There’s some surprisingly good news in the economy in the past week, at least as single data points go. First on the jobs front: While 2025 was the worst jobs growth year since 2003 with a gain of only 181,000 jobs, the job market bounced back nicely in January by adding more than 130,000 jobs, with more than half the gains in healthcare (manufacturing added 5,000 jobs in January). Second, core CPI – goods and services without volatile energy and food prices – increased only 0.3% in January, which makes it the lowest year-over-year increase since 2021. Based on historical trends (companies tend to increase prices at the start of a new year), analysts still expect CPI to peak in Q2 before falling, which would make room for the Fed to start reducing rates again this summer.
This news follows on the heels of ISM’s Purchasing Manager Index showing U.S. manufacturing moving back into expansion territory in January, jumping 4.7 percentage points to 52.6%. This is the first move into expansion terrain in more than two years.
The question economists are asking is: Will this growth hold during Q1 and Q2 of 2026? The Conference Board’s Consumer Confidence Index actually fell 9.7 points in January to 84.5, the lowest level since 2020. The impact of American tariffs and changes in U.S. global policies are considered a foundation for this decline in confidence.
Lurking behind such good news has been, in recent weeks, a sudden – or, perhaps, expected – emergence of a new set of warnings about AI, not just in terms of whether total investments have created a bubble, but in terms of the rapidity in which AI is advancing and the level of disruption some are now forecasting. And not just workforce disruption (some AI executives are now admitting that AI could quickly render countless jobs obsolete). Many in the industry are projecting a broader threat to society. In the words of one former Claude engineer who resigned his position, “I’ve repeatedly seen how hard it is to truly let our values govern our actions…we constantly face pressures to set aside what matters most.”
(Updated 2/13/26)
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