and utilities are borrowing and growing, while consumer-facing sectors remain cautious:
  • “You have sectors where you're really seeing capex expectations surge and that they're expecting growth… On the other side, you have sectors much more tied to the consumer [that] are growing much more slowly and are much more cautious about adding leverage.” (13:07, Megan Robson)

Risks and Positioning

• Consumer confidence and policy uncertainty remain major risks for 2026:
  • “I've said this many times before, recessions are when confidence falls. And so it depends on how people are going to be feeling...” (14:33, Tim Stenbeck)
• Megan recommends credit investors favor sectors like mortgage servicers and originators exposed to higher-income consumers, while exercising caution with consumer discretionary high-yield areas (bowling alleys, movie theaters, leisure, etc.):
  • “We like mortgage servicers and originators... sectors that are exposed to not only lower income but also that middle tier that’s starting to show weakness we think are places you might want to avoid.” (15:18, Megan Robson)

4. Stress and Investment in the US Power Grid

(20:09–28:47)

Massive Demand Surge & Modernization Needs in New York

• Host Carol Massar and Tim Stenovec interview Sally Librera, President of National Grid New York, about the rapidly increasing demand on the state's energy grid, driven by a boom in data centers and high-tech manufacturing.
  • “There is increasing demand for energy across the entire state... The cumulative power need across those companies... is about 10 gigawatts of energy. One year ago, that was one third the size. It literally tripled in just one year.” (22:06, Sally Librera)
• Utilities face the challenge of modernizing extremely aging infrastructure while keeping bills low and balancing reliability with political and regulatory scrutiny.

Affordability and Energy Policy

• Investments will mean higher costs for customers, but are necessary for reliability and to support new business:
  • “There are moments, and now is one of those moments, where customers are seeing increases on their bills. And that’s for a number of reasons, but primarily it’s to be investing in infrastructure that is necessary.” (28:17, Sally Librera)
• On state/federal energy policy, National Grid is pursuing an "all of the above" approach (renewables, natural gas, nuclear) to meet needs:
  • “Given the rate at which demand for energy is increasing, we need to be utilizing all of those opportunities.” (26:46, Sally Librera)

5. Consulting Giant McKinsey Confronts Cuts, Changing Industry

(32:31–39:43)

McKinsey at a Crossroads

• Sri Natarajan details how McKinsey, long the consulting industry’s standard-bearer, is facing pressures—flatlining revenues, changing client demand, lingering reputational scandals, and the disruptive potential of AI.
• “Their traditional services are not in the same level of demand as they would like... McKinsey’s revenues are sort of flatlined.” (33:05, Sri Natarajan)
• On AI and consulting: “As a firm marks its hundredth year, we are operating in a moment shaped by rapid advances in AI that are transforming business and society... The one word that you will zero in on is AI.” (36:10, Sri Natarajan)

Reputation and Enduring Power

• Despite the malaise, McKinsey still stands alone in prestige and scale: “They are in a category of one. You cannot be faulted for hiring McKinsey for management consulting work… they are still considered in a league of their own, and they're perhaps two times as big as their next closest rival.” (38:48, Sri Natarajan)
• Lingering scandals are, per McKinsey leadership, in the past: “They may well have righted the ship. The question is, can the industry be as robust as it has been in the past?” (37:59, Sri Natarajan)

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Notable Quotes & Memorable Moments

• On incomplete jobs data:
  “We’re not going to get the household survey, so we don’t get the unemployment rate, which is what matters to the Fed.”
  —Michael McKee (03:13)

• On inflation’s stubbornness:
  “2% has always been their goal, but every year they move it two years out. Right now, we’re not going to see 2% until 2027.”
  —Tim Stenbeck (10:04)

• On Fed priorities:
  “They will protect the labor market. And so we think they are biased towards more cuts… that’s partially why you’re seeing asset prices so elevated.”
  —Megan Robson (11:11)

• On the K-shaped economy:
  “You have sectors where you're really seeing capex expectations surge... On the other side, you have sectors much more tied to the consumer, they're growing much more slowly and are much more cautious about adding leverage.”
  —Megan Robson (13:07)

