Is artificial-intelligence taking jobs or saving the economy? It could be both, which is a tricky conundrum for the Federal Reserve and investors to process.
A weakening job market is being taken as good news, firming up the case for
interest-rate cuts from the Fed. A report from payroll processor ADP showing private hiring fell in November cemented bets on a quarter-point reduction at next week’s meeting. In the absence of an up-to-date payrolls report, the debate looks settled until January’s monetary-policy meeting.
But things get more complicated from there, with President Donald Trump expected to name the next Fed chair early next year and questions over the impact of AI on employment. The market is currently enthusiastic about
automation—Fitch Ratings just raised its estimate for U.S. gross domestic product growth this year to 1.8% from 1.6% due to spending on AI. But investors might not be so enthused if the technology contributes to a lasting downturn in hiring.
So far, the evidence is on the side of the optimists. While there are pockets of weakness in areas exposed to AI, especially in junior roles, there are no signs of widespread layoffs. Economists at equity manager ClearBridge Investment expect job creation could pick up to 80,000 or 90,000 per month next year—from around
62,000 a month for the three months through September—on the back of interest-rate reductions, tax cuts, and relief from tariff uncertainty.
However, AI is a fast-moving technology. Amazon has just introduced “frontier agents” which it says can handle tasks such as writing code and don’t require human intervention for days at a time. Salesforce said it is striking more and
bigger deals for AI product Agentforce, designed to do jobs such as customer service.
Such AI advances are being welcomed right now but that might not last if they begin to replace workers more widely. Bad news
can only be taken as good news for so long.
—Adam Clark
***What’s Ahead for Markets in 2026? From “Liberation Day” tariffs to torrid rallies in AI stocks and gold, this year has been full of surprises. Join us on Dec. 11 at noon for discussions with investment
strategists and money managers about the outlook for the economy and markets in 2026—and how to position your portfolio for success. Sign up here.
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November’s Job Losses Raise Hopes for December Rate Cut
Amid a dearth of official employment data, a report on private payrolls showed companies shed a larger-than-expected 32,000 jobs last month, fueling hopes that the Federal Reserve will cut interest rates next week. While some sectors, such as services jobs, are growing, tariffs and uncertainty are weighing on hiring decisions.
- The ADP report on Wednesday contrasted with expectations that private companies added 40,000 jobs in November. The slowdown included a significant pullback by small businesses at a time when employers typically retain workers heading into the holidays. Businesses with fewer than 50 employees cut 120,000 jobs in November.
- ADP’s chief economist Nela Richardson called job losses at small businesses a canary in the coal mine, but added that it wasn’t broad enough to call conditions a recession. “But it is a point of weakness and a point of concern, and it could grow to something.”
- The drop in
private payrolls, coming after the Fed’s periodic survey of economic conditions known as the Beige Book said employment declined slightly, should be enough to persuade Fed officials to cut the benchmark rate, writes Stephen Brown, Capital Economics’ deputy chief North America economist.
- The Institute for Supply Management’s survey of top executives at banks, retailers, restaurants, and similar businesses found that while the services side of the economy grew for the sixth straight month,
businesses remain cautious about hiring and investing.
What’s Next: The ADP November report is one of the few major employment indicators that Fed policymakers will get to review before next week’s meeting.
Futures markets expectations for a quarter-point cut ticked higher to an 89% probability, as tracked by the CME’s FedWatch tool.
—Megan Leonhardt and Janet H. Cho
Salesforce’s AI Agents Are Picking Up Corporate Customers
Salesforce raised its full-year guidance as its artificial intelligence offering, Agentforce, shows signs of picking up traction. CEO Marc Benioff said more companies are adopting the AI agent for customer service and for their internal operations. Investors have focused on the product, which was slow to find commercial success.
- For the third quarter, the software maker reported adjusted earnings of $3.25 a share and revenue of $10.26 billion. The results were mixed, but the outlook beat expectations, seeing full-year revenue in a range of $41.45 billion to $41.55 billion, representing 9% to 10% growth.
- Salesforce rolled out its generative AI products using the sales pitch to corporations that they could automate big parts of their workflows. But as competitors have also shown, corporate customers have been cautious toward adopting the technology for their operations.
- Still, some progress is being made. Salesforce has booked annual recurring revenue of $540 million from agentic AI products, up by $100 million from just three months before. That’s about 1.2% of projected revenue for the next 12 months, but gives investors a way to understand how the AI initiatives are faring.
- Thus far in fiscal year 2026, Salesforce’s overall sales are up 8.7% from the year before. And Salesforce has become more profitable, with a free cash flow margin of 33% in 2025, versus 20% in 2023. It has used some of that cash for dividends and buybacks.
What’s Next: Salesforce said it has over 9,500 paid Agentforce
deals and 3.2 trillion tokens processed. CFO Robin Washington, who is also chief operating officer, said the third quarter momentum and Agentforce adoption reinforces their path to achieve a $60 billion organic revenue target by fiscal 2030.
—Adam Levine and Liz Moyer
Trump Proposal Puts Emphasis Back on Fossil Fuel-Burning Cars
President Donald Trump proposed a major rollback of Biden-era fuel-economy standards that he said imposed expensive restrictions on auto makers. He made the announcement in the Oval Office flanked by
