Here's What The Jobs Report Isn’t Telling You

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Welcome to Proftry Markets. I'm Ed Elson, it is August 11th. Let's check in on yesterday's market vitals. The major indices slipped on a lack of progress in Iran. Brent crude climbed.

Treasury yields increased intel shares. Fell 4% after the company announced a $15 billion comment stock offering to fund its AI efforts.

And finally, Nvidia shares fell nearly 3% on news that the company is partnering with Wall Street for a $500 billion AI infrastructure financing package.

OK, what else is happening? The July jobs report came in much weaker than expected. The economy lost 23,000 jobs in July, far short of economists' expectations for 80,000 new jobs. And while the unemployment rate fell to 4.1%, it's lowest level in two years, that headline also masks a somewhat troubling reality, which is that fewer people are participating in the labor market altogether.

The labor force participation rate, which is the share of adults working or looking for work, fell to 61.4% in July. That is its lowest level since February 2021. Meanwhile, the labor department revised job growth in May and June downwards. In some, the labor market was weaker than we thought, and it might be weakening further. So, joining us to discuss these jobs numbers. We are speaking with Katherine and Edward's labor economist and host of the Optimist Economy.

Katherine, thanks for joining us on the show. The economy lost 23,000 jobs, the unemployment rate went lower, which seems good. But then you have this labor force participation wrinkle, which means it's bad. What do you make of this? Oh, it's just bad. I don't think there's not a lot of green shoots in this report.

We lost jobs and people left the labor force, so there's not a ton of bright lines to draw there. You know, this has been such an incredible economy over the past year and a half. And I've described it as the closest that a $30 trillion economy could be to standing still. And, you know, we had a really dismal kind of back half of last year that started to look a little better in the front half of this one.

But we've never seen consistent strength, consistent growth, and that has consequences in the labor market.

And both in kind of amplifying the security that people's feel that they could expand their payroll, that they could take on more workers as well as discouragement in the labor market. If you can't find a job and lots of people you know are having a hard time finding a job, these type of echo chambers of both lack of confidence and lack of discouragement, they have their own cost.

But I mean by that, that, you know, the market's not crashing. We are economy isn't in free fall, but there's a difference between free fall and firing all cylinders.

“And we have been kind of stuck in the middle for some time. This report is just another example of that.”

What would you say to people who say, well, GDP growth is growing, or that the stock market is hitting all time highs, both of which are true on those kind of surface level measures, it seems like things are going great. Is the place that we should really be looking at should be really be looking at the jobs numbers? I mean, where is the real story being told in your view? All right, 70% of the U.S. economy is the or 60 to 70% of the U.S. economy depending on the quarter and the year is the consumption of U.S. households.

How much they can afford to spend? And the remaining 20 or 30 to 40% can be the investment of businesses, the net exports, things that are in some ways a little bit more volatile and manipulative.

You know, we've had months where quarters were GDP, you know, had a gangbusters headline number, but it was because of like very odd behavior related to planning for tariffs and stocking up on inventories.

“So I look at the consumption of households as really, this is the biggest part of our economy and it is the most important translator of does this big economy actually mean anything to the people in it?”

Can they afford their life? Can they buy things? And I think that that number has been, you know, week, like very slow growing, we're not seeing much progress. And then if you were to look at just a basic measure of do we have enough jobs and are those jobs posting wage growth above price growth?

You know, the answer to those appear to be no, maybe not in the obvious sense that unemployment is spiking, but we're losing workers.

And wage growth has had months where it's done better than inflation, but we seem to keep on getting involved in Iran in a really costly way. I don't think that there's a lack of indicators. I think that there's just a preference of what are you going to value when you assess our economy.

“And if you want to paint a nice story and how great the economy is, I mean, go listen to a White House press conference.”

If you, if you want to look at some numbers that say that the US economy is in trouble, you've got hundreds to pick from. Just looking at the difference between how the labor market is affecting women versus men, I was looking at we were looking at a report from the National Women's Law Center, which said that women are basically accounted for all of the decline in the labor force in July, which seemed quite striking that it's so specifically targeted this this issue that we're seeing in the labor force is specifically targeted towards women.

