The numbers don't lie, but the headlines do

I want to tell you about last Friday.

On last Friday, which was June 5th, 2026, a number came out of Washington. The number was 172,000. It meant jobs. One hundred and seventy-two thousand of them, supposedly created in a single month. This was considered good news. The stock market promptly lost a trillion dollars.

You should sit with that for a moment. I’ll wait.

The Nasdaq lost 4.2% in a single afternoon. A trillion dollars evaporated from chip stocks. Futures markets now put a coin-flip on a Fed rate hike. 150k tech workers have been let go this year, and it is only June. These are the numbers. They were caused by a jobs report that was considered good news.

The people who lost the trillion dollars were not poor people. Poor people don’t have a trillion dollars to lose. The people who lost it were the kinds of people who own things - chips, mostly, the silicon kind that make computers think. Nvidia fell nearly 6%. Marvell fell 16%. Micron fell 13%. The Nasdaq had its worst day since April of last year, which was itself a bad day, which was itself a response to tariffs, which were themselves a response to a trade war, which was itself a response to fear, which is what most things are a response to, if you go back far enough.

Good news about jobs made rich people poorer. This is because good news about jobs makes the Federal Reserve want to raise interest rates. Higher interest rates make borrowed money expensive. Most of the value of technology stocks is borrowed from the future. When the future gets expensive, you give some of it back.

This is not complicated. It is also not simple. Welcome to the economy.

About those jobs…

Here is what 172,000 jobs looked like, broken open.

70k of them were in restaurants and bars. This is because the World Cup starts June 11th. The United States is hosting it. Philadelphia, Boston, Atlanta: they are all hiring bartenders and hotel managers and people to stand near velvet ropes and look purposeful. Hospitality hiring in host cities jumped 30% in May. In Philadelphia it jumped 83%.

The Federal Reserve will now consider raising interest rates because Philadelphia needed more bartenders for a soccer tournament.

The people setting monetary policy for the most powerful economy in the history of human civilization are, in part, looking at this data and nodding gravely.

Meanwhile, the share of unemployed Americans who have been out of work for more than six months rose to 27.5%. A year ago it was 20.4%. These are not the people getting hired to pour beer near a stadium. These are people who have been looking for work since before the leaves changed last fall and are still looking now, in the heat.

The jobs number that makes headlines is always the first one. The revised number, which tells the truth, comes out quietly months later, after everyone has moved on. The year through March 2025 was revised downward by 911,000 jobs. It was the largest revision since 2009, which you may remember as the year everything was on fire. Nobody had a ticker tape parade about the revision. Nobody ever does.

The man in charge of the money

The Federal Reserve used to be run by Jerome Powell. Now, it will be run by Kevin Warsh, who was picked by a president who wanted lower interest rates.

The president is not going to get lower interest rates.

Oil is above $110 a barrel because there is a war involving Iran, which has not ended, the way wars involving that region tend not to end. Wholesale inflation ran at 6% in April. The OECD, which is a organization of economists who went to very good schools and are therefore trusted, says inflation will hit 4.2% this year. The Fed had been hoping for 2.7%. Hope is a beautiful thing. It is also not a monetary policy.

Futures markets now put a 52% chance on the Fed raising rates before the year is over. This is the first time that number has crossed 50% since 2023. The 30-year Treasury yield is at its highest point since 2007. The bond market is tightening things up on its own whether the Fed participates or not, the way a crowd will crush you whether or not anyone in it means to.

All of this is happening at the same time that a man who wanted lower rates has just been put in charge of the institution that sets rates. The universe has a sense of humor. It is not a kind one.

The ghost of 1999

Now I want to talk about technology, and about a thing that happened before, and about how humans are very good at believing that the thing that happened before will not happen again, especially when they are making money.

In 2026, 150k technology workers have lost their jobs. The year is half over. By December, the estimate is 370,000. Tech sector unemployment is at 5.8%, the highest it has been since the dot-com bust, which ended with the Nasdaq down 78% and a great number of very confident people looking for work.

Oracle laid off somewhere between 20,000 and 30,000 people. Block, which used to be Square, which used to be the thing that let your farmers market vendor take credit cards, eliminated 40% of its entire global workforce. Cisco cut 4,000 people. Meta laid off 8,000 humans to make room in the budget for computers that think.

The computers that think are the point of all of this. Every company has a version of the same speech. The speech goes: we are investing in artificial intelligence, which will create enormous value, and in order to invest in it we must stop paying certain people, and those people should feel good about having contributed to the future.

Amazon, Microsoft, Alphabet, and Meta have together committed $700 billion to AI infrastructure in 2026. That is not a typo. $700B, in one year, for the machines.

In 1999, they were building fiber optic cables and server farms. The logic then was the same as the logic now: the infrastructure will pay off. And here is the thing…they were right. The internet did change everything. It just destroyed an enormous amount of money first, and took about a decade to recover, and a great many people who thought they understood what was happening turned out not to.

95% of enterprises currently report getting no return on their generative AI investments. Klarna replaced 700 customer service employees with AI, watched quality fall apart, and hired the humans back. The technology is real. The returns, so far, are mostly a story being told to shareholders.

Stories told to shareholders are worth a great deal of money, right up until they aren’t.

What happens next?

I will tell you what I think happens next. I could be wrong. Everyone who has ever been certain about what happens next in an economy has, at some point, been wrong. This is a feature, not a bug. If economists could predict things accurately, they wouldn’t need to be economists.

In the next 60 days: inflation data drops June 10th. If it’s bad, the rate-hike story gets louder. The SpaceX IPO is June 12th, at a reported valuation of $1.8 trillion. It will either prove that appetite for enormous growth stories is still alive, or it will be the moment everyone realizes it isn’t. Watch the Treasury yield. Watch it the way you’d watch a dog that has been calm for a long time.

In the next year: the World Cup ends. The bartenders go home or find other work or don’t. The revised jobs numbers come out and they are smaller than the original ones, because they always are. If the Fed raises rates, every company that borrowed from the future to fund its AI dreams will have to recalculate. A lot of them will find the math doesn’t work as well as they thought.

In the longer run, the question nobody wants to ask out loud: when AI does what its advocates say it will do - when it genuinely replaces paralegals and accountants and analysts and writers and the whole middle layer of the economy - where do those people go? The bartender jobs will be taken by then too, most likely. We don’t have a plan for this. We have some very interesting conference panels about it, which is not the same thing.

Synopsis

The jobs number was inflated by soccer. The Fed is being pushed toward hikes by a war and the price of oil. Technology is eating its own workforce and calling it progress. The stock market just had its worst week in months and it will probably have worse ones.

These things are connected. They are all part of the same story, which is a story about what happens when you build an enormous amount of value on assumptions that turn out to be wrong, and then the assumptions start to change.

It is a very old story. We have told it many times. We are apparently going to tell it again.

The numbers don’t lie. Read all of them.

Stay sharp.

Forward this to someone who should know.