Goldman Sachs Chief Economist Jan Hatzius Joins CNBC to Discuss the US Jobs Report and the Economic Outlook

Summary

• Nonfarm payrolls rose by 165,000 in October, exceeding nearly every forecast.
• Goldman Sachs estimates the underlying trend in job growth is back above 100,000 per month.
• The unemployment rate has remained in the 4.1% to 4.2% range, indicating a labor market stable at about full employment.
• Layoffs are at the lowest levels seen in a series spanning more than five decades.
• Hiring remains relatively subdued within a stagnant but solid environment.
• GDP growth is currently rapid with three-handle rates in the second, third, and likely fourth quarters.
• Goldman Sachs maintains a baseline growth estimate of 2% to 2.5% for next year.
• Downside risks to the growth outlook include financial conditions tightening by 50 basis points, energy prices, the war with Iran, and AI buildout effects.
• AI adoption has reduced employment growth in the technology sector by roughly 10,000 to 15,000 jobs per month.
• Correlations between AI adoption, employment growth, and unemployment rates are beginning to appear in the service sector.
• The relationship between AI and labor market outcomes is expected to strengthen over the next one to two years.
• AI is projected to become a headwind for employment growth by 2028.
• AI is expected to become a more significant macroeconomic story by 2027.
• AI currently acts as a tailwind for profit margins.
• Investment spending is expected to flatten out and decline after 2028 as infrastructure buildouts complete.