Episode summary
Job Diversity is a 'Necessary Backbone for Every Economy,' Says Nancy Lazar
Bloomberg Surveillance
· · 6 min · Guests: Nancy Lazar, Veronica Clark, Nela Richardson
Summary
The guest argues that near-term employment will stay weak because companies are still focused on protecting profit margins and because labor is a lagging indicator. She says some of the weakness is an unwinding of earlier government-driven hiring in health care and education, and she expects job formation to improve only gradually, with green shoots in mid-2026 and more meaningful hiring in the second and third quarters of 2026.
She also says the broader economy is being supported by stronger profits and capital spending. The guest points to improving earnings breadth across the S&P 500, S&P 600 and Russell 2000, and argues that companies will keep spending on technology to raise productivity before they hire. On the consumer side, she says spending usually turns up before jobs, helped by lower rates, easier bank lending and refinancing, and she expects tax refunds to give disposable income a boost in 2026.
On tariffs and industrial policy, the guest calls tariffs a regressive tax that has kept inflation sticky, especially for lower-end consumers and smaller businesses. She is bullish on U.S. reindustrialization, saying corporate tax cuts and full CapEx depreciation reinforce a manufacturing renaissance and support blue-collar job growth. She says the unemployment rate could drift toward 5% in early 2026, but still views that as consistent with a labor market that is slowly healing.
Key takeaways
- The guest expects near-term payrolls to stay weak because firms are still prioritizing margins and labor is a lagging indicator.
- She expects labor-market improvement to become visible in mid-2026, with more meaningful hiring in the second and third quarters of 2026.
- The guest says rising profits across the S&P 500, S&P 600 and Russell 2000 are setting up future hiring through higher technology spending and productivity gains.
- She argues tariffs act like a regressive tax and have helped keep inflation sticky, especially for lower-end consumers and smaller businesses.
- The guest says U.S. reindustrialization is being reinforced by corporate tax cuts and full CapEx depreciation, which she sees as a backbone for every economy.
- She thinks unemployment could rise toward 5% in early 2026, but frames that as a gradual, not severe, deterioration.
Notable quotes
“Probably in mid 2020, mid 2026, you're seeing green shoots for the labor markets”
“You have profits improving across the board, both S&P 500, S&P 600, Russell 2000”
“Tariffs are attacks. How much as a share of a of a share of GDP, you're about over 10% as a as a hit”
“which is a necessary backbone for every economy”
How the episode opens
Near term, no employment is going to be on the weak side. Companies are still really focused on their profit margins. But employment's a lagging indicator.
Quite, quite, quite, quite frankly. The government did crowd out employment earlier over the past couple of years. They the health care industry crowded out the private sector education.
So we're kind of unwinding that right now. So that's also a headwind along with the private sector still a little bit focused on protecting the profit margins. When do we get back to job formation that doesn't involve health care workers and bartenders?
Probably in mid 2020, mid 2026, you're seeing green shoots for the labor markets. You have profits improving across the board, both S&P 500, S&P 600, Russell 2000. So you're getting the breadth of now profits.
Companies are willing to spend they always for spend on technology to further improve their productivity and their profitability. And then you get employment. Employment is a lagging indicator.
So you're setting the stage for employment as you move into the second, third quarter of 2026. And you are getting some indications that it is incrementally improving. Small businesses have stopped firing, which is again the first step in getting job, job hiring as we go through 2026.
We've got a little bit of hindsight here, Nancy, with tariffs. What happened with tariffs? How did they kind of impact the economy?
How are they how are they impacting the economy? So first, they are attacks on tariffs. Tariffs are attacks.
How much as a share of a of a share of GDP, you're about over 10% as a as a hit up in 2% at the beginning of the year. And it's really a regressive tax on that lower end consumer on smaller on smaller businesses.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- job market weakness
- adp payroll data
- fed rate decision
- labor hiring slowdown
- s&p 500 and treasury yields
Companies and tickers mentioned
- PIPR
- C
- ADP
- AAPL
- VZ
- Piper Sandler
- Citigroup
- ADP
- Apple Inc.
- Verizon Communications Inc.
Watch the episode
Watch “Job Diversity is a 'Necessary Backbone for Every Economy,' Says Nancy Lazar” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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