Inside Today's Labor Market: What Jobs Data & AI Are Really Telling Us (With Nela Richardson)

LIZ ANN SONDERS: I'm Liz Ann Sonders.

COLLIN MARTIN: And I'm Collin Martin

LIZ ANN: And this is On Investing, an original podcast from Charles Schwab. Every week we analyze what's happening in the markets and discuss how it might affect your investments.

COLLIN: Well, hi, Liz Ann. A lot's been going on lately, and I think we should just kind of get right to it, given a lot of the news, a lot of things are changing. So I'm sure you get this question a lot, but let's keep it very broad. What has been going on with the market lately?

LIZ ANN: Oh gosh, so boring. It's hard to fill this time on these podcasts with what the heck to talk about. Well, Collin, as you know as we sit here we are on a day we're taping this on Wednesday, and it is an incredibly strong day in the market, which we started to see in the futures market last night when the decision was made to not go in to the degree that the president had suggested would be the case at 8 p.m. on that deadline, but instead announced a two-week ceasefire.

And I think the market, from a positioning standpoint, was sort of poised to take advantage of that shift, at least for now, and massive, massive turn up on the day with 2.5% or so move higher in the main large-cap equity indexes. Interesting day today, too, because you have every sector up with the exception of energy and stark contrast to the period up until we're having this conversation since the war began, where the only sector up was energy. So yet again, one of these … not just a reversal day in terms of the overall action in the market, but you know, everything that was up is down. Everything that was down is up. It's sort of opposites day.

And it does make me think, Collin, that this is yet again … action on a week like this is yet again gives me this sense that there's a lot of players in the market right now that think about trading in the market almost in gambling terms and casino terms. You know, vetting in one direction or another in the very, very short term. In fact, I think it's such an important topic, and it's one that our CEO Rick Wurster talks about quite often whenever he's given an opportunity out in the public domain, he talks about the necessity of differentiating investing with gambling.

One of the—for lack of a better word—taglines that I have often used to describe the difference between the two, and I like it in its simplicity is, "Investing is about owning, and gambling is about hoping." And I think action like this well highlights some of the important tenets of that distinction. And so Kevin and I took advantage of this kind of market behavior and decided to go a little bit more evergreen and big picture and talk a bit about that conflating of investing and gambling. But you certainly see this casino kind of mentality pervasive within the markets. There's so much more, as I've been calling it, short-attention-span money in the market, the combination of retail traders and commodity trading advisors, or CTAs for short, systematic hedge funds, other long/short fund complexes.

And it's just remarkable because there's a lot more short-term trading of these traditional passive exchange-traded funds, or ETFs, to a greater degree in the month of March than anything we've seen in history. So the landscape is really changing. And I know, Collin, there has been, maybe not to the same degree of volatility in the bond market as the equity market, but what is your perspective on what we've seen, not just in terms of this turnaround that we have gotten as we speak, but just the last couple of weeks? What are the messages coming out of the bond market?

COLLIN: We've seen a lot of volatility in the bond market, fluctuating expectations about what the Fed may or may not do going forward. It's driven Treasury yields of all maturities up and down over the past five and six weeks. Corporate bond markets, credit spreads, we've seen a lot of volatility there, especially with the bond market. Bonds are meant to be long-term investments. So I like the tie-in you brought there with gambling, investing, and trading, because we get the question a lot about "Hey, what's the right thing to be in with bonds?" And it's all about your plan and how do they fit in? What's your time horizon? You know, it wasn't that long ago that that we would separate … if you think about investing or if you have a brokerage account at Schwab, what are you doing with your money there? There's long-term investing, and there's trading, and there's different buckets for that. Now we have that third bucket that, I agree with you about, you know, the prediction markets and gambling, and that's a whole different animal.

But to your point, Liz Ann, we've had a lot of volatility, and throughout all of this, our outlook and the guidance that we've provided to our clients hasn't changed too much. There's been ups, there's been downs, but what matters more is "How do these fit into your portfolio, and are they going to help you reach your goals?"