• On historic power demand:
  “The cumulative power need... is about 10 gigawatts of energy… It literally tripled in just one year.”
  —Sally Librera (22:06)

• On McKinsey and AI disruption:
  “As a firm marks its hundredth year, we are operating in a moment shaped by rapid advances in AI that are transforming business and society... The one word you will zero in on is AI.”
  —Sri Natarajan (36:10)

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Key Timestamps for Segments

• [02:28] – Wall Street’s confusion over jobs data with Michael McKee and Megan Robson
• [07:09] – Inflation outlook and Fed policy debate
• [13:07] – Credit market “K-shaped” dynamics
• [20:09] – National Grid’s Sally Librera on New York’s surging power demand
• [32:31] – McKinsey’s history and consulting industry change with Sri Natarajan

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Tone and Style

The conversation is analytical but conversational, with experts and hosts questioning each other directly, candid about uncertainties, and frank about risks and challenges in each sector. The tone is brisk, sometimes wry, with light moments amid dense economic discussion.

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Transcript

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Bloomberg Audio Studios Podcasts Radio News this is Bloomberg Businessweek 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 Stenbec on Bloomberg.

[Carol Massar]

Radio well, the big debate in the US treasury market over the extent of Federal Reserve interest rate cuts ahead is about to hit up. Tim. We've got a string of pivotal economic data releases and it starts tomorrow with a bunch of reports on the labor market.

[Co-Host/Reporter]

Yeah, it'll go a long way in filling the void created by the US Government shutdown, delayed announcements of monthly employment and inflation figures, and then early January brings in more key jobs data. We've got with us Michael McKee, Bloomberg TV and Radio International economics and policy correspondent. He joins us here in the Bloomberg Businessweek studio also here, Megan Robson, head of U.S. credit strategy for BNP Paribas. She's going to jump in with us in just a minute. Jobs Tuesday, we don't usually say that. We usually say Jobs Friday, usually say.

[Tim Stenbeck]

We haven't said that in a long time.

[Co-Host/Reporter]

But are we getting a complete picture?

[Tim Stenbeck]

No, we're not. We're getting a partial picture and it is also an old picture. So it isn't clear exactly how much difference it will make. I will defer to the smarter person to my left in terms of what the bond market is going to do about this. But you have to realize we're not going to get half of the October. We're getting October and November, but not half of the October report. We're not going to get the household survey, so we don't get the unemployment rate, which is what matters to the Fed. And we don't know in the October report how many of the actual categories in the establishment survey we're going to get either, because a lot of that comes in electronically and some of it they have to call and get it. And whether they were able to call and get it or not, we don't know. Which means for November, we're going to have a number for how many jobs were created. But compared to what, is that compared to September or is that compared to October and November? I mean, it's, it, it's going to take a little while to figure all of this out. We also have one other big complication, and that is the federal workers, they were furloughed in October. So depending on when they were off the job and how many were off the job, they will count us as not being employed. And then the DO workers, the people who were fired or who took early resignations and had a severance, that severance ran out on September 30th so that they would fall off as well. So we could have it like a big negative number, but you drop the federal workers out and it's slightly positive. And I think that's kind of what people are looking at with this 50,000 consensus in the survey.

[Carol Massar]

All right, wait a minute. So we're not happy when we're not getting data and then we're not happy when we're getting kind of weird data.

[Tim Stenbeck]

Right?

[Carol Massar]

I mean, Megan, is there anything to it? Come on in on the conversation. Is there any value in this for you?

[Megan Robson]

I think that the market does want to see some employment data. So I think it's good that we're starting to. Even if it's backfilled and will be noisy. I think it's good to have that data. I think investors are also starting to think about 4Q earnings and typically you just have GDP in other economic data. That gives you a sense of how earnings will come in. So I think it will be a little bit of a relief to get to get past some of this data and see where, where it comes in.

[Co-Host/Reporter]

Mike, if you're Fed Chair Jay Powell or a voting member of the fomc, are you like, why couldn't we have gotten this data last week? But would it have changed any of the way that people on the committee voted?