How do you, how do we explain this this seeming gender divide in the loss in the job losses in this economy? You know, it happens to some degree every summer. So it's not a like shift in 2026 that's something remarkably and uniquely bad is happening to women this summer. This is something that we see every summer. Summer campus expensive summer coverage can be hard to procure a lot of women are employed in jobs through teaching and in the education services that also take breaks for the summer.

So every summer you see some version of a decline in women's employment because of the break in the school year, as well as a decline in women's labor force participation, not just because of the decline in employment, but also because of the, you know, dramatic reduction in a safe free place to put children between the hours of nine to five. So we see some version of this every summer and in some summers it's it's quite stark and others it's not in the reason for that can can vary year to year of like what makes one year particularly bad or or not so bad, but the overall cause is not a mystery at all.

We don't support parents in the workplace at all. There's no metric by which we can say and we've done a great job for working parents. We don't have paid family leave. We don't have paid sick days. We don't have subsidies or free child care. We don't have free after school and we don't have broader support for summer. So I mean, if you make working and being a parent difficult women will bear the brunt of that and this is just one of a, you know, just. Really depressing portfolio of statistics you could pull of the cost of not supporting working parents in the summer of 2026. It's going to be that everyone who left the labor force last month and everyone who lost a job last month was a woman.

What are the kinds of people? What are the kinds of workers that you think are being most affected right now? I think that given the rise of AI there was a concern about the white collar workforce, but it's not totally clear what's happening at the moment.

And when you're trying to break into a labor market that is quite closed off, that is catastrophic for you. You know, I always tell people, whatever the a person's unemployment rate is either zero or 100%.

You don't think of the overall national unemployment rate as any kind of sab towards your inability to find a job at a given moment.

“So I think the lack of clear growth, the lack of confidence, the lack of expansion to people's payrolls.”

I mean, that is hitting the people trying to break in the hardest. It's also why wage growth is flattening so much because wage growth tends to be driven by people switching jobs. And so if you're stuck at an awful job and you can't find another one, you're probably not seeing much of a pay increase and you probably also feel like the labor market isn't its own version of recession.

Recently wrote a piece titled, AI anxiety won't be eased by universal basic income. We've been talking about AI.

Incessently on this podcast. And I think rightly so because this is a market spot, Gaston the markets are almost entirely dependent on AI at this point. What are your views on AI right now and how it might or might not affect the economy? And also how it might impact the labor market and what we should do about all of this.

“I think there's a few very clear certainties. AI will make workers more productive on the job. We don't know how fast that will happen and we don't know which workers.”

When workers become more productive on the job, that shifts the nature of labor demand so that some workers will be demanded more and some will be demanded less. Meaning that it's going to both create jobs and destroy jobs. Destroy jobs. We don't know when and we don't know who. And as a result of both making workers more productive and creating destroying jobs, there is going to be people who get highly remunerated because of this and there's going to be people who end up unemployed because of this.

And the only concrete question we have is if we know that people were going to lose their jobs at some points, are we prepared and our unemployment system to deal with it? And that is an answer as a clear no. One thing that I bring up when we talk about AI is if you were to go back and look at the average productivity of the US worker over the past 90 years, you will not see a single technological innovation. If you don't see air conditioning, you won't see cell phones or computers or the internet or Microsoft office, you don't see it because it takes a long time for productivity to be absorbed into the workplace and used by employers.

That doesn't mean there's not an employer out there that is using AI, but using it effectively.

“And it's actually adopting it to the degree where you are changing how you demand your workers as opposed to just exposing them to some new technology and seeing what happens. Those are very different process, right?”

Just because your boss said like here's Claude tried out that there's a gap between here's Claude tried out and we're going to lay off 200 people. There's a very big step there and most of the time it's not a jump, it's just you're kind of like crawling towards this new type of productivity. I think my kind of trying to pour bucket of cold water on AI in its effect in the workplace is not to say that AI is not an incredible tool that will change the future. But that it's in some ways a distraction from the problem that we refuse to see, which is that the US has a very cruel policy when it comes to supporting the unemployed.