But let's talk a little about what's been going on in terms of expectations. We always like to start with the Fed. And just recently, so we're recording this on Wednesday, April 8, after the news of the ceasefire. So we've seen already a shift in expectations from the Fed where the markets, the fed funds futures market, was projecting essentially no change in Fed policy over the next nine, 12 months or so, over the next year.

That's shifted, and now there's roughly a 50% implied probability of a cut by the end of this year. So we've seen a little shift there. I think the situation is still very, very fluid. We got good news, but how the inflation outlook plays out, I think, is still to be determined. The Fed's going to look at potential spillover to the labor market, growth, things like that. But at the end of the day, we're talking about, you know, maybe a cut by the end of the year or the next 12 months. What does this mean for investors? It might not mean much. If you're in Treasury bills, the yields you earn, the income you earn, are probably going to be pretty similar over the next few months. Money market funds, the income they pay tend to be based on the fed funds rate. It means their yields might just hold steady for a while. It might not mean too much.

We've also seen a big shift in Treasury yields. At the start of the conflict, the 10-year Treasury yield was below 4%. It rose almost to 4.5% by the end of March, and it's back now to 4.25%. It's been in this pretty tight, call it half a percentage point range for the past handful of weeks, 4% to 4.5%. In the grand scheme of things, it's really hard to time the markets. So if you're an investor, if it goes up or down five basis points a day, that shouldn't be changing your outlook on how you want to invest. And that's how we approach it. If we see a big shift coming, Liz Ann, and we expected yields to rise very sharply, which is not our view, in that case, we'd probably suggest investors focus more on short-term bonds. That means you can limit your potential price volatility. And if they're short-term, that means as they mature, they could take advantage of higher rates.

But we're not seeing the outlook for yields to rise much further from here. We don't expect them to fall much further from here either, because the economic outlook is relatively stable given all the uncertainty. So there's a lot of headlines. We talk a lot about changing Fed expectations, the shift in the balance between the labor market and inflation. But at the end of the day, our view hasn't changed much. We think the Fed will probably be on hold for an extended period of time, several meetings. Maybe they'll cut one time by the end of this year. Maybe there'll be no cuts.

And we still think long-term Treasuries like the 10-year Treasury yield will probably hold between 4% and 4.5% for the time being. It might bounce around a little bit, but we don't see a catalyst that's going to send it much higher or much lower.

LIZ ANN: Yeah, let me let me share the equity market perspective, too, and the message we've been imparting to investors in this difficult period of time. We've been suggesting a bit of neutrality. By that, I don't mean we're just neutral. We don't have any opinion on what's going on. But within the equity side of your portfolio, there's just too many variables that lead to uncertainty as to the direction.

In the meantime, though, one of the disciplines, aside from the obvious discipline of diversification, which you guys talk about always on the fixed income side, too, is there are rebalancing strategies. Now, sometimes investors will have their rebalancing structure based on the calendar. They might do it quarterly. They might do it at the end of the year. They'll make adjustments to the portfolio based on asset classes that have outperformed versus asset classes that have underperformed. And it forces us to sort of lean into a version of "buy low, sell high," which is "add low, trim high."

Often when we're left to our own devices, we do the opposite. We let our winners run or we chase our winners, and we panic out of our losers. Rebalancing keeps us in gear and has us in that add-low, trim-high kind of backdrop. And sometimes periods of heightened volatility, to the extent you're not wed to calendar-based rebalancing, provides that opportunity for what I often call volatility-based rebalancing or portfolio-based rebalancing. Let your portfolio tell you when it's time to make an adjustment because you've had an outsized set of moves both on the upside and the downside.