[Tim Stenbeck]

We don't know if we get a big surprise one way or another. It might have. The reason they couldn't is the Fed meeting was very early and they extended the survey period for November to be able to get as much as they could because they not only got started late, but they had Thanksgiving in the middle of it. So they weren't able to change it, get it in time for the Fed meeting. But I think what you'll see is Fed officials, they'll give us a feel for how they think about what it's telling them about the economy. But they're really going to wait for the December numbers, which we'll get on January 9th if we don't have another government shutdown. And that will be more of the basis on which they'll make a decision for the end of January meeting. Although also with the CPI numbers we're going to get on Thursday.

[Carol Massar]

Right. And I wonder if they're more important. We did know that Fed Chair Jay Powell, you guys know this, that he did say there's pressure on both the labor and inflation mandates on the Federal Reserve. And he talked about this being challenging when it comes to inflation. Stephen Myron, the Fed governor recently appointed by President Trump, he shared his view once again on US Inflation. He spoke earlier today at Columbia. Here's what he had to say, guys. There was a large bout of inflation that resulted in an increase in prices after the pandemic. While American families are still rightly distraught with that experience, unhappy with affordable affordability, Unhappy with affordability, prices are now once again stable, albeit at higher levels. Policy should reflect that. Megan, Mike, you both, you both smile. Is he right?

[Sally Librera]

Megan?

[Megan Robson]

So we at BNP, we're actually forecasting inflation to accelerate a bit into 2026. We think there still will be pressure on, on goods inflation, the tariffs or. Because, yeah, based on tariffs and some of the delayed impact of, of goods. So we have inflation target around 3%. And so we do think there also will be some, some bumpiness in the labor market potentially, as Mike highlighted for the January report. So we think we get one more cut next year, but that inflation will prevent the Fed from really extending a cutting cycle. Beyond that.

[Tim Stenbeck]

It's pretty much a universal view that we're going to see inflation accelerate because of tariffs into 2026. There's some question about when that falls off. Jay Powell said six to nine months. It could be that we see this. But the interesting thing about what Stephen Myron said, and remember he's there to give Donald Trump's viewpoint was that inflation has stabilized, albeit at higher levels. Wait a minute. That's what you're supposed to bring down.

[Carol Massar]

But so then there's inflation.

[Co-Host/Reporter]

But that brings up a good point. And that's about the Fed's 2% target and whether or not that's actually a realistic thing right now. What do you think, Megan?

[Megan Robson]

I think that given the environment that we're in, I think it's going to take, I mean look at their, look at their forecast. I think we, we, it's going to take some time for, for, for the Fed to get to the, to, to get to the actual 2% target. And it does seem like although they're looking at both sides of the mandate, Powell does still seem like he's biased towards the unemployment side of things. So if anything, we would likely get more, more cuts based on, on that posture.

[Carol Massar]

Mike, will, will CPI help us out here in terms of giving us some good information on inflation?

[Tim Stenbeck]

I don't think he'll give us a specific amount of information unless it's a surprise. As I say. Yeah, that will change Fed feelings because I think they have a pretty good feel for where we are within a certain range. But the thing that is, is going to get people is when do we have a feel for what unemployment is going to do versus inflation? And that's what you need to have is the comparison because right now they're betting on unemployment being worse. They're looking at the SAHM rule basically and saying when unemployment starts to accelerate, it goes up fast. If it doesn't do that but inflation doesn't come down, then they're going to flip their mandate and start worrying about inflation.

[Carol Massar]

You guys have been watching the Fed for a long time. What does if both of them are challenged, what are they going to be most? Let's say jobs gets better but inflation gets like which one is more important? I guess was what I'm guessing in terms of the mandate, I'm not playing laying it out well, but I mean.

[Podcast Announcer]

Does one of the.

[Tim Stenbeck]

They don't want to say one matters the other. But what their. Yeah, what their official strategy is is you look at the one that is farthest away from the goal, that will be the hardest to bring back to where you want them to be.

[Carol Massar]

Right.

[Tim Stenbeck]

And right now they think that's going to be unemployment because they had been making progress on inflation until we got the tariffs and things started to turn around there. But there's another argument that there are some embedded inflation problems in the numbers that are not related to tariffs. And that's what they're going to have to be able to tease out here and figure out. I was thinking when Megan was talking, since 2015, roughly when they started putting out these summary of economic projections, 2% has always been their goal, but every year they move it two years out. Right now we're not going to see 2% until 2027. Well, last year it wasn't going to be till 2026 and the year before that you'll be till 2025. So can they hit it? That's an interesting question.

