Gregory Daco

Claims:

1/ Initial claims a little lower in the week ended 2/06. Probably still weather-impacted. ~10K higher than a year ago.

If not weather-impacted (let's see next week) - this is the magnitude of increase I would have expected from the fall surge in layoff announcements.

😬 Who Is Paying for the 2025 U.S. Tariffs?

« We find that nearly 90 percent of the tariffs’ economic burden fell on U.S. firms and consumers »

Mary Amiti, Chris Flanagan, Sebastian Heise, and David E. Weinstein @newyorkfed.org

libertystreeteconomics.newyorkfed.org/2026/02/who-...

The jobs picture still looks muddy, even with surprisingly strong January growth January job gains were better than anything the U.S. economy saw in 2025 but not still enough to sound an all-clear.

"We’re heading from a jobless expansion to potentially an income-less expansion, because income is essentially the combination of jobs and wages. With both under pressure, that means that for many families, income and income growth prospects are muted"

www.cnbc.com/2026/02/11/t...

Trump Rebuked Over Canada Tariffs as Midterm Anxieties Grow Donald Trump’s tariff policies suffered their strongest political blow yet with the Republican-led US House passing legislation aimed at ending the president’s levies on Canadian imports.

« Donald Trump’s tariff policies suffered their strongest political blow yet with the Republican-led US House passing legislation aimed at ending the president’s levies on Canadian imports. »

www.bloomberg.com/news/article...

“Spending momentum is softening. Why? Because the labor market is softening,” said Gregory Daco, chief economist at EY. “This is the key pillar to income growth, and in turn, consumer spending activity... The income story is going to be the key story of 2026"

www.bloomberg.com/news/newslet...

Underemployment has drifted higher & all measures of nominal wage growth are decelerating despite sticky inflation--the labor market is still looser despite the massive step down in labor supply supporting econ research conclusion--immigrants are complements to, not substitutes for domestic workers

Don't confuse this with a pure demand shock.

We're going through a historic negative labor supply shock with net migration falling from over 2mn per year to close to zero while ageing demographics are at play.

As a result the #unemployment rate has only risen to 4.3%.

To put things in perspective, this is the weakest annual increase in US payrolls since 2003

The US economy only added 181,000 jobs in 2025 which means only 15,000 jobs per month.

A historic supply shock from reduced immigration is only part of the picture. Reduced labor demand is increasingly visible in easing wage growth.

Jan '26 US #Jobsreport: Solid but still concerning joblessness

✅Payrolls +130k
✅Private +172k
✅Gds +36k
✅Services +136k
🔻Gov -42k

🔻Revisions Nov/Dec: -17k
🚨Benchmark: -898k

⚠️2025: only +181k

🔽 #Unemployment 4.3% (-0.1pt)
✅ Part rate 62.5% (-0.1pt)

📉Wages
✅+0.4% m/m
✅3.7% y/y

Trump Privately Weighs Quitting USMCA Trade Pact He Negotiated President Donald Trump is privately musing about exiting the North American trade pact, people familiar with the matter said, injecting further uncertainty about the deal’s future into pivotal renegot...

« President Donald Trump is privately musing about exiting the North American trade pact, people familiar with the matter said, injecting further uncertainty about the deal’s future into pivotal renegotiations involving the US, Canada and Mexico. »

www.bloomberg.com/news/article...

House Rejects Speaker Johnson’s Effort to Block Tariff Votes The vote is a stinging rebuke of GOP leadership that paves the way for challenges to Trump’s signature economic policy.

« House lawmakers rejected an attempt by Speaker Johnson to block votes on resolutions disapproving of Trump’s #tariffs—a stinging blow to his leadership that paves the way for lawmakers to potentially rebuke Trump’s signature economic policy »

www.wsj.com/politics/pol...

📉The US labor market is increasingly **disinflationary**

Directly through moderating wage growth & indirectly via slower real disposable-income growth and softer consumer spending, particularly among upper-median, median, and lower-income households.