And one of the themes that we've had in terms of what characteristics we think you want to look for goes back to actually a bit of an old school acronym that was really popular in the '90s, GARP, which stands for "growth at a reasonable price." So looking for stocks that have that positive growth outlook, either because they're not at the mercy of the vagaries of the war, or they're not being disrupted by AI. They've got that, you know, nice, positive trajectory in terms of forward estimates, but also be mindful of what you pay for that. That's the reasonable price component. So it's a kind of little bit of that quality tilt to it, but with specificity in terms of the individual factors. And I think strength of balance sheet is also important in this kind of backdrop. So that's how we've been helping our investors to sort of navigate this very difficult time within at least the equity portion of the portfolio.

COLLIN: So Liz Ann, I think we have a great guest this week. So can you tell us a little bit about the conversation you're about to have?

LIZ ANN: Sure, and I'm excited about this. Dr. Nela Richardson is chief economist and ESG officer for ADP. She also leads the independent team at ADP Research, which provides reliable and timely data-driven discovery for use by the public, business leaders, and policymakers. I'm sure many people, many of our listeners, recognize the name ADP as the big payroll company.

Nela frequently appears on CNBC, Fox Business, CNN, Yahoo Finance and in The Wall Street Journal, Fortune magazine, The New York Times. She has a weekly column called "Main Street Macro," which examines economic conditions and their effect on small and large businesses, workers, and households. Prior to joining ADP, Nela was at Edward Jones and also served as chief economist at Redfin and worked as an economist for Bloomberg as well.

She has a PhD in economics from the University of Maryland and has held research positions at the Commodity Futures Trading Commission, Harvard University's Joint Center for Housing Studies, and Freddie Mac. Nela is a member of the Stanford Digital Economy Lab Advisory Group, the National Academies Committee on National Statistics, the World Economic Forum, Global Futures Council, and the U.S. Monetary Policy Forum.

Well, Nela, I'm excited about this because you are a returning guest, and the first time, my now former and retired co-host, Kathy Jones, had the opportunity to interview you, and I'm really thrilled that it's my turn now. So thank you so much for coming on again.

NELA RICHARDSON: Liz Ann, thank you for having me. It's a pleasure. I'm a big fan of your market commentary, so I'm looking forward to this conversation.

LIZ ANN: Thank you. We've run into each other a couple of times in the green room in Bloomberg. I feel like somehow we're tapped at similar times on similar days. I'm not sure if there's some sort of aura thing about that or whether it's been purely coincidental, but always nice to see you there, too.

So before we get into the meat of the conversation, just particularly for listeners that are not familiar with ADP or your role or the last time you appeared. Just … you know, what's your job at ADP? What is it that keeps you busy throughout the course of a day in ADP world?

NELA: In a word, paychecks. So ADP is a payroll provider and an HR tech company. And so in that function, it pays about 40, a little bit more than 40 million workers around the world, 26 million in the United States. And I am the lucky economist who gets to have all of that data at their fingertips. So I spend my day leading the team, looking at that data to ask research questions. And we ask a lot of questions, both with our hard payroll data coming from paychecks, but also some sentiment questions, which I hope we can have some time to dig into as well. But that is the job, and we're most known probably by this audience, by our monthly, now weekly, employment report, the ADP National Employment Report.

LIZ ANN: You know, speaking of that, I want to ask more detail about that weekly report, but just talk in general about the importance of having high-frequency data, especially in this unique period of time with so many forces at work hitting our economy and changing the nature of the labor market, AI, and residual impacts of the pandemic. So … and maybe also because of government shutdowns and lower response rates to a lot of survey-based data. So just talk in general about the importance of high-frequency data, especially in the context of ADP shifting to this now-weekly Pulse report as well.

NELA: Well, to answer that question, I'd like to take you all the way back to the pandemic. This is the reason I actually came to ADP. In that six-week period, in the aftermath of the shutdown of large parts of the U.S. economy, about 22 million people lost their jobs in six weeks. And that is the best example I can provide of the importance of weekly data. Hopefully we will never see that kind of impact on the jobs market again. But when you look at local markets, whether it's a hurricane, AI, in terms of an occupation, whatever macro trend, having the ability to get a real-time look at that data is so essential for business makers, for policymakers, for workers.

