Unhedged Episode Summary

Episode Title: Is AI creating jobs?
Date: February 12, 2026
Hosts: Katie Martin and Robert Armstrong (Financial Times)

Overview

In this episode, Katie Martin and Robert Armstrong dig into the January US jobs report’s surprising figures, the wider context for American employment, and—centrally—the question: is the explosion of AI investment actually creating jobs? They peel back the data, explore regional stories like Lancaster’s emerging AI-driven renaissance, unpack contradictions between jobs momentum and weaker consumer/retail metrics, and finish with reflections on how disruptive trends (AI, weight loss drugs) are shaking up markets.

Key Discussion Points & Insights

1. Unusual Timing and Big Surprises in the Jobs Report

• Delayed Release:
  • Jobs data, usually released first Friday of the month, was postponed to Wednesday due to a partial US government shutdown.
  • [01:33] Robert Armstrong: “Things are a bit of a mess over there in Washington. Let’s just move on.”
• Headline Numbers:
  • 130,000 jobs added in January—the biggest monthly total in over a year, far above the expected 70,000.
    • [02:04] Katie Martin: “People had been expecting something more like 70,000.”
  • The White House immediately touted the good news, but Armstrong points out the report’s complexities.

2. Peeling Back the Data: Where Are the Jobs?

• Heavy Concentration in Healthcare and Social Assistance:
  • Of 130,000 jobs, 123,000 were in these sectors.
    • [03:46] Armstrong: “There was a ton of jobs created in these two areas.”
  • While these are valuable sectors, this concentration means cyclical (economically sensitive) job growth remains weak.
  • Nuance:
    • Cyclical private sector job creation was at or below zero for a year. But since October, there’s been an (uncertain) uptick.

3. AI Investment and Local Economic Booms

• Capital Expenditure Pipeline:

  • Many companies announced huge capex in 2025 (lots of new data centers/facilities), but ground is only now being broken.
    • [06:18] Martin (relaying Steve Cavarone, Federated Hermes): “There was an awful lot of capex...But they didn’t break ground until kind of now.”
  • Lancaster, Pennsylvania Example:
    • CoreWeave is building a $6B AI data center:
      • Will need construction workers; others will follow for the support ecosystem (housing, services, etc.).
      • [06:49] Martin: "You’re going to need a lot of construction workers...amenities and facilities and yada yada."
    • This could be a model for other small US towns and could mark the start of a larger jobs boom.

• Are We Seeing AI-fueled Job Creation Yet?

  • Evidence from Construction Data:

    • 30,000 construction jobs added in January (stronger than usual, despite broader real estate slumps).
      • [07:52] Armstrong: “Construction...has not had an easy time because our housing market...has been very slow here...Two of the last three months we've seen positive [job] ads.”
    • The growth was in “non-residential specialty trade contractors”:
      • Electricians, plumbers, painters, concrete specialists—consistent with data center construction.
      • [09:05] Armstrong: “That sounds a lot like somebody who’s wiring up servers inside a data center to me...”
    • Still, no definitive proof the AI boom is the direct driver, but the circumstantial evidence mounts.

  • Wage Trends:

    • Question raised: Are wages for construction/tech installation jobs spiking? Not clear yet.
    • Overall wage growth solid at just under 4%, but job market feels “solid but not dynamic.”
    • [11:24] Armstrong: “You’d like to see more pep, spark, joie de vivre in the job market.”

4. Jobs vs. Consumption: A Strange Divergence

• Retail Sales Weakness & Mixed Consumer Mood:

  • Despite jobs growth, retail sales data has been trending down since October.
    • [11:50] Armstrong: “Consumption is the engine of the US economy…since October, the trend in retail sales has been starting to drift down.”
  • Contradiction: Why does the economy look strong, yet job and retail growth are weak?
    • The two series are now “converging” with retail weakening and jobs improving.

• Under Strain: Younger, Lower-Income, and Indebted Americans

  • Higher interest rates and difficulty for young workers and low-income debtors.
  • Credit card and auto loan delinquencies are reaching post-financial crisis levels.
    • [13:22] Armstrong: “There is a slice of consumers, mostly young, mostly low income...that is feeling the strain.”

