Employment in AI-linked sectors is contracting: Over the last 3 months, AI-affected sectors posted an average monthly decline of -11,000 jobs. This includes roles in management consulting, graphic design, office administration, telephone call centers, computer systems, software publishers, and web search. Since mid-2023, there have been only 2 months with a net increase in employment in these sectors. By comparison, at its 2022 peak, employment in these industries increased by as much as +55,000 jobs per month. Furthermore, employers cited AI as the reason for 38,579 job cuts in May, the highest monthly total on record, according to Challenger Gray data. This marks the 3rd consecutive monthly increase since ~5,000 in February. The impact of AI on the labor market is becoming increasingly visible.

Employment Friday delivered mixed signals. Non-farm payrolls beat expectations at 117k, but household employment fell for the third straight month. Manufacturing is picking up. Services are lagging. Historically, one follows the other. The US budget deficit is shrinking despite massive tax refunds flowing to corporations and individuals. That tells you the economy is probably stronger than the headlines suggest. Truflation has core Consumer Price Index (CPI) excluding food and energy at 1%. Producer prices are running above consumer prices, which usually happens when consumers push back on price increases. We think inflation will surprise to the downside over the next 6 to 9 months. Oil is the wildcard, but supply is growing fast. Capital spending has broken out of a 30-year range. AI is pulling old-guard names like Cisco, Corning, and Akamai back into growth. The manufacturing buildout is real and broadening. The innovation equity space has been frustrating this year. We've been selectively adding to innovation positions. We think the selloff in innovation stocks will clear as the economy turns. From where we sit, the economy is healthier than the headlines suggest, inflation is lower than people fear, and the innovation cycle is accelerating. Watch “In The Know” for Cathie Wood’s full economic breakdown.

The Equal Employment Opportunity Commission has told administrative judges to pause federal workers’ class discrimination cases as the agency prepares to overhaul civil rights enforcement in the government.

The Texas Employment Forecast indicates jobs will increase 2.0 percent in 2026. Texas employment grew an annualized 3.5 percent in June, adding 42,100 jobs. Meanwhile, May employment growth was revised up to 1.3 percent.