Podcast Summary: Unhedged

Episode: The Mystery of the Vanishing Jobs
Date: September 11, 2025
Hosts: Rob Armstrong, Aidan Reiter (Financial Times)

Overview

In this episode, Rob Armstrong and employment market expert Aidan Reiter unpack the “mystery” behind America’s declining job creation numbers despite a still-healthy unemployment rate. They explore the reliability of labor market data in the post-COVID era, the effects of immigration crackdowns, and why mixed signals from economic indicators are making analysis especially tricky. The conversation also tackles potential bias in jobs data, the uneven recovery, and what it all means for Federal Reserve policy.

Key Discussion Points and Insights

1. The Paradox: Fewer Jobs, Low Unemployment

• [00:36–03:14]
  • US unemployment rate sits at 4.3%—historically low and close to “full employment.”
  • However, monthly job additions are alarmingly low: recent months averaged a mere 29,000, with at least one month of negative job growth post-revisions.
  • “A year ago, it was like 100,000 a month or something.” – Rob Armstrong [03:01]
  • Aidan emphasizes that both the initial numbers and subsequent large revisions have spooked markets.

2. Data Quality: Trusting the Numbers

• [03:14–06:12]
  • A large annual revision showed that 911,000 fewer jobs were created than initially estimated, the biggest such revision ever.
  • Growing skepticism toward Bureau of Labor Statistics (BLS) methods, partly due to political attacks, is noted.
  • Response rates for both business and household labor surveys are “rapidly declining”—aided by the prevalence of spam calls, shifting the challenge toward real data collection.
  • Armstrong asks if data reliability is in question.
    • “The numbers they put out are still incredibly, incredibly reliable…those revisions are reliable.” – Aidan Reiter [05:25]
    • However, initial data is getting less accurate, leading to greater revisions.

3. What’s Actually Going On? The Revision Problem

• [06:12–08:13]
  • BLS annual revisions are based on state unemployment insurance records—seen as more reliable because the unemployed are motivated to report.
  • This year’s revision, and similarly large revisions last year (818,000 jobs), are tied to modeling errors likely worsened since COVID.
  • Despite the big headline, the market didn’t react much—possibly because such volatility was expected.
  • “The annual revision is at the end of every year…This year, it was the biggest preliminary revision of all time.” – Aidan Reiter [07:04]

4. Why the Numbers Might Not Mean What We Think

• [08:30–11:50]
  • The labor supply has shrunk, partly due to stricter immigration and fewer illegal border crossings.
  • Uncertainty over how many immigrants are present—and whether they’re showing up in employment surveys—complicates analysis.
  • Armstrong muses: “It stands to reason that a smaller country would create fewer jobs for any given rate of economic growth.” [09:58]
  • The “break even” number (jobs needed per month for a healthy economy) may now be much lower—possibly even zero, according to some experts.
  • “US market investors might have to get used to a world where zero job growth is a good number.” – Wendy Edelberg, cited by Aidan [10:58]

5. Do Sluggish Numbers Signal Trouble, or a Statistical Mirage?

• [11:50–14:47]
  • Debate: Are declining job additions a genuine economic red flag, or simply a reflection of shifting demographics and measurement issues?
  • Evidence supporting a still-healthy economy:
    • Corporate profits and revenues remain strong.
    • Companies are still investing; capex is robust (notably in tech/data center spending).
    • Household balance sheets are mostly solid.
  • “It just feels like we don’t have the major components of a recession out there.” – Rob Armstrong [13:39]

6. Structural Risks: An Uneven Economy

• [15:25–17:01]
  • Big worry: Underlying economic strength might be masking severe disparity.
    • The wealthiest Americans continue to consume robustly, while those at the bottom are struggling.
    • Recent subprime lender collapse (Tricolor) signals trouble for the lower-income segment.
  • “It’s just more proof that the US economy can only be resilient because its wealthiest consumers do the lion's share of consumption…which is not necessarily a good or healthy economy.” – Aidan Reiter [16:37]

7. Fed Policy: Between a Rock and a Hard Place

• [17:01–18:46]
  • Inflation remains “warm”; CPI at 2.9–3.1% suggests ongoing price pressures.
  • The Fed faces a tough call: cut rates to support a wobbly jobs market, or stay the course to avoid reigniting inflation.
    • “It seems like they’re more okay with higher inflation going forward…but not in the high threes.” – Aidan Reiter [18:02]
  • Market expects a 25 basis point cut soon, possibly with more to follow—signaled as “dovish” easing rather than a one-off drop.

Notable Quotes & Moments

• “Less than ideal is a powerful phrase, Aidan. This is like the kind of phrase my doctor uses when he sees my blood work.” – Rob Armstrong [02:18]
• “[Job data revisions] have actually been what really moved the market.” – Aidan Reiter [02:47]
• “It is super duper hard to count how many jobs are added in the US Economy. It is a big economy.” – Aidan Reiter [03:38]
• “Maybe the underlying economic growth rate might be the same and the number of jobs created might be less.” – Rob Armstrong [10:00]
• “We do trade in vibes here at Unhedged. I think that is fine.” – Rob Armstrong [11:35]
• “Recent years, it's been trending the wrong direction” (regarding job openings vs. job seekers)—Rob Armstrong [12:58]
• “It’s a very uneven economy…one that is thriving at the high end and struggling at the low end.” – Rob Armstrong [16:09]
• “It’s just more proof that the US economy can only be resilient because its wealthiest consumers do the lion’s share of consumption.” – Aidan Reiter [16:37]

Important Timestamps

• 00:36: Episode intro; current unemployment rate and puzzling labor market signals
• 02:08–03:14: Discussion of recent job reports and market reactions
• 04:30–05:53: Declining response rates and challenges in labor market data collection
• 06:12–08:13: The significance of annual BLS jobs data revisions
• 09:52–11:50: Shrinking labor force and the question of monthly “break even” job growth
• 12:35: JOLTS report indicates more job seekers than openings for the first time since COVID
• 13:07–14:47: Reasons the overall economy still looks solid (strong profits, capex, household health)
• 15:25–17:01: The increasing unevenness of the recovery and its risks
• 17:49–18:46: Fed policy outlook in light of mixed signals and sticky inflation

Tone and Style

The conversation is smart, informal, and occasionally self-deprecating—trading in economic “vibes” as much as data, with regular asides and banter. Armstrong and Reiter balance technical analysis with relatable analogies and a touch of dry wit, aiming to make complex labor market dynamics accessible and engaging.

Final Takeaways

• The US labor market is undeniably weaker in terms of job creation, but context matters: data limitations, a shrinking labor pool, and population uncertainties muddy the interpretation.
• While headline numbers suggest trouble, strong corporate and household finances, plus continued business investment, contrast with historical recession patterns.
• Economic strength is not being evenly shared; lower-income Americans are increasingly at risk as the high-end consumer drives resilience.
• Federal Reserve policy decisions remain delicately poised between taming inflation and supporting a murky, possibly bifurcated jobs market.

For those who missed the episode:
This conversation captures the contradictions and uncertainties shaping the US jobs debate in fall 2025—where looking past the headline numbers is essential to grasp whether trouble truly lies ahead.