What 26 Million Paychecks Reveal About the Economy (With Nela Richardson)
On Investing | EP133
What 26 Million Paychecks Reveal About the Economy (With Nela Richardson)
This week's episode connects two of the biggest themes driving markets today: rising bond yields and a rapidly evolving labor market.
Collin Martin and Liz Ann Sonders discuss why higher Treasury yields matter far beyond the bond market. They explain how rising yields affect mortgage rates, borrowing costs, housing affordability, and stock market leadership. While higher rates create challenges for interest-sensitive sectors like real estate and utilities, as well as lower-quality companies with significant debt burdens, they also create attractive opportunities for fixed income investors.
The featured interview is with ADP Research Chief Economist Nela Richardson, who offers a detailed look at the U.S. labor market through ADP's payroll data. Richardson explains why ADP's employment data can differ from government job reports, discusses emerging wage trends, and introduces ADP's new Pay Insights research. She argues that inflation's lasting impact on purchasing power helps explain weak consumer sentiment even as economic growth remains resilient. The discussion also explores manufacturing, labor shortages, overtime trends, job-switching premiums, and how demographic shifts are reshaping workforce dynamics.
The conversation concludes with a deep dive into artificial intelligence and employment. Richardson shares research suggesting that AI may be reducing opportunities for some younger workers in AI-exposed fields while enhancing productivity and employment prospects for more experienced workers. Despite concerns about disruption, she remains optimistic that a combination of technology adoption and skilled workers can drive the next wave of productivity growth, much as previous technological revolutions did.
You can read the ADP National Employment Report that Nela and Liz Ann discuss at http://www.adpemploymentreport.com/.
On Investing is an original podcast from Charles Schwab.
If you enjoy the show, please leave a rating or review on Apple Podcasts.
Explore more topics
The comments, views, and opinions expressed in the presentation are those of the speakers and do not necessarily represent the views of Charles Schwab.
This material is intended for general informational and educational purposes only. This should not be considered an individualized recommendation or personalized investment advice. The securities, investment products and investment strategies mentioned are not suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decisions.
All expressions of opinion are subject to change without notice in reaction to shifting market, economic or political conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.
Past performance is no guarantee of future results.
Investing involves risk, including loss of principal.
Performance may be affected by risks associated with non-diversification, including investments in specific countries or sectors. Additional risks may also include, but are not limited to, investments in foreign securities, especially emerging markets, real estate investment trusts (REITs), fixed income, municipal securities including state specific municipal securities, small capitalization securities and commodities. Each individual investor should consider these risks carefully before investing in a particular security or strategy.
Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.
High-yield securities and unrated securities of similar credit quality junk bonds) are subject to greater levels of credit and liquidity risks and may be more volatile than higher-rated securities. High-yield securities are considered predominately speculative with respect to the issuer's continuing ability to make principal and interest payments.
All names and market data shown are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security.
Forecasts contained herein are for illustrative purposes only, may be based upon proprietary research and are developed through analysis of historical public data.
The policy analysis provided by Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.
Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see Schwab.com/IndexDefinitions
The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.
Negative correlation refers to investments that tend to move in opposite directions: when one rises, the other falls.
NERP is the National Employment Report Pulse from ADP: https://adpemploymentreport.com/