Podcast Summary: Claudia Sahm Talks US Unemployment

Podcast: Bloomberg Talks
Host: Bloomberg Anchor
Guest: Claudia Sahm, New Century Advisory
Date: December 31, 2025

Main Theme & Purpose

This episode features economist Claudia Sahm, founder of New Century Advisory, discussing the state of the US labor market as 2025 comes to a close. The conversation centers on interpreting recent unemployment data, understanding the impacts of demographic trends and policies, and contextualizing the broader economic outlook heading into 2026. Claudia provides a pragmatic, nuanced analysis, focusing on the realities behind the numbers and challenging simplistic narratives about layoffs, AI, and the value of higher education.

Key Discussion Points & Insights

1. Current State of the Labor Market

• Layoffs Remain Low:
  • Despite frequent reports and announcements of layoffs, these have not materialized in a significant increase in actual unemployment claims.
  • Quote: “We are not seeing signs of deterioration in the labor market... The layoffs have not picked up in a way that—that was the downside risk that the Fed has been very acute to and we haven't seen that.” (Claudia Sahm, 00:42)
• Hiring Rates Are Still Weak:
  • Unemployment claims have been “sticky,” with hiring rates notably low, but there’s still potential for improvement.
  • “We need a little bit more of the good news. But, you know, the fact that layoffs have not shown up despite a lot of announcements...that's good news.” (Claudia Sahm, 00:42)

2. Interpreting Unemployment Data

• Seasonal Adjustments Create Complexity:

  • Claudia warns that labor data, especially at the turn of the year, can be tricky due to the holidays and typical seasonal fluctuations.
  • “Reading these data is much harder at the turn of the year than in the middle of the year.” (Claudia Sahm, 01:42)
  • The general trend is stable but needs confirmation from upcoming hiring data.

• Government Shutdown’s Lingering Effects:

  • Data collection was disrupted by a government shutdown, with lingering distortions — especially in metrics like CPI and labor statistics.
  • “The shutdown casts a long shadow. We have distorted data in a way that we don’t typically.” (Claudia Sahm, 05:40)

• Bottom Line:

  • Claudia advocates for taking a holistic, trend-driven approach and cautions against overreacting to short-term shifts.

3. Demographic Trends & Labor Supply

• Impact of Lower Immigration and Birth Rates:
  • Fewer immigrants and lower birth rates are expected to tighten the labor market, but hiring demand is lagging supply, with wage growth slowing and unemployment ticking up slightly.
  • Claudia describes the “ingredients for the good news story of the labor market” as present for 2026, namely, consumer spending and business investment. Optimism is reflected in recent Federal Reserve outlooks.
  • “We should have hiring pick up...We are at levels that we have seen wage growth slow... That is a sign demand for workers is just lagging the supply.” (Claudia Sahm, 02:49)

4. Monetary Policy and Manufacturing Jobs

• Effect of Cutting Interest Rates:
  • While not a cure-all, lower rates can support expansion, especially for smaller businesses, and potentially boost hiring.
  • Claudia tempers expectations, highlighting the limited power of monetary policy alone and emphasizing the importance of fiscal support and reducing uncertainty.
  • “We shouldn’t have the view that the Fed has the magic wand here...But the Fed pulling restriction out...does help. It moves in the right direction.” (Claudia Sahm, 04:23)
  • Policy uncertainty and technological changes have also weighed on labor markets, but as these pressures ease, hiring could increase.

5. Artificial Intelligence and Jobs

• Minimal Broad Impact So Far:
  • While some industries (tech, finance) are seeing more AI adoption and efficiency gains, there isn’t clear evidence that AI is broadly suppressing labor demand.
  • Claudia stresses balancing fears of job loss with recognition that technology can also create new opportunities and boost productivity.
  • “We should also remember new technology enables new jobs and uses...It’s not just about saving labor, it’s also about making labor more productive.” (Claudia Sahm, 07:20)

6. Value of Higher Education and Skills

• Nuanced View:
  • Claudia acknowledges that education and skills do pay off in the labor market, but the traditional college route isn't for everyone.
  • Vocational, technical, and trade education are increasingly important, and not every student should be pushed towards a four-year degree, especially given rising costs.
  • “Technical training, and I think in the trades—there are lots of ways to gain skills...The education and the skills, they do pay off.” (Claudia Sahm, 08:55)

Notable Quotes & Memorable Moments

| Timestamp | Speaker | Quote | |-----------|---------|----------------------------------------------------------------------------------------------------------------------| | 00:42 | Sahm | “We are not seeing signs of deterioration in the labor market... layoffs have not picked up...” | | 01:42 | Sahm | “Reading these data is much harder at the turn of the year than in the middle of the year.” | | 02:49 | Sahm | “We should have hiring pick up...but demand for workers is just lagging the supply.” | | 04:23 | Sahm | “We shouldn’t have the view that the Fed has the magic wand here...it moves in the right direction.” | | 05:40 | Sahm | “The shutdown casts a long shadow...we have distorted data in a way that we don’t typically.” | | 07:20 | Sahm | “New technology enables new jobs...It’s not just about saving labor but making labor more productive.” | | 08:55 | Sahm | “The education and the skills, they do pay off.” |

Important Segments & Timestamps

• Labor Market Overview & Layoffs: 00:24–01:26
• Interpreting Unemployment Claims: 01:26–02:18
• Demographics and Hiring Outlook: 02:18–03:49
• Interest Rates & Policy Impact: 03:49–05:11
• Data Reliability & Seasonal Adjustment: 05:11–06:50
• AI and the Future of Work: 06:50–08:20
• Value of Higher Education: 08:20–08:55

Tone and Approach

Claudia Sahm’s analysis is deliberate and sober—she avoids alarmist takes but also tempers optimism. She reiterates the interplay between statistical nuance, policy, and broad economic trends, keeping a balanced, practical view throughout.

Conclusion

For listeners concerned with nuanced interpretations of labor data, the episode provides reassurance that, despite persistent headlines, the US labor market remains stable with reasons for cautious optimism heading into 2026. Claudia Sahm advocates for reading beyond weekly data blips and focusing on long-term trends, while remaining attentive to ongoing demographic and technological shifts.

Reference:
Full episode: “Claudia Sahm Talks US Unemployment” – Bloomberg Talks, December 31, 2025.