So all of this uncertainty of the things we know and the things we don't, if you were worried about US workers, you wouldn't be looking at the bottom line of companies, you know earnings portfolio, you would be looking at our unemployment system and demanding a better one.

Once a recent universal basic income or some sort of dividend has been suggested by a lot of people when it comes to AI, what do you think the answer is?

A robust unemployment system. We have a short term unemployment system right now that has a decent base but terrible execution, it just is in desperate need of reform and attention. But how I would characterize policy related to unemployment is if it's not a recession, nobody cares. And I mean, nobody cares about unemployed people outside of a recession. But now the way that it should work is that if you lose your job, you shouldn't be terrified of what the unemployment system looks like, of what your options are.

We need a robust system, a short-term system that triages into a long-term system that then moves into things like helping workers move, helping workers get reeducated, helping workers start businesses. I think my problem with universal basic income, not just in practice but also in tone, is that it's very much like a text CEO said you're unemployed, so here's some money while you sit idle. I just don't think it should be the posture of policy makers or pundits to be so derisive and dismissive of the US worker.

Cash won't be enough and it doesn't come with the type of respect that people want from themselves of earning money, so if they don't, if workers don't want to give up, I don't think their government should either, and that's why I'm always opposed to UBI.

“Final question, when you look at the economy right now, is there anything that you're feeling more optimistic about the usual and then is there anything that you're feeling more worried about unusual?”

Okay, more optimistic about the usual is that we have, we seem to have a lot of policy makers either in power or trying to be in power that are focusing on some pretty nice bread and butter working class issues, like maybe the minimum wage shouldn't be 725 and that's something that lots of people are talking about.

I think the, the really conservative economic era that we've been living through is really showing some cracks and people are ready to move on to the next thing.

So I'm optimistic that policies that you couldn't get people to talk about 15 years ago are now in everyday discourse. We're talking about paid family leave, we're talking about child care, we're talking about raising the minimum wage and what that would mean for families. I'm not optimistic that there will be much movement on that, you know, in the very near term, but, you know, the US economy over the past two years has shown what kind of hit it can take, right, and in the language of rocky.

“Sometimes your greatest strength is how hard you can get hit and keep moving forward, like I think the US economy has absolutely advanced that and that should give us the confidence going forward that we can be more creative in our policy.”

Look how not scared they were to just throw tariffs on the wall, maybe this means we would still have an economy if the minimum wage was about $7 like maybe.

I mean that people gain some confidence, some pushback on like, hey, sorry, there's a single mom who doesn't have paid sick days in a shift job, which has no schedule and advanced notice and like we don't want her to have child care. Can I stay with me? I might be okay. I think you've the only one who's found a genuine silver lining in this tariff agenda. The question is will we actually grow a spit who knows.

“We always love having you. Thank you so much. Cheers.”

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That's joinDeleteMe.com/proxyCoProxy. We're back with PropGia Markets. Big Tech has officially come up with a response to the anti-AI sentiment sweeping the nation. Today, Mark Zuckerberg published a 6,500 word essay describing matters outlook on the future of AI. In the essay, Zuckerberg voiced his support for open models. He critiqued the Trump administration's proposed LLM review period and pushed for more rigorous data protection policies. The META CEO also announced a $1 billion future for everyone fund which will invest directly into the local communities that surround META's new data centers. These policies appear to be Zuckerberg's attempt to address one of Big Tech's biggest problems, which is the fact that 72% of Americans are concerned about AI and in the first three months of this year alone, that concern has led to the delay or the cancellation of a $130 billion worth of data center projects.

That leaves Big Tech with two choices, either win over the public on AI or let the AI build out grind to a halt. Here, to break down META's new AI manifesto, we're speaking with Bradley Tusk, Metricapolis, political strategist and writer Bradley.

“Thank you so much for joining us on the show again. What do you make of this manifesto? What do you make of the strategy? Does it make sense?”

