Labor Slack, AI Momentum, and the “Powell Put”: Market Balances in Flux

In the October 2025 edition of Charts and Smarts, portfolio strategists Jack Janasiewicz and Garrett Melson (Natixis Investment Managers) dissect the interplay between cooling labor markets, AI-driven investment, and shifting market narratives.

• Labor demand, not supply, appears to be driving rising unemployment as wage growth normalizes below pre-pandemic levels.

• Consumption remains resilient, buoyed by upper-income households benefiting from high cash yields and equity gains.

• AI investment supports markets but contributes modestly to real GDP once imports are netted out.

Are markets mistaking resilience for renewed strength — or merely enjoying the calm before policy and growth realign?