And so when we relaunched the National Employment Report, which has been around for years, but we relaunched it in 2022 with our partners at the Stanford Digital Economy Lab, it was always with weekly data in mind. That is how we built it. But what we did is we reserved the last six weeks of that data. So we weren't contemporaneous with that weekly data. But last fall, we took a look at the data again, and we decided that we needed to evolve to meet the moment.

And that's when we decided to make this data as real-time as payroll data can get. We now offer it every week with a two-week lag. So that provides that pulse, that gut-check on the numbers that we see every month, whether it's from the government or the data, we're providing that real-time indicator of how the economy is doing right now.

LIZ ANN: Talk about the history of the data when it was monthly from ADP and how that has compared to the more traditional payroll data that we get from the Bureau of Labor Statistics, or the BLS, via their establishment survey. I know over time there's a decent amount of tracking, but there can be big gaps. So maybe talk a little bit about the relationship between the two and what history has shown to be different times of a spread, so to speak, between the two readings.

NELA: Well, believe it or not, there is a perfect jobs data set. It's called the Quarterly Census of Employment and Wages, to your audience if you haven't heard of it. It's a near-complete consensus of U.S. employment. About 95% of the private sector is represented, firms of all sizes, all locations, all occupations. It only has one fatal flaw. It's only available with a six-month lag.

So six months is way too late for most of us to make good decisions on. And so what the ADP data does, and what the Bureau of Labor Statistics, the government data, does is really, at their essences, a projection of what these data sources think the quarterly census of employment and wages will say in six months. We are a projection of what that data is. And so that's what we do. We take our large data sets, this time in the case of the ADP data, and we benchmark it by what is known as the truth to get a view of national employment. Now, our data strength comes from its scale. We are large, and we are nationally representative. And so we are able to take the scale and benchmark it appropriately.

For the government, it comes from their statistical methodology. So they're actually very different data. We just count how many people are employed. We have clients. Over a half million of them are represented in the survey, and we count the number of people they add every single week. It's a pretty simple calculation. There's no hocus pocus.

LIZ ANN: So it's a count, not a survey.

NELA: It's a count. It's a count that comes from the number of paychecks that are issued on behalf of our clients. So we take this count, and we weight it by this quarterly census of employment and wages to make it representative. And we weight it in different categories. For us, it's size, it's industry, and it's location. And that is the National Employment Report. There's no fancy stuff here.

LIZ ANN: And has it always been calculated that way?

NELA: No. Great question. For a long time it wasn't. And I think that's one of the reputational considerations we had to make when we relaunched it four years ago. ADP data, private sector data in general, used to just be a forecast of what the government said. So imagine this. This is the world we were in. We were using hard paycheck data, actual data, to project a survey.

LIZ ANN: It's a little backwards.

NELA: Yeah, yeah, and some time along the way, and I think the pandemic was a big impetus, a big trigger for this new line of thinking, is we have the scale. Our sample is as large as the government sample. Why don't we just provide a different lens, a complementary, private-sector lens of employment? And that's what we did with our partners at Stanford in 2022.

Now, of course, going on podcasts like these is helpful in reminding people that we have changed our methodology quite a bit. But that is the point, is to use this private-sector data. And I think you're seeing that more, Liz Ann, more private-sector companies providing their data to provide a different snapshot. So it's really the elephant analogy. We're all taking different pictures of the elephant. And hopefully, if you combine them, you get the right picture.

LIZ ANN: And talk about the elevated attention that was directed your way during what was, not the most recent partial government shutdown, but the big whammy of the shutdown in the latter part of last year, given the concern about, number one, just access to government-issued data, but also, and I would love for you to touch on this, also concerns about the efficacy of the data.

