Fed Moves to Cushion a Softening U.S. Job Market

Anxieties are rising that the U.S. labor market is weakening even as markets and AI investment run hot. Job growth has diverged from GDP, prompting the Fed to cut rates twice as “risk management,” with calls for faster easing ahead. The piece is wary but suggests policymakers’ proactive moves offer reasons for hope.

Key Points

Investors warn of a “K-shaped” economy where markets and AI investment thrive while many workers fall behind.
Job creation has diverged from overall economic growth, breaking their usual tandem relationship.
The Federal Reserve has cut interest rates at its two most recent meetings as a form of insurance.
Jerome Powell calls the easing “risk management,” while Christopher Waller urges faster cuts beginning December 10th.
Despite the gloom, the article suggests there are reasons for hope, implied to stem from proactive policy responses.

Sentiment

The overall sentiment of the Hacker News discussion is predominantly pessimistic and anxious, largely agreeing with the article's core premise that the U.S. job market is struggling and many Americans are facing difficulties. While some commenters attempt to challenge or nuance specific points (e.g., Black Friday sales), these challenges are often met with further arguments that reinforce the article's 'K-shaped' economy concept or highlight underlying issues like inflation and debt. Personal anecdotes of job market struggles are widespread, particularly in tech, and skepticism about official optimistic data is common.

In Agreement

The job market, particularly for software developers and designers, is currently grim, with many experiencing long and difficult job hunts and struggling to find work.
The 'K-shaped' economy is a real phenomenon, where spending by the wealthy (e.g., the top 10% of income earners) primarily drives consumption figures, rather than broad-based economic health.
Official government job data might be unreliable, politicized, or understating the severity of the job market's struggles, with anecdotal evidence suggesting worse conditions.
Offshoring, H1B visas, and a lack of taxes on service imports are significant contributors to job losses and market struggles in the US.
This economic downturn feels different and potentially more severe than previous ones (2001, 2008), with concerns about long-term job displacement, AI's impact on labor, and social instability due to wealth concentration.
The investment thesis around AI suggests a future where human consumers become less significant, with 'robot armies' driving consumption, leading to a concentration of wealth and potentially obsoleting human workers.

Opposed

Record Black Friday sales suggest that Americans are not 'languishing' as the article implies, indicating consumer resilience.
The perceived 'record' Black Friday sales figures are misleading as they are not adjusted for inflation, population growth, or the extended duration of sales events, making them appear higher than they are in real, per-capita terms.
Many consumers are deferring purchases until sale periods like Black Friday, rather than increasing overall spending, or are buying essential goods rather than luxury items.
Sectors like construction, trades, and other 'physical-world stuff' are still hiring, offering alternative job opportunities outside of tech.
Mid-level developers with 7+ years of experience are still finding jobs without significant issues, suggesting the struggles might be more acute for junior roles or specific specialities.
The economy might be nearing the bottom of a business cycle, and things are expected to improve, as they always do after recessions.