Good morning. Andrew here. Jay Powell, the Fed chair, spelled out yesterday the reality of the employment problem in our economy. “There’s zero net job creation in the private sector,” he said, suggesting that the nation has “very, very low — nonexistent, really — growth in the labor force, which of course we’ve never had in our history.” We go deep on his comments, including about how long he may ultimately stay on the central bank’s board. We also look at how the war in the Middle East is battering the global energy market. And you — our readers — provided some fascinating feedback on the impact of artificial intelligence on jobs. More below. (Was this newsletter forwarded to you? Sign up here.)
‘No intention of leaving’War-fueled uncertainty has rocked global markets. Now, Wall Street is contending with another wild card — that Jay Powell, the Fed chair, may not leave his post any time soon. That could set the stage for more clashes between the Fed and President Trump, who has badgered policymakers, and especially Powell, to lower interest rates. The market reaction has been swift. Futures traders this morning see the Fed holding interest rates steady until June 2027. Yesterday, traders saw the central bank making one cut by December. The prospect of fewer cuts and concerns about the economic fallout of war in the Middle East (more on that below) have prompted a global sell-off in bonds. A recap: After the Fed voted yesterday to leave its benchmark lending rate unchanged, Powell told journalists that he planned to continue leading the central bank until his successor was confirmed by Congress, even if that happens after his chair term expires in May. “That is what the law calls for,” said Powell, a former lawyer. Trump’s pick to succeed Powell, Kevin Warsh, still awaits a confirmation hearing date, and his path to the Fed chair is in doubt. Powell wasn’t done there. He said he would stay on at the central bank as long as the Justice Department pursues a criminal investigation into his role in a renovation project for the Fed’s headquarters. Senator Thom Tillis, Republican of North Carolina, has vowed to block confirmation of Trump’s Fed nominees until the legal matter has been resolved. “I have no intention of leaving the board until the investigation is well and truly over, with transparency and finality,” Powell said. A reminder: After his Fed chair term expires, Powell could stay on as a governor until January 2028. Powell also said that he hadn’t yet decided whether he would serve the full term, adding more drama to central bank succession. History buffs: The last time a Fed chair did this was in the 1940s when Marriner Eccles, for whom the Fed HQ is named, stayed at the central bank in an effort to protect the institution from what he considered outside political pressure. Fed watchers see parallels. “The Fed’s independence is widely recognized as a bedrock of a healthy economy,” Bill Adams, an economist at Comerica Bank, wrote in an investor note yesterday. It’s a principle that’s had wide bipartisan support, he added. “It is for good reason that they call the Fed chair the second most powerful person in D.C.”
The flight from private credit continues. Stone Ridge Asset Management, which holds consumer and small-business loans made by fintech companies like Affirm and LendingClub, informed clients that because of the high volume of redemption requests it would pay out just 11 percent of the total amount requested. Elsewhere, S&P Global Ratings downgraded its outlook for Cliffwater LLC’s $32 billion flagship fund over redemption concerns. Kraft Heinz and Unilever reportedly discuss merging their food brands. The consumer product giants considered combining Unilever’s food business and Kraft Heinz’s condiments division before the talks ended, The Financial Times reports, citing unnamed sources. Both companies have struggled to attract increasingly health-conscious consumers as the popularity of GLP-1 weight-loss drugs continues to shake up the food aisle. HSBC is said to be weighing deep job cuts fueled by artificial intelligence. The job losses could affect 20,000 employees — about 10 percent of HSBC’s staff — focusing on back- and middle-office roles in service centers, Bloomberg reports, citing unnamed sources. Analysts suggest that banks could cut up to 200,000 jobs in the coming three to five years as A.I. takes on more human tasks.
Energy warAs the war in the Middle East widens, energy infrastructure is increasingly fair game. The latest strikes in the Persian Gulf, including on major gas hubs in Iran and Qatar, have put energy supplies at risk, raising the price of oil and fears of an economic pullback. The latest:
New attacks: Qatar blamed Iran for strikes on its natural gas facilities in Ras Laffan Industrial City, a major coastal energy hub. QatarEnergy, the state-owned petroleum company, said that the attacks had caused “extensive damage” to several of its liquefied natural gas facilities and to Pearl GTL, the world’s largest gas-to-liquids plant, which is owned by Shell. The strikes came after Tehran vowed to retaliate. Iran’s parliamentary speaker said the country would respond “eye for an eye” to an Israeli barrage yesterday on its South Pars gas field, which is in both Iran and Qatar. President Trump called for a de-escalation of sorts. The economic fallout has made the war highly unpopular in the U.S., even with Trump’s base. The president wrote on social media that Israel had acted alone in attacking South Pars and that it would not do so again. But he warned that if Iran continued to attack U.S. allies in the region the U.S. would retaliate. The escalating messages and tit-for-tat attacks have markets on edge. How bad could it get? The latest attacks are dealing a major blow to crucial energy infrastructure. The disruptions could be long-lasting, creating another supply shock for a region contending with a partially closed Strait of Hormuz, the vital route for energy exports. Analysts have been dialing up their forecast for even more expensive oil — possibly above $150 a barrel.
Shipping is also in danger. A British maritime monitoring agency said today that a vessel had been hit by a projectile near the Ras Laffan energy hub in Qatar. It was the second attack on a vessel overnight in the region. Politics and power needs force data centers off-gridSkyrocketing demand for electricity to power the artificial intelligence infrastructure boom has become a divisive political issue. Communities are pushing back as concern grows about how the construction of data centers will drive up electric bills. To take on the backlash, the tech industry is spending tens of millions on lobbying. And earlier this month, President Trump gathered executives from Google, Meta, Microsoft and other tech companies to sign a nonbinding pledge that they would pay a larger share of the energy costs from data centers. The tension has only increased in recent weeks as the war in Iran caused oil prices to spike. But even as they work the political system, tech companies are adopting another strategy: using off-grid energy, and even building their own on-site power plants. The biggest portion of that power will be generated by natural gas, The Times reports. At the end of 2025, an estimated 39 percent of the gas power capacity being developed in the United States was intended to serve data centers on site, up from 5 percent at the end of 2024.
What you told us about A.I. and jobsOn Tuesday, Andrew shared that, while crisscrossing the country in recent days, he’s been hearing a lot about fears that artificial intelligence will destroy jobs. He wrote: “That is a sea change from the prevailing worry I heard just a couple of months ago, that we were in an A.I. bubble that could pop. It is fascinating to observe how quickly things shift. Which perspective is right?” Many of you said the two weren’t mutually exclusive. As Tom Cisewski put it, “A.I. can be in the middle of a bubble and cause massive work force disruption.” Here’s what else you had to say (the responses have been edited and condensed):
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