Is that something that you've experienced in the past with government shutdowns where the spotlight gets turned on a little brighter on ADP, and then it reverts or it feels like that spotlight has stayed shining fairly brightly on you guys, especially in the aftermath of the shutdown, the big shutdown.

NELA: Yeah, I think last fall was unique. Last fall was unique because during previous government shutdowns, we still got a jobs report. And this was coming at a time where there was a tension in the Fed mandate. There was both some concern about a weakening jobs market and concern about sticky inflation. And so data was super important. And the absence of data was also very important, not just to monetary policymakers, but for businesses who are trying to make these same kinds of decisions when it comes to hiring and headcount. And that's when we decided, OK, we're going to, obviously, our lights are still on. We're going to keep putting out our monthly report. But could we do something more?

Could we provide this real-time indicator of employment change when everything seemed like it was changing at the time, and we had this new thing called AI that a lot of people were already seeing, and including in our data and research, some threads that the labor market was being impacted. And so we decided to do what we had been doing. This is structured to be a weekly data set, but let's do it in a more timely way so we can provide the public with the real-time information that we were seeing inside the company.

And there are some differences when you look at ADP data versus the BLS. What we essentially ask is how many people are employed. The BLS is surveying companies on "Who did you pay this week?" in their establishment survey. And so the data sources, the data say different things. But over time, especially after revisions, and this is an important point, the data look very similar. They trend in a very similar direction. And if you look at just the first three months of this year, the government, even with an … I'm sure we'll talk about the wild swings we've seen in the government data, even in the last two months, the three-month average and ADP's two-month reports are about the same. And so that is a consistency there that people should be reminded of. It's not just about one month; it's about the trend over time. And we're both trending in the same direction.

LIZ ANN: All right, let's talk about the here and now. Give me your assessment of the health of the labor market right now, maybe in the context of the common refrain being used to describe it of "low hiring, low firing" kind of backdrop for a whole host of reasons why many companies seem to be in that mode. What is your current assessment of where we are?

NELA: First, I'm going to take an ounce of humility and say that my assessment is constantly changing. And I have updated it even as of yesterday, Liz Ann. I talked to about 20 CEOs and C-suite executives of large companies. And they have changed my thought process a little bit on this. But big picture, I will say that the labor market is fairly solid. It is.

What's missing is that dynamism. So the stock is good, but the flows are weak. And the question for economists is how weak is too weak? Obviously, we've decelerated over the last two years. That was to be expected. There was a lot of hiring in the aftermath of the pandemic. But the deceleration is way faster and way deeper than I think economists were expecting, and it has to do with two things, both the demand side and the supply side. We are an aging population. There's a lot of retirees. We can't expect employment to grow at the same pace as it did before. At the same time, immigration has subtracted supply this last year and into this year. So the numbers we're seeing may be healthy for the state of the economy, healthy in terms of the unemployment rate.

The question in my mind is, "Is this healthy long-term?" I would describe the labor market simply as solid, but highly fragmented. This is not a widespread growth market. This is a market where, between January 2023 and January 2025, three out of every four jobs were provided by the health care sector.

That is a highly concentrated market. And because it's so concentrated, I think that's what's driving a lot of the volatility that we've seen even this year.

LIZ ANN: Now, let me stay on that and pull some additional threads here, because you talked about the health care sector. You're a chief economist. You're not just an analyst of jobs-related data. So what kind of work do you do in terms of what you're seeing at the sectoral level, where job growth is strongest, where it's weakest?

And do you tie that into a bigger-picture view on the economy based on what you're seeing at that more sectoral level, whether it's cyclical industries, hiring would be ostensibly a good sign for the economy, vice versa if it's purely defensive areas? So talk about how you roll that sectoral data into a bigger-picture thought about where we are in the economic cycle.

