In my last article, I discussed how companies and policymakers can step in to help in an AI-driven labor market. What about educational institutions? While students themselves can develop skills to prepare, educational institutions can play a role in guiding them on which skills to develop.

A college education implicitly promises increased access to career opportunities and higher earnings. But students often don’t know what they don’t know when it comes to preparing for careers. Upon entering college, they usually can’t name the particular skills they’ll need to succeed as, say, a data scientist. Instead, they place their trust in key college courses to provide relevant material.

In our business, precision is power. We build predictive models for clients making some of their biggest fiscal decisions. A couple of months ago, one of our best performers, a model that had nailed inventory needs quarter after quarter, started to drift. Its forecasts weren’t wrong, exactly. Just… fuzzier. The prediction intervals widened. The signals got noisier.

When we investigated, the culprit wasn’t the math; it was the map. Our assumptions, built on decades of reliable data from America’s gold-standard statistical agencies, were suddenly out of sorts. Tariff tremors, policy-driven supply distortions, and even now a federal shutdown have all disrupted the data we depended on.

Last week, I spent several days in Philadelphia for the Annual Meeting of the National Association for Business Economics (NABE). The event brings together economists from central banks, think tanks, corporations, and universities to assess the state of the global economy. The theme this year was Global Economy in Transition: Finding Opportunity Amid Disruption. Sessions explored the pressures shaping global business and policy: geopolitical instability, shifting trade regimes, monetary divergence, and the disruptive force of technology. There were also discussions of long-term structural issues such as climate risk, labor markets, and the balance of economic power.

As Kent and I highlighted two weeks ago, conventional recession indicators suggest a healthy economy, though recent trends in the labor market for college graduates paint a different picture. We pointed to some appalling anecdotes and statistics, including the case of the Computer Science major who submitted 5,762 job applications, only to hear back from none.

This reality begs the question of whether job creation in the age of AI will ever speed up as individuals, companies, governments, and educational institutions adapt. If so, when?

This Diwali season, I’ve found myself in India, surrounded by the warmth of tradition on the one hand, and a quiet undercurrent of frustration on the other. Gold, long woven into the fabric of celebration here, is suddenly the subject of side-eyes and recalculations at the various malls. Coins, bangles, and necklaces used to arrive without question. Now, they come with hesitation and a not so quiet glance at the market.

After all, at present, the price of gold, in inflation-adjusted terms, is not just high. It is downright abnormal.

Let me be clear: I believe in the promise of AI. As a power user, I rely on multiple foundation models daily to streamline my work and solve problems faster than ever. The productivity is real, the tools are evolving quickly, and the cost per use keeps dropping. Naturally, I want to invest in the future I’m already living. And like many of my colleagues, I’ve tilted my portfolio to give a little extra love to AI-heavy tech stocks. But here’s the thing… I’m also an economist. Which means I’ve seen this movie before. And I know how it ends.

In 2025, if you asked the average economist about the U.S. labor market, the answer might sound reassuring: the unemployment rate is holding steady around 4%, inflation is relatively under control, and job growth continues month after month. But ask a 23-year-old college graduate with a crisp new diploma and a browser full of unanswered job applications, and you’ll hear a different story.

Picture this: you walk into your favorite department store and notice two things at once. First, the racks are heavier with "40% off" tags than you have seen in years. Second, the checkout line feels strangely light, with fewer people and smaller baskets. What’s sad is that this picture may not be all that difficult to imagine…

For professional economists, these signals are not trivial. But for households, they are even more telling. Recessions leave footprints in daily life long before policymakers announce them.

The federal funds rate is not some simple light switch. You cannot flip it down and flood the economy with prosperity, nor crank it up and instantly stamp out inflation. Yet, time and again, politicians sell it that way.

The latest example comes from the President’s aggressive campaign to slash interest rates by as much as three percentage points, to around 1%. The adminstration insists this will supercharge growth, lower mortgage costs, and save the government trillions in debt payments. But there’s a catch: no serious Fed official supports it.

Ten days running is my tally of hearing some variation of the same uneasy question: “Will we be able to trust the numbers coming out of Washington?”

And these aren't conspiracy theorists or online agitators. They are fellow economists, investors, and business leaders. You know… sensible, data-driven people… who built careers on the assumption that official statistics were, if not perfect, at least honest.

Now that trust is starting to fray.

Earlier this year, John, a seasoned professional with a major firm, decided it was time for a leap. The stock market had been climbing steadily, financial headlines were full of optimism, and investor sentiment seemed to signal a revitalized economy. And John was getting increasingly tired of feeling left out. So, convinced that growth had returned, he left his stable job to join a consumer–facing start‑up.

Six weeks later, John was unemployed.

Among colleagues who follow the U.S. economy closely, shifts in policy direction don’t usually come as a surprise. Yet, in recent weeks, a series of reports has indicated that the administration aims to select the next Federal Reserve Chair chiefly for ideological loyalty, favoring a candidate inclined to reduce interest rates regardless of macro dynamics; the prospect has given both these authors a pause.

As trained monetary and financial economists, we’ve spent years studying the delicate architecture that allows the Federal Reserve to function independently from political pressures. When that independence is threatened, so too is the foundation of macroeconomic stability.