Throughout 2025, the first monthly revision to the initial payroll jobs report was, on average, a downward adjustment of 57,000. This is the third-largest average downward revision on record, with the other two instances occurring during the 2008 financial crisis and the COVID-19 pandemic, signaling significant underlying economic weakness.
Electricity prices have been on a consistent upward climb, contributing to inflation that directly impacts household budgets. A key driver behind this trend is the massive and growing energy demand from AI data centers. This suggests a new, structural source of upward pressure on utility costs that is just beginning.
Annual benchmark revisions to payroll data reveal a much weaker labor market than previously reported. After revisions, total job growth in 2025 was only 181,000, with most gains in the first quarter. This indicates the job market has been effectively flat since April 2025.
The reported 123,000 job gain in healthcare, which accounted for most of January's headline strength, was not due to an economic boom. It was a statistical artifact caused by unusual seasonal adjustment patterns. Job gains that should have appeared in late 2025 were instead shifted into January's report.
The unemployment rate for college-educated workers (age 25+) has risen significantly to 2.9%, one of the largest increases among any educational group. Economists on the podcast speculate this is an early sign of AI's impact, particularly affecting younger, higher-skilled workers in sectors like tech.
Despite recession-level downward revisions in job data, the economy avoided a downturn. The proposed reason is a rare simultaneous shock: labor demand fell due to tariffs and a slowing economy, while labor supply also contracted significantly due to immigration reform. This kept the unemployment rate stable, preventing a recessionary spiral.
The Employment Cost Index (ECI), a more accurate wage measure, shows private wage growth at only 3.3% YoY. This is below other metrics and close to the overall inflation rate. Combined with the fact that lower-income households face a higher effective inflation rate, it strongly suggests their real, after-inflation wages are declining.
The missing October CPI data significantly impacted the report because of how shelter—the largest component—is measured. The Bureau of Labor Statistics uses a six-month rolling panel. By imputing a zero change for the missing month, it artificially dragged down the entire index in a way that simply measuring prices from September to November could not correct.
The official headline CPI of 2.4% is artificially low due to a measurement error from the October government shutdown. When corrected, the true year-over-year inflation rate is closer to 2.7-2.8%. This means underlying inflation is still hovering near 3%, significantly above the Federal Reserve's 2% target.