5. Federal Reserve & Interest Rate Outlook

• Jobs Numbers’ Implications for Fed Policy:
  • Despite the blowout jobs data, markets didn’t price in major changes to Fed rate cut expectations.
    • [16:44] Martin: “The gangster move here would be to raise rates...”
  • Armstrong’s take:
    • With inflation still near 3% and unemployment low, the data says “hold,” not “cut.”
    • [17:06] Armstrong: “Inflation above target, unemployment rate stable. That says hold to me...Stick to your guns.”
  • AI’s Potential Role:
    • Presumptive Fed chair Kevin Walsh is bullish on AI-driven productivity helping contain inflation.
    • The panel is skeptical: the story is plausible, but unproven.
      • [17:24] Armstrong: “...He thinks because there’s going to be higher productivity, you can have lower rates and not see inflation go up...We just don’t know if it’s right.”

Notable Quotes & Memorable Moments

• On the jobs report’s concentration in healthcare:

  • [03:46] Armstrong: “Of the 130,000 net jobs added, 123,000 were in healthcare and social assistance.”
  • [04:30] Armstrong: “Healthcare is a productive part of the economy. It’s good that people are getting hired, whatever they’re doing…”

• On Lancaster’s AI boom:

  • [06:49] Martin: “It’s going to need an awful lot of women in bonnets, but...it’s costing 6 billion bucks.”

• On construction jobs as a leading indicator:

  • [09:05] Armstrong: “That sounds a lot like somebody who’s wiring up servers inside a data center to me or pouring the concrete foundation…”

• On consumer woes:

  • [13:22] Armstrong: “[There’s] a slice of consumers, lower income, younger and in debt, that is having trouble. And we see it in credit card delinquency.”

• On AI and Fed policy:

  • [17:24] Armstrong: “The Fed chair, presumptive, is a believer in the AI productivity story...I think that’s a totally intellectually respectable thing to think, but we just don’t know if it’s right.”

Long/Short Segment ([18:36])

• Robert Armstrong:

  • Long Volatility
    • Predicts “a wild year” in markets due to technological disruptions.
    • [18:36] “...this thing that has happened with the software companies...My prediction is that kind of thing is going to keep happening with AI.”

• Katie Martin:

  • Short Sugar
    • Highlights how weight loss drugs are tanking sugar prices and even ice cream sales.
    • [19:37] “Sugar prices have tumbled to their lowest level in more than five years as...weight loss drugs accelerate a drop in demand.”

• Fun Aside:

  • Armstrong refuses to give up on “the pleasure of overeating”:
    • [20:25] “That’s why I’m never taking these drugs, Katie. The pleasure I get from food at this point in my life is such an important thing.”

Timestamps for Key Segments

• Jobs report release & overview: 00:09–03:46
• Dissecting healthcare's outsize role: 03:46–05:08
• Lancaster/AI investment story: 06:18–07:45
• Construction job growth analysis: 07:52–09:49
• Retail sales vs jobs market: 11:24–13:22
• Consumer strain & debt: 13:22–14:40
• Fed outlook & inflation discussion: 14:40–17:15
• AI, productivity & the Fed: 17:24–18:11
• Long/Short segment (volatility, sugar): 18:36–21:10

Tone & Language

The episode maintains a breezy, conversational, and often witty dynamic—with both hosts trading self-deprecating jokes (“I simply do not understand” [06:45], “Staffed only by women in bonnets” [06:45]), honest confessions of market uncertainty, and an unforced blend of economics nerdery and plain English.

Conclusion

This episode of Unhedged delivers a lively, nuanced exploration of the American jobs scene, with a critical eye on how the much-hyped AI revolution may (or may not yet) be reshaping employment on the ground. While construction and infrastructure sectors hint at a possible AI-driven jobs boom ahead, the data remain ambiguous. Meanwhile, disparities in consumer well-being, mixed signals from markets, and the ever-hovering role of the Fed ensure further intrigue for policy-watchers and investors alike. Prepare for volatility ahead—AI is certain to keep both companies and policymakers guessing.