Bloomberg Audio Studios. Podcasts, radio, news.
The Nvidia boss, Jensen Huang, said concerns around AI's impact on the workforce are overblown. Torsten Slok of Apollo agrees, writing there is zero evidence of job losses because of AI. Non-farm payrolls for May could come in significantly higher than the around 90K expected. Torsten joins us for more. Torsten, good morning. Good to see you. What are people getting wrong?
Well, I think what people are getting wrong is this whole notion that it's not only about individual companies. It's what's happening at the macro level. And at the macro level, it's become much easier to open a business. You see this in the surveys from the census of how many businesses are created every week. It's exploding higher. You're also seeing data from Stripe showing you the number of solo founders of new businesses is also exploding higher. So, there's a lot of new businesses that are created. Yes, some of them will probably only be one employer, namely the founder. But a lot of these businesses will also result in a lot more jobs. So, it's not only about the displacement that might come on some micro levels. It's much more about the aggregate where we have a significant increase in the number of new businesses that are formed.
It doesn't help, as you know, that some of the individuals at the frontier of this massive push you're talking about a white-collar washout when it comes to the labor force. What's your message to them?
Well, yeah, this started actually already in the spring of last year where there were a lot of people beginning to talk about, well, within one year's time we will already have layoffs and we'll already have entry-level jobs that may no longer exist. But here we are with ADP on a weekly basis for the last eight weeks producing 30, 40,000 jobs every week. Jobless claims still being low. ISM today, over the last six months ISM has gone up. We're above 50. ISM is likely going to be also high today. And now we have some very strong tailwinds, not only from the AI spending boom, but also from the one big beautiful bill. This economy really is on fire in the sense that we both have strong growth and we also have upward pressures on inflation. And now we also have, of course, the ultimate risk that if AI does result in more job growth, it will be really the miracle drug that both creates high productivity and also creates higher job growth.
That can be true at the same time that John's assertion can be true, which is that white-collar jobs can decline as a proportion of overall jobs. If you look at the job growth and where it's come from, it's construction, it's manufacturing, it's in healthcare, it's in education, it's not in finance, it's not in media and media services. So, how do you square those two ideas?
Well, if you look at also the unemployment rate, so now we'll get more data on Friday. If you look at the unemployment rate for people that are between 20 and 24 years old, that has exactly gone down in the last six months, also telling you that it's not the case that young people can't find a job. There are some issues around what type of job they can get, and yes, maybe they may not be getting access to the job that they wanted. There may be something also about expectations for young people when it goes into that discussion, but the bottom line still really here is that at the end of the day, young people are actually doing really well because the unemployment rate for young people is actually lower than where it was six months ago.
Okay, to build on that, the conversation yesterday among some of the people who might be entering the workforce in a not-so-distant future: plumbing. A discussion around becoming a plumber because you're going to make a lot of money in plumbing, but you're not necessarily going to make a lot of money going into the white-collar workforce. So, at what point is that the type of work that is going to be the future of a lot of the job creation? Is that what we're seeing right now in some of the data?
Yeah, but I'm also critical of this whole idea that white-collar workers are just going to say, 'Oh, I got fired. I'm just going home in my basement and sitting here twiddling my thumbs.' Of course, those white-collar workers are going to say, 'Hey, maybe we should open a business, maybe I have some friends, maybe I have some connections from my last job.' And I think that that's exactly what's going to make it a lot easier with large language models, with agents, to build a new model, and that's exactly why business formation is going up. That's why the number of sole founders, solo founders, has also been going up. And that business formation will ultimately also result in a lot more job growth.
Can we touch on something you said about expectations? That might be about expectations of those entering the workforce. Are you saying that potentially younger generations, if they don't like some of the characteristics of a job, they are going to not go into the workforce and potentially maybe start their own business or do something else?
Well, there is certainly a lot of, of course, discussion around, well, is it because young people can't find a job? They can certainly find a job. But then why are we having this discussion? Maybe exactly to your point, Anne-Marie, maybe we are actually hearing more young people just not having met their expectations of where they could get a job. In other words, maybe they didn't get the job that they thought that they could get. So yes, maybe there is something also when it comes to the expectations of younger households and younger people when they enter the labor force.