[Co-Host/Reporter]

Two years from now, maybe two years.

[Tim Stenbeck]

Two years from. And two years from the Fed does two years down to those two weeks, you know.

[Co-Host/Reporter]

Well, Megan, on the, the dual mandate, what Carol is getting at, and this seems to be the core tension between different members of the fomc. Which one is the priority in your view, what needs to get under control.

[Megan Robson]

So we think, we think they will protect what they will do, not, not necessarily what they should do. We do think they will protect the labor market. And so we think they are biased towards more cuts. I think that's partially why you're seeing asset prices so elevated.

[Carol Massar]

At the risk of inflation.

[Megan Robson]

At the risk of inflation, because you have the Fed at your back. You know, if unemployment, we do see a nonlinear sort of rise in the labor unemployment numbers like we did over the summer. The Fed is there to really, to really cut for now. We haven't seen inflation rising to any degree like we did outside of the pandemic. So I think that is lower on their, on the priority list for now.

[Carol Massar]

All right, so I want to ask you, Megan, I want to stay with you for a moment. In terms of the credit markets and what we're seeing, it seems like we had a little bit of stress earlier this year, right. In terms of some of the regionals, some of the, you know, kind of subprime auto lenders and so on and so forth. What are you seeing right now?

[Megan Robson]

So I think the debate right now is really around are we seeing a transition from deleveraging to re leveraging? And for most of 2025 through third quarter we still really saw corporates very disciplined, not much borrowing, higher rates really impacted debt issuances. And then that sort of started to change in third quarter with the hyperscalers and just really chunky M and A deals in the, in the expected pipeline. So for next year we do think there will be a pickup in supply and an end to the quote unquote bond scarcity story. But we're still forecasting less supply than consensus. We think that rates are still elevated and they will dissuade some sectors outside of the known utilities hyperscalers from really borrowing too much. So I think that's the key story, especially in the investment grade markets.

[Co-Host/Reporter]

You know, we talk a lot about the K shaped economy and that's kind of been like, you know, the backdrop of our conversations over the last few months. You note the credit market is K shaped. What do you mean by that?

[Megan Robson]

So K shaped? I think it means a couple things. You have some sectors where you're really seeing capex expectations surge and that they're expecting growth and you're seeing borrowing on the back of that technology. Technology is a great example. I think utilities is another example. Capex has increased 20% related tech spend related to the tech.

[Carol Massar]

Talk about like the New York power spend really a little bit.

[Megan Robson]

But, but on the other, on the other side you have sectors much more tied to the consumer. They're growing much more slowly and they're much more cautious about, about adding leverage. So we do think that there's a dichotomy there. And so overall credit can, can perform well. And part of it is you're not seeing that real animal spirits in a lot of, a lot of the market.

[Carol Massar]

Mike, when you think about the economy and moving into a new year, I mean it's hard to believe all the kind of twists and turns we had this year, but what are the major risks to the economy next year?

[Tim Stenbeck]

Well, it's interesting because the President is touting and some economists are writing into their forecast the idea that people are going to get bigger tax increases, tax refunds this year because of the, the President's tax cuts and then they're talking about some sort of bonus checks that's probably not going to happen. But the offset to that is the whole thing with the Obamacare premiums. Because if you're going to get, you know, fifteen hundred dollars back on your taxes, but you're going to have to pay 2,000 or $3,000 a month. That's not going to go very far.

[Carol Massar]

Right.

[Tim Stenbeck]

So, so we don't really know what's going to happen. And I think the overhang of all this is confidence. I've said this many times before, recessions are when confidence falls. And so it depends on how people are going to be feeling, which is kind of the tension you see coming out of Washington is the Republicans are saying to the president, get out there and tell people how wonderful it is. And then people when they hear him say no, not so much. And so the Democrats are going to be piling on that side and the Republicans on this side and we'll just have to see how people feel as the year goes on and all these things come at them.