The notion that Mark Zuckerberg cares about the public good in any way shape or form is ludicrous. He could kill us about it. The amount of harm that he has done to the world through his platform is greater than cigarettes or probably most of the things that have helped destroy humanity over centuries. So he doesn't care about that at all. However, for me, business strategy standpoint, it's absolutely brilliant. You know, I think one of these times that, you know, I talked through which one, we're talking between the kind of Chinese model to AI compared to the US model.

And where I think China's companies have really, government, everyone look at it, have really gotten it right, is just the way that anthropic and open AI and everyone else built their systems, the assumes that you need the most sophisticated type of AI at all times. And 80, 85% of the time, that's just not the case. Sure, if you are using AI to try to come up with new ways to procure cancer or move carbon from the atmosphere or achieve nuclear fusion, whatever it is, absolutely.

But I've never done those things and my guess is that you've never done those things.

And that really is just copying that Chinese model of saying, we'll have a mix of experts, we'll have multimodality, all that meaningfully reduces the effort that needs to be conducted by the neural network to answer the question.

“And that meaningfully reduces the cost of providing the answer. That's why the Chinese models are so much cheaper.”

A little bit of is around that China, just by being a non-democracy, is able to sort of produce and supply energy at a lower cost, but that's really much less important about it. So I think what's the good work is doing again, this is really smart, is saying that the models that, you know, are all men and a moody and the others dealt really are massive overkill. We don't need most of it. And if he just puts it open source, he can choke them off completely.

That's how he built Facebook and Instagram and the company is in the first place, which is, here's a bunch of cool stuff that you can add for free. And it's that it's going to make the money office subscriptions and token use. He's going to make the money just off of having it massively bigger underlined base with a lot more content advertising and using that to meet the needs and stats.

“I think it's an excellent strategy. The notion that Mark Zuckerberg in any way is try to help society is absurd.”

Well, what do you make of that one billion dollar fund? They're going to use that might invest in local communities around the data centers. They'll pay teachers.

I mean, the reality is this. Again, he doesn't care about the communities that he's in.

What he cares about is getting the zoning and permitting approval to build the data centers in the first place. And so effectively saying, I'm building the building dollar fund to put to, you know, win approval by paying for things that are politically popular teachers or improving the electricity grid or new parks or whatever. That's fine. There's nothing innovative about that. That happens in almost every major capital project of every kind, which is there are these things called community benefit agreements.

And the people who have power over their zoning, leverage that power to get other things that they want. And the people who are paying it say, in the big scheme of things, the amount of money that I can make from building this, you know, luxury high rise, data center, you know, power plant, whatever it might be is great enough that it's worth sort of advertising these costs into it. It's not charity. It's not philanthropy. It's just an additional cost to, in order to build the project. I guess the question is will it work? I mean, it's so many people are so worried about data centers. I was literally walking down the street this morning and saw an AI data center, an anti data center rally literally walked right by me.

That has sort of gone way beyond reality. So let's think about one of the negative externalities of data centers. They could impose a lot more electricity costs and energy bills, make them a lot higher for people who are on the same grid or system. They could use up a lot of water that communities need. And I guess arguably, maybe they're using valuable public land that has some higher purpose, right?

However, number one, a lot of states are already moving towards. We talked about government or hopefuls executive order a week or two ago. The notion that you can impose your energy costs in everyone else. That could come from your own providing your own powers, small modules, nuclear or whatever it might be. It could be from using more efficient compute. And keep in mind, law is going to be a lot more efficient to run, because you don't need all the processing power that anthropic in an AI need.

So you can solve for that. Two, a closed water system, which is being developed by a bunch of different companies, solve the water.

Then you're basically building in a couple of too many pools worth of water at the beginning, and then after that it just we circulates all of a time.

And then in terms of the land, that just gets back to this opening fight, right?

“So, you know, and that's why they're putting in these billion dollars in the incentives, which is the reality of the trillions of dollars in spent.”

And data center is around the area of around the area. So, right now, I think a lot of the anxiety and hostility towards data centers is not really about data centers per se. And it's about broader concerns about the risks of AI. He's going to take my job, it's going to screw my kids in some way. And then I think beyond that, either people generally just unhappy with the way society is going.