NELA: Yeah, it's a great question. At heart, I'm a microeconomist. And so that gives me a different perspective on the labor markets in general. When I look at the labor markets as a microeconomist, I don't just take the number at face value. I look at what's driving the number. And now more than ever, the question of why you're seeing the number that you're seeing is so important. Is it a supply reason or a demand reason? And that question is live every single day.

So what's driving the economy now is our service sector, OK? We're 90% services. But it's a particular component of our service sector. It's health care, and that is tied to our aging demographic. So when we unbundle those health care jobs, they're not coming by and large from doctor's offices and hospitals and nursing facilities. Those jobs are being created in low-paid occupations tied to in-home health care. This is reflective of an aging retirement-focused economy where the retirees are very wealthy compared to historical cohorts, and they are choosing to age in place. And that demographic is reshaping the labor market in a major way.

So when you think about cyclical, health care is not cyclical. It is tied to the slow-moving demographics. And if you couple that with new research out of the Dallas Fed that this break-even number, the number economists … I call it the unicorn because it doesn't really exist. Let's pretend it exists. The break-even number that doesn't trigger unemployment rate to go higher or lower is around 10,000, this new research says.

Well, that means that "Is there even a business cycle?" If all of our … the bulk of our job creation is coming from a non-cyclical sector, what creates those cyclical dynamics? That is tied back to this loss of dynamism and stagnation in the hiring that I'm seeing. And that is, to me, even though the job market is overall solid, the fact that it's highly fragmented and concentrated in one sector is my deepest concern.

LIZ ANN: Speaking of one sector, and maybe it is best described as a sector, I want your thoughts, Nela, on AI. Prior to the onset of the war, the AI discussion was front and center. Most of the questions I was getting from clients were AI-related, particularly given the disruption phase that we've most recently been in. So how do you think about where we are in that AI cycle as you look at data? Have you seen a significant shift in terms of hiring or lack thereof as we've gone through this now three-plus year epic boom in what we think of as AI, particularly since the launch of ChatGPT in 2022?

NELA: Yeah. Yes and no. And I'll break that down a little bit because that sounds like an economist answer if I've ever heard one.

LIZ ANN: I do that all the time, too. Strategists do it, too. We're also two handed.

NELA: No in the macro sense, yes in the micro sense. So here's what I mean by that. We partnered with Stanford University again. They used our data at ADP to look at occupations, and they divided our occupations in our vault of data. We have about 9,000 of those occupations into AI-exposed and AI-non-exposed careers, occupations. And because our data is highly granular, they were able to do it by age cohorts. They found that in AI-exposed occupations where the jobs were more complex, as referenced by having older workers in them, it was augmentative. With the rollout of ChatGPT in October 2022, you saw employment increase. But for younger workers with more simple tasks, they actually saw a 20% drop in some occupations like computer software developers and customer service representatives.

So there are some tasks that were evidently being automated and some that were being augmented. But if you look outside of this AI-exposed paradigm to home health care aids, everybody was gaining in employment in that sector.

So it was really based on the occupation, not even the industry. And what we're doing to extend this research is, first of all, isn't that cool that we can actually measure AI exposure and occupations? And what if we could do that in real time? And what if we could take, Liz Ann, those same jobs, break apart their job descriptions, and like a hedonic housing market, assign value to those tasks, value that makes those tasks higher earning, and value that makes those tasks less relevant to the companies? And that is the research. That's the frontier research we're doing with Stanford right now. We're unbundling tasks within an occupation that we all do. And we're tracking value just like you would a house. What is the price of that fourth bedroom? What is the price of having that communication skill, having that software tool?

Is that growing in value, or is that losing value to the employer, and because we're ADP, and we pay millions and millions of workers, we actually have that data on hand. And I think one day very soon, maybe in a couple years, maybe later this year, instead of coming on your podcast and talking about the jobs report, I'm going to tell you about the task report, how many tasks were created or destroyed by AI in this economy. It's a total different shift in our thinking about what is a job and what do we measure.