[Co-Host/Reporter]

Yeah, Megan, on that, the way that people feel obviously has a way about an impact on the way that they spend, on the way that they think about the economy. How are you looking at that going.

[Megan Robson]

Into I think for credit credit investors there are some places you can position for some of the weakness and strengths that we're seeing on the consumer side in the high yield market. We like mortgage servicers and originators. We think as rates continue to fall down and you have exposure to more medium upper income consumers that that sector can perform well next year. And then on the other side of the coin, sectors that are exposed to not only lower income but also that that middle tier that's starting to show weakness we think are places you might want to avoid. So leisure out of home entertainment places like bowling alleys, movie theaters in the high yield market have really struggled more and that's, that's places we would, we'd be more cautious on.

[Carol Massar]

You say you were just at a bowling alley?

[Co-Host/Reporter]

No, I did, I did bike by a bowling alley over the weekend but I did not go inside. We hear from the cruise operators that.

[Carol Massar]

Everything is awesome, super rosy, super, super rosy. You sound more cautious.

[Megan Robson]

I think on the cruise lines are interesting because they do they pre, a lot of their revenue is pre booked so they could be booked for all of 2026. So there is this sort of lagged impact on weakness that, that we haven't seen on the cruise lines. But to your point, we've seen cruise lines has been an area we've liked. We've seen upgrades and they've done a great job deleveraging their balance sheets.

[Carol Massar]

Mike, 20 seconds. Fed Williams, John Williams, the president, the New York Fed said monetary policy now well positioned for 2026. When he talks, it's important, right?

[Tim Stenbeck]

Well, when he talks, he kind of gives you an idea of where the chair is because the he's the vice chairman of the Open Market Committee, which by tradition never dissents. But we already know that because that's exactly what Powell said. So they're out delivering a unified message now.

[Carol Massar]

Team all aboard.

[Co-Host/Reporter]

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

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[Carol Massar]

It was a report in the Albany Times Union and they said over the weekend National Grid and other utilities are spending billions of dollars to prep New York's electric grid for a generational shift. And it includes things like all of those data centers that are being built in the state and across the country. Really?

[Sri Natarajan]

Yeah.

[Co-Host/Reporter]

The paper went on to note that New York utilities are spending that much money to modernize the grid for those facilities. Facilities, their investments for New Yorkers, many of them are already struggling with utility costs are going to have to pay for that in the coming years. But the idea is that we're prepping it for the future.

[Carol Massar]

Exactly, exactly. But so how uncomfortable as the build out happens and the stress on the grid continues. Let's see what our next guest has to say. We've been looking forward to this. Sally Librera is President, National Grid New York, York. It's a subsidiary of the publicly held electricity nat gas and clean energy utility National Grid plc, serving millions in New York and Massachusetts. National Grid ADR is trade in the U.S. they've got about a $75 billion market cap. They're up more than 27% year to date. So nice to have you here. How are you?

[Sally Librera]

Great to be here. Thanks Carol and Tim for having me.

[Carol Massar]

Well, it's great to have you here. How would you describe power demand today and how that demand is growing, surging, use whatever word makes sense so that we understand what's the current situation.

[Sally Librera]

Sure. So at National Grid in New York, we serve more than 4 million customers and we deliver natural gas and electricity to those customers. And our focus is on doing it safely, reliably and affordably. But the reality is there is increasing demand for energy across the entire state and we serve through upstate, we serve in Long island and we also serve in New York City. And it's our job to deliver that energy to meet that energy demand where, when and how folks need it.

[Carol Massar]

How would you quantify that demand though? Give us some idea because we're talking nonstop about deals of AI data centers, whether it's New York or elsewhere. Give us an idea how stressed is the situation.

[Sally Librera]

So we work with our New York independent system operator, the niso. Yeah, And NISO manages what we call the large load queue. So it's essentially the companies that have indicated wanting to hook into the New York grid that have large power needs. And they estimate that the cumulative power need across those companies that are essentially in line to connect sometime over the next five or so years is about 10 gigawatts of energy. And so just to give you some context, at our peak in New York, we demand about three times that across the entire state. And another really important point is that one year ago that Q was one third the size. It literally tripled in just one year.