The left foot frame, that are an income inequality, the right foot frame, that are around in migration. And just, but either way, what it's really about is change, right? The pace of change is faster than ever. The pace of technological change is incredibly fast, and being able to keep up with it is really difficult. So, for most people, that amount of change is really scary.

It produces anxiety, and that manifests itself in specific political actions, whether it's a rally against data centers, or letting Trump or Montgomery, or whatever else it might be. But it's about broader anxiety about life, as opposed to this particular source of service ever. Yeah, just final question here. What do you make of this manifesto as a calm strategy from Meta?

I feel like I'm seeing it increasingly these blog posts. Does it work? I mean, I think that, you know, people like Mark Zuckerberg, who are probably very, very used to people telling them how brilliant they are. All day, every day, don't really hear much and wave negative.

I think that their words have this incredible resonance to that.

You know, as far as manifesto is called leaders and squids, mass shooters, and people like that too.

“No, because I think for it to work, you have to start with some well of underlying trust.”

And I don't think anybody trusts Meta or Mark Zuckerberg at all.

And I think usually, instead of I've spent half of these ten minutes criticizing him,

he just said, hey, here's how we do a better job and make more money and outperform the others. I probably would just appraise him for the whole ten minutes.

“No, no. I think it's a failed calm strategy. And I think when you try to treat the public like idiots,”

most of the time, they catch on to it in a bad way. Okay. Well, the task is a venture capitalist political strategist and writer appreciate your time, Bradley. If you've been reading the news lately, you might have heard how socialism is on the rise.

From current elected leaders like Moundani and AOC to potential leaders like El Said in Michigan,

many are concerned about the new direction of progressive politics that concerned that we're transitioning from a capitalist society into a socialist one. And you can understand why Moundani and AOC both describe themselves as democratic socialists. And while El Said isn't a democratic socialist, he has been endorsed by many politicians who are so clearly socialism is becoming a thin.

But there is a very important question that no one seems to be answering.

“And that is the following, what actually is socialism?”

Well, it depends on who you ask. The dictionary definition of socialism is a political system where the means of production are controlled entirely by the state. But then there's the dictionary definition of democratic socialism, which is economically the same as normal socialism only the political system is run democratically. But then there's also social democracy, which is defined as a system that is largely capitalist,

but also employs some socialist policies like subsidized housing or universal healthcare, the things that we see in places like Sweden or Norway. So which is it?

And the answer is, I don't really know, but going off of what I've seen here in New York,

I can pretty safely assume that what most democratic socialist seem to be going for is number three, and that is social democracy. The government doesn't own everything, but it does provide more of a safety net than we have today. Why do I believe that? Because that is exactly what Mandoni has pursued.

Yes, he is progressive, but he's also done a lot of things that actually conservatives would be proud of. For example, he actually deregulated small businesses. He eliminated over 50 permitting rules that made it harder to start a company. He also got rid of red tape on housing, made it easier to build a home without getting approvals from the government. He even launched his own version of Doge. He installed chief savings officers,

whose job was to identify wasteful government spending and then eliminate it. These are not the kinds of policies you think of. When you hear about New York's socialist or even communist mayor, but they are the policies that are being enacted. So clearly, whatever socialism we are seeing in America isn't the communist revolution that Fox News wants you to think it is.

But at the same time, it's also clear that the progressives need to define what democratic socialism actually is.

“Is it the dictionary definition? Does it really mean abolishing private property?”

Or is it something else? Something's still unconventional, but significantly less radical than a lot of people seem to assume. I am not a DSA member, so I cannot give you the answer, but I do know that the future of American politics rests largely on this question. So I end this episode with a request. And to any democratic socialist who might listen to this podcast, my request is quite simple. Please give us the answer.

Okay, that's it for today. This episode was produced by Claire Miller and Alison Weiss, and engineered by Benjamin Spencer. Our video editor is Brad Williams, our research team is Dancialon, Kristen and Donna Hugh and Mia Solverio. And our social producer is Jake McPherson. Thank you for listening to Prophecy Markets from Prophecy Media. If you liked what you heard, give us a follow. I'm Ed Nelson, I will see you tomorrow.