LIZ ANN: That is so fascinating, and it ties into something I've often thought about AI as a disruptor, as a replacement. So far anyway, my mindset is AI, large language models, is more of a replacement of tasks, not full occupations. So you just detailing that is fascinating. When will that information and in what form be out there in the public domain? Sign me up.

NELA: We're working hard on it. We're trying to get it out as quickly as we can. And I think it solves a lot of problems for companies. If you think about it now, we just kind of take for granted the way occupations run within a company, but occupations are actually pretty siloed. You have the accountant sitting over here and the lawyer sitting over here and the HR people in their own department, and in a large company, you know this well, these people, they do meet over Zoom or in a conference room.

But their skill set is siloed. Imagine a world where your skill set is more fluid. That is the world that AI creates. So it's not that we become less valuable. It's actually that people become more valuable because our skills can be deployed within a company to their greatest usage. And that's what I'm excited about when I think about AI. There is a future where people could suggest that AI eliminates occupations. That's not a future I see.

I see a future where AI changes our jobs tremendously, but also makes us more valuable.

LIZ ANN: I love that view. Maybe because I share that view. I think there is so much on AI that is incredibly doom and gloom, that this is the end of the world as we know it. And you you've seen the prognostications about we're going to hit a 30% unemployment rate. And I certainly don't think that we're going to end up there, but I'm a big believer in … when you look back at history at every epic innovation that we've have, you do go through a disruption phase, and there is that creative destruction, and there is some job displacement, but ultimately you come out the other side, and you've got brand new occupations and brand new interesting things that workers are doing when they're sort of freed of some of the shackles of those traditional … so I want to be first on the list, Nela, of people you tell, "OK, we're about to launch this in the public domain." And you're obviously working with, I seem to recall that Stanford might have some talented brains over there. So that is absolutely fantastic.

So I want to wrap up by just tossing it back to you. I love when events or if I'm … you know, sitting in the seat that you're sitting in right now and being interviewed on a podcast or doing a television appearance, you know, what's a key takeaway? What do you want to, in this case, leave listeners with that you feel is most important, even if it is just putting a wrapper around something you've already discussed? But what is sort of the power statement here to end our very interesting conversation?

NELA: It's all about the granularity of the labor market. We are captured by the headline number every month. Like, that is the whole story. That's just the beginning. What we're seeing in the labor market, this is the most fascinating time that I've ever experienced in my entire career. When I talk to business leaders, they say things that don't sound like what you hear on TV.

What they're worried about is "How do we get a young person to work a 12-hour shift?" Nobody wants to do that anymore. Very few people want to work 12 hours at a time. Like, the worker has changed. Our sentiment about work has changed. The pandemic has a long shadow about how we feel about work and what motivates people. And it's not the same as it used to be. And so we're just catching up to a change that's already happened. And then there's new changes coming.

So I guess the first thing I would say, if I were to leave your audience with, is the labor market's pretty, well, good. We came out with a number that the U.S. economy, our prediction right now as of this airing, is that it's on solid footing. And it's been increasing hiring over the past few weeks. But it's still a labor market that there's not a lot of dynamism. So there's room for improvement.

But also there's an acknowledgement that the structure of the economy has changed. And for employers, which is who I talk to, how can you make the most of that structure? Maybe 12-hour shifts is not the future.

But if you need that, what do you need to do to incentivize workers so that you can match the past with the present? I think that's what employers are grappling with now. And if they can do that successfully, if we can help them nurture their talent, that's going to be additive to both their bottom line and the economy.

LIZ ANN: Absolutely brilliant. I loved this conversation. As you were going through everything, I was thinking of words that you and I both have heard our friend Jon Farrow of Bloomberg say, which is "Just a clinic," and you managed to do it in a way that even the non-clinicians out there can just get so much great information. So thanks for coming on again. We will reach out to you again. So this is not second and done, but we really appreciate your time. Thanks, Nela.

NELA: It's been a pleasure. Thank you.