[Co-Host/Reporter]

All data centers?

[Sally Librera]

No, not all data.

[Co-Host/Reporter]

What is it then? Because it does seem like for many years we thought that power demand across the country would actually stay relatively flat. And it did stay relatively flat, but it just. In recent years we've seen so much of an uptick in demand. What are you seeing on your grids?

[Sally Librera]

Well, there's definitely, definitely is the impact of data centers. But New York is also very attractive to manufacturing and large scale manufacturing, particularly some of the modern manufacturing we see around semiconductors and computer components. It's very energy intensive and companies with big power needs are drawn to New York. And we are working to make sure that they have the power that they need, not just today, but well into the future.

[Carol Massar]

So it's interesting, right, because we think about this White House, right, and encouraging investment from foreign companies to build here. I mean, I guess, you know, that's the good thing, right? We want to see other companies investing into the United States. But there's a power grab on that too, right, As a result of that, in order to meet that.

[Sally Librera]

Well, potentially, I think it is important to note that even if we weren't at this unique moment in time with, with rapidly increasing demand for power, we still have a grid in New York. And this is true across many places in the country. We have a grid that needs investment. We have assets that are close to 100 years old.

[Carol Massar]

Tim. Like how many people? Why, if it's 100 years old, why.

[Co-Host/Reporter]

20 years ago, why didn't we make the investment then?

[Sally Librera]

Yeah, we've been politics, I'm guessing part of it.

[Carol Massar]

That was a long.

[Co-Host/Reporter]

Please, you answer the question.

[Carol Massar]

Understand, because it's important.

[Sally Librera]

Have been very careful about balancing the bill impacts which customers bear with the investments that we make in our infrastructure. And even today, where we look at assets that are 70, 80, 100 years old, we're very strategic and pinpointed about which of those assets, which of those parts of infrastructure we replace because we want to keep customer bills low. So we look for those opportunities where we can do multiple things with an investment, where we can replace an aging asset with something that's more modern and something that can carry more energy, something that can unlock more energy that our generators have to connect into the grid, and something that's going to be more resilient to storms and better leverage technology so it's cheaper to maintain.

[Co-Host/Reporter]

Does more resilient to storms mean burying power lines? Is that the way to do it?

[Sally Librera]

In some cases we do that, but it's also the type of infrastructure that we've, that we put up. We are, we are replacing in places, sometimes wooden poles with steel poles, just much stronger infrastructure.

[Carol Massar]

Well, you know, and I think about the. How do you balance all of that, like affordability, as you know, has become quite the word that we are hearing a lot, certainly in the political environment. So how do you keep your investors happy and the grid reliable without rising bills that make your customers furious and invite regulatory and political pushback? I mean, that is a hard mandate.

[Sally Librera]

It is a, it is a difficult balance, and it's one that we navigate every single day. We do it through a number of avenues. We certainly work closely with our customers to help them manage costs. And we do that through a variety of bill assistance programs and energy efficiency programs and rebates. And we work with, we have consumer advocates whose job it is to specifically work with folks in communities to help them manage their costs. We also, as I mentioned before, are very careful about where and how we invest in assets. And we make sure that if we're investing in an asset, that we're going to get more power from investing in that asset, that we're going to get more resiliency, and then we're going to get more efficiency from investing in that asset.

[Co-Host/Reporter]

The president has been outspoken about his disdain for certain renewables, especially wind power. Your investment in renewables or sourcing energy from renewables, has that changed under this administration?

[Sally Librera]

Well, we certainly support the all of the above energy approach and are pleased with the most recent version of the state Energy Port report that's just come out today that leans into an all of the above approach. Given the rate at which demand for energy is increasing, we need to be utilizing all of those opportunities, from renewables to natural gas to nuclear, to make sure.

[Co-Host/Reporter]

But is that more difficult if the federal government is not supportive of certain renewables.

[Sally Librera]

We are working on the infrastructure to move power from point A to point B. So while we support projects like say the Nessie Pipeline, that's a, that's a supply project. It's not our project, but we support it because we know how critical it is to the downstate community and how reliant New York City and Long island are on natural gas and how thin that reserve margin is. And their energy demand for energy is growing as well. So we support Nessie for those reasons. The other side of our business is about building transmission. It's about building the highway over which the power moves. So the sourcing as to where it's coming from isn't a national grid decision. We work with generators of all kinds.

