Dear Reader,
Simmy Adelman here with Behind the Markets.
Last Thursday, the Labor Department released a number that stopped me in my tracks.
New jobless claims for the week of July 12th through 18th came in at 187,000.
That is the lowest level since the week of August 31st, 1969.
57 years.
The headline sounds like great news.
And in some ways it is.
But I want to help you understand what’s actually happening underneath it.
Because the story is more complicated — and more important — than the headline suggests.
The Paradox
Here is what 187,000 jobless claims actually means.
Almost nobody is getting fired right now.
Companies are holding onto their workers at a rate not seen since the Nixon administration.
That sounds like a strong labor market.
But here is the other side of the coin that the headline doesn’t tell you.
Companies are also barely hiring.
The June jobs report showed employers added only 57,000 jobs — a sharp decline from the prior month.
Economists and labor researchers have a name for what’s happening.
They call it a low-hire, low-fire market.
Nobody is getting laid off.
But nobody is getting hired either.
The labor market isn’t booming.
It’s frozen.
Why Is This Happening?
The answer is AI — and it’s playing out in a way most people haven’t noticed yet.
Companies are using AI to get more out of the workers they already have.
I can’t tell you how much of a difference it’s made here at Behind the Markets.
Productivity is going up.
Which means they need fewer new workers to grow their output.
So they’re not hiring.
But they’re also not firing the people they have — because those workers still know how to run the business, and replacing institutional knowledge is expensive and risky.
The result is a labor market that looks healthy on the surface.
187,000 jobless claims.
57-year low.
Great headline.
But underneath, the nature of work is quietly changing.
The jobs being protected are the ones with institutional knowledge and relationships.
The jobs being eliminated — slowly, quietly, through attrition rather than layoffs — are the ones AI can already do.
Entry-level positions.
Routine cognitive work.
The first rung of the ladder that previous generations used to build careers.
What This Means for the Fed
This is where it gets complicated for investors.
A 57-year low in jobless claims sends one very clear signal to the Federal Reserve.
The labor market is strong.
Which means the Fed has no urgent reason to cut interest rates.
Kevin Warsh has already signaled rates are staying high.
Now the labor market data is backing him up.
Add oil crossing $100 a barrel last week on Middle East escalation — and you have an inflation picture that gives the Fed even less room to move.
Higher rates for longer.
That is what last week’s number means for your portfolio.
Growth stocks, long-duration bonds, anything that needs cheap money to work — all of it faces more headwind than the market was pricing in just a few weeks ago.
What This Means for Everyday Workers
Here is the part I keep coming back to.
The people who already have jobs are mostly fine right now.
187,000 jobless claims tells you that.
But the people trying to enter the workforce — recent graduates, career changers, anyone looking for that first real job — are facing something different.
A market that isn’t really hiring.
A market where the entry-level positions that used to exist as training grounds are quietly disappearing.
Not through mass layoffs.
Through something slower and harder to see.
AI handling more of the work.
Headcount growing more slowly than revenue.
Companies getting leaner without anyone noticing.
The Anthropic CEO said it earlier this year — AI could eliminate half of all entry-level white-collar jobs within five years.
The 57-year low in jobless claims is not a contradiction of that warning.
It’s actually consistent with it.
You don’t have to fire people to hollow out a labor market.
You just have to stop replacing them.
But there is one sector where the opposite is happening — where investment is surging and demand is accelerating.
I mentioned oil crossing $100 a barrel earlier.
That’s not just a headline about the Middle East. It’s a signal about where energy is going.
Starting July 4th, every new solar and wind project in America lost its federal tax credits. Gone. The two technologies that dominated clean energy for 20 years just lost their biggest financial advantage.
But one energy source keeps full government backing for eight more years.
It runs around the clock. Zero carbon. No batteries required. It doesn’t shut off at sunset.
The Pentagon calls it their number one energy priority. California just mandated it. Google, Meta, and Berkshire Hathaway are already under contract.
Investment in the space has surged 100x in seven years. The Fervo IPO this summer forced Wall Street to cover the sector for the first time.
And one company controls the entire chain — from the ground to the grid. Nobody else does.
Dylan’s team has been digging into this one for months.
The Bottom Line
187,000 jobless claims is genuinely good news for people who have jobs today.
It’s a complicated picture for people trying to get one.
It’s a headwind for anyone hoping the Fed cuts rates soon.
And it’s one more piece of evidence that the AI revolution is already reshaping the economy in
ways that don’t always show up in the headline numbers.
The surface looks calm.
Underneath, things are changing faster than most people realize.
This is something to watch carefully. Things don’t go well in a society where young people don’t have jobs…
Back to your regular scheduled programming tomorrow.
It’s been a pleasure,
Simmy Adelman, Editor-in-Chief
Behind the Markets
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Written by Simcha Adelman