The Employment Cost Index shows continued deceleration in compensation growth in Q4. All metrics of wage growth are slowing even as inflation has gotten stuck confirming that labor demand < greatly reduced labor supply

Revised data on retial sales now show a sustained deceleration in nominal spending growth in Q4

Benefits of growth not equally hitting all income levels or businesses: EY Parthenon's Greg Daco Greg Daco, EY Parthenon chief economist, joins 'The Exchange' to discuss the Federal Reserve's upcoming moves, the latest retail sales data and much more.

Benefits of growth not equally hitting all income levels or businesses: EY Parthenon's Gregory Daco cnb.cx/3O7YTjK

Alphabet Begins Selling Multi Tranche Debut Swiss Franc Bond Alphabet Inc. is selling at least $9.4 billion in sterling and Swiss franc-denominated bonds, including an ultra-rare issue of a 100-year note, following a bumper deal in the US.

« Alphabet Inc. is selling at least $9.4 billion in sterling and Swiss franc-denominated bonds, including an ultra-rare issue of a 100-year note, following a bumper deal in the US. »

www.bloomberg.com/news/article...

« Beijing may have shifted some of its holdings to custodian accounts in Europe. Belgium — whose holdings include Chinese custodial accounts, according to market analysts — has seen its Treasury holdings quadruple since the end of 2017 to $481 billion. »

🇺🇸 @newyorkfed.org inflation expectations fell slightly in January

➡️3.1%: 1-year-ahead (-0.2pt)
➡️3.0%: 3-year ahead (flat)
➡️3.0%: 5-year ahead (flat)

⚠️Transitory upward pressure from #tariffs on #inflation expectations

Watch US Economy is 'Paradox' of Strong Growth, Underlying Weakness: EY's Daco - Bloomberg Gregory Daco, Chief Economist at EY, joins Bloomberg Businessweek Daily to discuss the state of the US economy, saying that he currently sees a "paradox" of strong growth paired with underlying weakne...

US Economy is 'Paradox' of Strong Growth, Underlying Weakness: EY's Daco

www.bloomberg.com/news/videos/...

"Chinese regulators have advised financial institutions to rein in their holdings of US Treasuries, citing concerns over concentration risks and market volatility... The directive doesn’t apply to China’s state holdings of US Treasuries."

www.bloomberg.com/news/article...

Japanese Prime Minister Sanae Takaichi secured a historic election triumph, positioning her as the nation’s strongest leader in the postwar era in an outcome that sent stock prices and bond yields soaring.

bloomberg.com/news/article...

💙 What a game! Wonderful @mancity.com ! And that ending 🤯 — let the goal stand at 3-1 and don’t give a red card to Szoboszlai…

“We’re in a deep freeze when it comes to the labor market,” said Gregory Daco, chief economist at EY-Parthenon.

www.wsj.com/economy/jobs...

💳Credit cards were running hot during the holiday season... not income...

Interesting chart using LLM to filter through Warsh’s speeches, transcripts, media interviews, papers, etc. ⤵️

🤯 Assuming these 4 hyperscalers' follow through on this expected $250bn increase in capex, and that only one fourth is pure domestic activity (i.e. 75% is offset by imports), that would lead to a 0.2% GDP boost in 2026!

Four of the biggest US technology companies together have forecast capital expenditures that will reach about $650 billion in 2026 — a mind-boggling tide of cash earmarked for new data centers and all the gear housed within them.

www.bloomberg.com/news/article...

Gliding along the pre-pandemic Beveridge curve -- points to likely further increases in the #unemployment rate in 2026

⚠️Bank of England voted 5–4 to maintain Bank Rate at 3.75% with easing bias

"Risk from greater inflation persistence has continued to become less pronounced while some risks to inflation from weaker demand & loosening labour market remain...
Bank Rate likely to be reduced further"