[Carol Massar]

You know, bottom line though, does this potentially, as you guys are very careful about when you invest so that you power prices don't go up. But are there going to be moments where prices are just going to go up just because of the environment? And it's hard to kind of predict everything and forgive me, just got about 30 seconds.

[Sally Librera]

There are moments, and now is one of those moments where customers are seeing increases on their bills. And that's for a number of reasons, but primarily it's to be investing in infrastructure that is, that is necessary. Those, those investments are necessary to make sure that folks continue to have the safe and reliable energy that they need.

[Carol Massar]

And those investments include renewables, green, all of it.

[Sally Librera]

Well, we're investing in the ability to unlock those, those energy sources and be able to bring them onto the grid and move them at a greater frequency.

[Podcast Announcer]

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[Carol Massar]

More from Bloomberg Businessweek Daily coming up after this.

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[Co-Host/Reporter]

Well, it's the most read story on the Bloomberg terminal. It's about how one of the go to advisors for companies and countries that often recommends cost cutting may be facing some cost cutting in the form of jobs. Sri Natarajan is a Bloomberg News chief Wall street correspondent. He joins us here in the Bloomberg Interactive Brokers studio. We're, we're talking of course about McKinsey. It's getting ready to celebrate its 100. I had no idea it was one centennial in 2026. As you write, it has an enviable roster of clients, blue chip companies like Coca Cola and Goldman Sachs, governments that span the globe. What's going on there?

[Sri Natarajan]

Well, first off, the hundred year, right 1926 it was there was a University of Chicago accounting professor, James McKinsey who started doling advice to a local meatpacker, Amers and Company. That's how McKinsey got its start. That was sort of the start of the management consulting industry. And today undoubtedly this company is the flag bearer of that industry. As goes McKinsey, so goes the rest of the consulting industry. And the fact is the last few years you get the sense that the industry has been facing some headwinds. Their traditional services are not in the same level of demand as they would like. Their clients, companies, countries, everyone's getting more cost conscious. And the first thing you do after perhaps advertising money is you look at your consulting contracts and you look to see if you can pare back on that front. So if you look back at the last five years, McKinsey has gone through a bit of a challenge on two fronts. One on the personal front because it has had to navigate its own scandals, opioid scandals, some of the work it did in China and Saudi Arabia and even with ice, but also the industry in general has been facing this little bit of a slowdown and McKinsey's revenues are sort of flatlined. We've gone 2021 was about $15 billion. We've stayed in that 15 to $16 billion band over the last five years. So even though late October when all the McKinsey global partners gathered in Chicago to kick off their hundred year festivities and you had the global managing partner, Bob Sternfels, the de facto leader of the company, try to give this rara speech and with plain spoken bravado said, you know, we are ready to kick some ass as we approach the second century. And anyone who's excited about that mission and if you Say yes, get on board. Because the good times are ahead of us. It still shields some of the more pragmatic messaging behind the scenes. And the messaging there has been. It's time to get leaner. And you know, it is a fact we associate the consulting industry with going into a lot of companies and unfairly so perhaps simplify it to saying all that they do is cut costs. And yeah, they are the advocating for.

[Co-Host/Reporter]

Jobs in office space.

[Sri Natarajan]

It's perhaps unfair, but unfortunately that's the image that stuck with them. And I suspect there is a little bit of schadenfreude when you see news about McKinsey considering its own measures to get in, let's call it consulting jargon, leaner.

[Carol Massar]

Well, if they're cutting costs, maybe they shouldn't have Oprah at their annual meeting.

[Sri Natarajan]

You are tough, Carol.

[Carol Massar]

I am tough.

[Sri Natarajan]

100 year festivities.

[Tim Stenbeck]

Don't worry.

[Carol Massar]

That was a question.

[Sri Natarajan]

Hometown.

