Despite The Strongest Jobs Reading In Months, Most American Workers Are Falling Behind As Inflation At 3.7% Continues To Outpace Nominal Wage Growth Of Just 3.1%.
The October payrolls report delivered a headline figure of 165,000 jobs added, accompanied by monthly wage growth of 0.4%, numbers that RSM Chief Economist Joe Brusuelas called broadly consistent with a labor market at full employment.
Brusuelas pointed to upward revisions of 84,000 positions across the prior two months, pushing the three-month run rate to 137,000 and reinforcing the view that underlying demand for workers remains solid.
The unemployment rate has held in a narrow band between 4.1% and 4.3% for several consecutive months, a range that Brusuelas described as “a really good description of full employment in this American economy.”
Context matters, however: the economy only needs roughly 35,000 new jobs per month to keep the labor market stable, a low bar driven by demographic pressures and constrained immigration policy that no political shift is expected to reverse.
Victoria Guida, POLITICO’s economics correspondent, noted that a 165,000 print is roughly equivalent in real terms to what used to be considered a 200,000-plus month, given how much the structural baseline has shifted.
The strong report now puts a December rate increase back on the table, a development that Kelly Intelligence’s Kevin Kelly acknowledged changes his calculus after months of arguing that wage growth mattered more than raw hiring figures.
Where the panel found sharper disagreement was on artificial intelligence and its true weight in the current investment cycle, with Brusuelas arguing that AI is not yet moving the needle on aggregate job destruction at any meaningful scale.
In October’s report, the only sector showing possible AI-related displacement was information, which shed 1,000 positions, while professional and business services surged by 70,000, the single strongest area of growth across the entire economy.
The more pressing concern, several panelists argued, is not job losses but capital misallocation, with CoreWeave cited as a stark example of a company borrowing at 15.5% while projecting returns on investment of only 9%.
Brusuelas was blunt about what that arithmetic means: “any expansion is a generation of negative equity,” adding that Nvidia (NASDAQ: NVDA), which owns approximately 11% of CoreWeave, would likely need to serve as a backstop for the arrangement.
Nvidia itself closed Thursday down on the year and trading at just 12 times next year’s earnings, while Marvell has shed roughly half its value over the past five months, a repricing that FBB Capital Partners President Mike Mussio described as the market finally reasserting the cost of capital.
Thursday’s heavy sell-off also reflected political shock after Democrats won control of Congress, with roughly 41% of data centers now located in jurisdictions moving toward tighter restrictions on new build-out.
The political map shifted further when Texas Governor Greg Abbott lost his re-election bid, replaced by Gina Hinojosa, though Brusuelas cautioned that all projects already under construction in Texas are committed through 2028, making any effective moratorium a 2028-2029 question at the earliest.
Markets are staging a recovery Friday, a bounce Brusuelas said is rational given how aggressively the sell-off priced in regulatory risk that remains years from materializing.
Google’s announcement of fresh investment in Malaysia and OpenAI’s public commitment to continued data center spending regardless of election outcomes both signal that the largest technology spenders have no intention of pulling back.
For investors navigating the turbulence, Kelly suggested rotating toward commodity producers supplying copper and aluminum, defensive healthcare positions, and infrastructure providers like Dell, which he described as a company with enormous backlogs that can afford to choose its counterparties.
Amazon was also flagged as a company insulated from the cost-of-capital crunch because its advertising business, boosted by expansion into live content, generates free cash flow sufficient to subsidize its AI infrastructure without external borrowing.
Brusuelas closed with a sobering structural note, pointing out that the projected $10 trillion in AI investment over seven years would represent 3.6% of US GDP, a figure one-third larger than the entire railroad boom of the 19th century, a scale he said demands regulatory engagement at the local level rather than in Washington alone.