COLLIN: Liz Ann, let's look ahead to next week. So what is on your radar?

LIZ ANN: Yeah, so the remainder of this week and into next week, we get personal income and spending. That's something I look at on a monthly basis to see which one comes in a little bit higher. More often than not in the past year or so, the spending numbers have been higher than the income numbers, which is not the healthiest backdrop.

We get the PCE price index, Personal Consumption Expenditures price index, which is the Fed's preferred measure. And obviously, if the Fed is paying close attention to something, then we do as well. We get your typical, you know, weekly initial unemployment claims, I think, not just the initial read, but continuing claims, a number of people that remain on unemployment insurance.

And then I think it was maybe last week, Collin, we talked about the next update to fourth-quarter gross domestic product, GDP, and you mentioned this last week, and we had a brief discussion on it, but like you, I will also be paying attention to the profits component of that that gets released. It's the national income and product accounts, NIPA-based profits, which is much, much, much broader than S&P profits. It covers publicly traded companies and private-sector companies, large and small, because there's been a big differential between overall corporate profits in the U.S. and S&P profits.

We also get Consumer Price Index coming up. We get yet another read on inflation expectations, then some you know more industrial-type indicators like durable goods and capital goods, and then we also get Producer Price Index next week. So between now and the next time you and I get together, we will have three important inflation readings to digest. How about you? What's on your radar?

COLLIN: Yeah, there's a handful on my radar, including, so we have the GDP report that you mentioned that includes corporate profits, but earnings season is coming up. I almost forgot about it, given all the other headlines that are happening, but we have a lot to focus on there. So next week we have existing home sales. It'll be interesting to see if the rise in mortgage rates have hurt them to a degree with mortgage rates up close to 6.5% or so.

Next Wednesday, we get the Fed Beige Book. So that's the Fed's, you know, sort of qualitative look at the economy using all the various districts. If we look back to the previous release back in early March, economic activity increased at a slight-to-modest pace in seven of the 12 districts, while five of the districts saw a flat or declining activity. So we want to see kind of what that breakdown looks like. Are we seeing increasing activity in the districts? Are we seeing more that are seeing flat or even declining activity? So that gives us a good kind of real-time look because the Fed has a lot of contacts with their district banks and in their local communities. So that's going to be really important, something we focus on a lot.

And we also get the Treasury International Capital flows, or the TIC flows, from the U.S. Treasury. So that's a look at basically who's owning U.S. Treasuries, what the flows look like. Are we seeing central banks increase or decrease their holdings? Private investors? So it's a look at both international and domestic, what that flow looks like. There is a caveat, it's from February, so this is before the conflict in Iran began, but it gives us insights knowing that over the past, say, 12 months or so, there've been concerns about "Is the dollar losing its luster? Do people not want to own Treasuries anymore?" That hasn't really been the case so far. I mean, we've seen some volatility with that TIC data, but for the most part, we continue to see inflows. So we'll be focusing on that because that is a driver of Treasury yields. Supply and demand plays a role there, and we want to see how that demand is holding up.

LIZ ANN: Thanks everybody for listening. We're always very appreciative. And as a reminder, you can keep up with both of us in real time on social media. I'm @LizAnnSonders on X and LinkedIn. My serious imposter problem has started to dissipate a little bit, but they're still out there. So make sure you're following the real me.

COLLIN: And I'm @CollinMartinCS on X and LinkedIn. So you can follow me there. That's Collin with two Ls, and the CS is for Charles Schwab.

LIZ ANN: And you can always read our written reports. They typically include lots of charts and graphs at schwab.com/learn. And if you've enjoyed the show, please consider leaving us a review on Apple Podcasts, a rating on Spotify, or feedback wherever you listen. And we would love if you would tell a friend, or maybe a few, about the show, and we will be back with a new episode next week.

LIZ ANN: For important disclosures, see the show notes, or visit schwab.com/OnInvesting, where you can also find the transcript.