[Carol Massar]

What I want to ask you though, sri, is this more of a change in just kind of consulting industries going through a lot over the last few years and just there's a pushback in general. The industry has changed. It's not always the go to. Or is it a case of a sign of what's going on in the broader economy if McKinsey is cutting back? I'm just trying to understand, is it an industry thing? Is it an economic indicator or. Or what?

[Sri Natarajan]

And is it also an indicator of what is shaping the economy in this moment? Because look at the statement from the McKinsey representative. As a firm marks its hundredth year, we are operating in a moment shaped by rapid advances in AI that are transforming business and society. So if you strip out all the extraneous words there, the one word that you will zero in on is AI. And that is a real concern. It is going to have a significant impact on the jobs landscape.

[Tim Stenbeck]

Right.

[Sri Natarajan]

If not the number of jobs, but at least the jobs that are done today, will they be there tomorrow or will people be pivoting to other kinds of jobs? That is a concern that hovers over all of us. We think about the legal industry, we think about the banking industry and entry level jobs and how that could transform. Right. You would be hard pressed to imagine that the consulting industry will not be affected by it.

[Carol Massar]

I just kind of find this funny in some ways because the consulting industry is probably consulting other companies on the impact AI is going to have on the labor market. And so it's, I don't know, again, kind of ironic here.

[Sri Natarajan]

So let me read you the other part of the McKinsey representative statement. And this way, we. We would have done all the needed disclosures. But just as we are partnering with clients to strengthen their organizations, we are on our own journey to improve the effectiveness and efficiency of our support functions. So in a lot of fluffy language, he's making the same point that you're making.

[Co-Host/Reporter]

Carol, you mentioned the beginnings, the humble beginnings of McKinsey, said University of Chicago. Right.

[Sri Natarajan]

University of Chicago accounting Professor Jim McKinsey.

[Co-Host/Reporter]

So over the last 99 years, the company has engaged China and Saudi Arabia. They've gotten in hot water over consulting during the opioid crisis and what allegedly happened during that. How much of a hangover is that for the organization?

[Sri Natarajan]

I'll present it in the words of Sternfels himself. And he told his gathering in Chicago in late October that he feels that they've collectively righted the ship. And that's perhaps true. They have gone through a rocky phase over the last three or four years, and they may well have righted the ship. The question is, can the industry be as robust as it has been in the past, or can it be as rewarding and fulfilling for them as it has been in the last 99 years? Because you don't get to $15 billion in revenue out of nothing.

[Co-Host/Reporter]

Okay, so when I was in business school, this was the place that everybody wanted to work. And this was close to a decade ago, but it was like, okay, bcg, yeah, Kinsey, you know, the other. All the consulting. Yeah, yeah, does. And the idea was you go, you work really hard for a couple of years, you spend a lot of time at airports, you don't see anybody be friends, you live in a hotel, but then you go and do something else, and it's a bridge to that next thing. Is that still the case?

[Sri Natarajan]

You know, as much as we want to revel in the fact that someone like a McKinsey is going through a tough time because they are an easy punching bag, the fact is that they are in a category of one. You cannot deny that much like no company would go wrong, at least in any sort of board review, if it were to hire Goldman Sachs bankers to pursue deals. You cannot be faulted for hiring McKinsey for management consulting work, for strategy work, because they are still considered in a league of their own, and they're perhaps two times as big as their next closest rival. There is no one close to them. And when you have a business of this scale and this size, yes, there are some extreme cases on either end. Sometimes the advice might just seem too pedestrian and too simple. And sometimes it might be some controversial work, but the bulk of the work must be really, really good, because how else do you have repeat business from some of the biggest and best companies across the world?

[Carol Massar]

And just so Oprah doesn't hate me. I mean, she's I'm sure no one.

[Sri Natarajan]

Can hate you, Karen.

[Podcast Announcer]

No 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, TuneIn and the Bloomberg Business App. You can also watch us live Every weekday on YouTube and always on the Bloomberg Terminal.

[Podcast Host]

These days it seems like AI agents are just about everywhere you turn every field and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it. Fortunately, Okta helps you get identity right by securing your AI agents identities, giving you a single layer of control, a single standard of trust. So whether an AI agent supports a single user or your entire enterprise, with Okta you'll turn risk into opportunity. Secure every agent. Secure any agent. Okta secures AI.

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