The US unemployment rate has held below 4.5% for 59 straight months — the longest such streak since the government started keeping the data in the 1940s.
Investors have spent this year watching for the crack in the labor market that would let the Federal Reserve cut freely. Ryan Detrick and Sonu Varghese instead found an economy running hot enough that a rate increase, not a cut, is now roughly a coin flip for next week's Fed meeting.
"Two rate hikes, are you kidding? It's not gonna, it's gonna do a squat, it's gonna do nothing for the economy."
Detrick and Varghese are Carson Group's Chief Market Strategist and Chief Macro Strategist, the two names behind the firm's asset-allocation calls across the billions of dollars its advisors manage — currently overweight equities and commodities, underweight bonds, a call they've held through most of this year's rally.
I listened to the full episode so you can skip it. 1 hr 1 min of audio, 14 minutes of reading.
Here are the 9 takeaways that matter.
🎙️ Hosts: Ryan Detrick, Chief Market Strategist at Carson Group, and Sonu Varghese, Chief Macro Strategist at Carson Group
📰 Published: 9 September 2026
🟣 Apple Podcasts | ⏱️ 1 hr 1 min | ✅ Time saved: 47 min
Key Takeaways
The unemployment rate has stayed below 4.5% for 59 straight months, a record
Data on this goes back to the 1940s
August payrolls beat every economist Bloomberg surveyed, and July's weak report was revised away
Not one of 74 economists expected 162,000 jobs created in August
Cyclical, higher-paying sectors — not healthcare — did most of the hiring since June
Construction, manufacturing and professional services made up 88% of job growth
Layoffs are near a four-year low, even though the headlines say otherwise
Announced job cuts fell 38% year over year in August
Wage growth looks weak only because of a Medicaid-driven mix shift in healthcare pay
Take healthcare out and wage growth is running hot
Markets are now pricing Fed rate-hike odds, not cut odds, for next week's meeting
Nominal GDP is growing at 6-6.5%, with Q2 at 8%
Commodity prices are surging across the board
Copper up 46% year over year, diesel at a record $5.90 a gallon
Software just had one of its three biggest buying surges in 25 years
Up almost 25% in five weeks, alongside relative weakness in semiconductors
The firm is still overweight equities and commodities, betting that even a bubble has room left to run
1. A Hotter Labor Market
Detrick opened by naming what he thinks is underrated about the US economy this year: the strength of the labor market, even after a summer that briefly looked ugly. Core services inflation has been running around 3.5%, which Varghese said doesn't happen "without a labor market that's pretty that's in pretty good shape."
The two hosts came into the year arguing the labor market was stronger than consensus believed. That call took a hit in June and July, when payroll data initially showed the economy losing jobs. Then the revisions came. "I think the labor market is stronger than most people think it is," Varghese said — and the data has now caught up with the call.
The benchmark revision cut estimated job growth roughly in half. The preliminary annual revision, covering April 2025 through March 2026, took the assumed pace of hiring from 23,000 jobs a month down to 16,000 a month — a reduction of 79,000 jobs across the year.
August payrolls beat every forecaster. The economy added 162,000 jobs in August, the strongest monthly gain since March. Out of 74 economists in Bloomberg's survey, not a single one predicted a number that high.
The three-month trend has been accelerating each quarter. Average monthly job growth went from negative 39,000 in the fourth quarter of 2025, to positive 73,000 in the first quarter of 2026, to 81,000 in the second, to 92,000 so far in the third.
The labor force participation rate ticked up for the first time in nearly a year. It rose from 61.4% in July to 61.6% in August. "First time in 11 months, that's actually ticked higher," Detrick said, calling it a sign more people believe they can find work.
The unemployment rate held at 4.1%, a level the Fed itself did not expect to see this late in the cycle. Varghese said "we've now been below four and a half percent for 59 months, Ryan. 59 months, that's just one month shy of five years. That is a record, by the way." The broader U-6 measure, which adds discouraged and involuntary part-time workers, has fallen to 7.7% from a November 2025 peak of 8.7%.
2. Cyclical Jobs Carry It
Both hosts spent time on where the August hiring actually came from, because it wasn't the story either expected. Detrick ran through the sector breakdown from Varghese's daily research note: leisure and hospitality added 62,000 jobs, construction 22,000, manufacturing 16,000, education 29,000. Information technology, or IT, lost 23,000 jobs — the one sector everyone points to as evidence of AI replacing workers.
Varghese doesn't buy the AI-jobs-loss story. Information technology has lost 37,000 jobs over the last three months, which he attributes to firms trimming staff after over-hiring during 2021 and 2022, not automation. "I don't think it's AI replacing the jobs," he said, pointing to a colleague's data showing software-developer job openings have actually been rising — the exact role AI would displace first if it were happening.
Entry-level hiring, the group most exposed to AI, is improving too. Unemployment for 20-to-24-year-olds hit 7.1% in August, down from 9.2% a year earlier.
The last three months show a broader, more cyclical hiring pattern than healthcare alone. The economy added 214,000 jobs from June through August, with the private sector adding 224,000 and government cutting about 10,000. Healthcare led with roughly 80,000 jobs, or 37% of the total — but professional and business services (61,000), construction (43,000), and manufacturing (43,000) together with retail and wholesale trade (42,000) made up 88% of total job growth since June. Detrick noted these are generally higher-paying, cyclical jobs, not the lower-wage service work that dominated earlier in the recovery.
Leisure and hospitality's August rebound stunned even the hosts. The sector added 59,000 jobs in August against a trailing 12-month average of about 12,000 — roughly five times the norm. Varghese, who attended nine or ten World Cup matches across 17 cities this summer, said hiring had likely been front-loaded before the tournament and then cut back in June and July once it ended, before bouncing back in August.
3. Layoffs Near Record Lows
Detrick and Varghese pushed back hard on the idea that layoffs are spiking. Varghese said Challenger, Gray & Christmas job-cut announcements are unreliable because they track proposed cuts that may never happen and never capture the hiring on the other side of the ledger.
Announced job cuts are actually down sharply. "In last month, so August, there were 53,000 jobs cuts. That's actually down 38% year over year," Varghese said — the lowest for any August in four years.
Announced hires jumped even more, off a small base. "It's off a low base, but that's up 725% year over year," he said, calling it the most hires announced in an August in four years.
The real scale of the labor market dwarfs both numbers. "The total number of people hired in July was 5.1 million," Varghese said — a hiring rate of about 3.2%, which he called low mainly because labor supply is tight. On the other side of the ledger that same month: "There were 1.67 million layoffs."
Normalized for the size of the labor force, the layoff rate is near a multi-decade low. Varghese said the layoff rate is now about 1% of the labor force, compared with roughly 1.2-1.3% in 2018 and 2019, even though the raw layoff number sounds large in isolation.
Weekly jobless claims still show no stress. Initial claims came in at 206,000, in line with where they've held for months — a level the hosts said would need to rise meaningfully before it signaled real labor-market weakness.
4. Wage Growth's Quirk
Year-over-year wage growth came in at 3.1%, the lowest reading since May 2021 and below the roughly 3.2% pace seen before the pandemic — a number that looks, on its face, like it argues for a Fed rate cut.
Varghese said the headline number is misleading because of a composition effect tied to this year's tax legislation, the One Big Beautiful Bill Act — Detrick joked he couldn't spell it on the spot. Medicaid cuts in the bill pushed some higher-paid hospital workers out of jobs, while hiring shifted toward lower-paid home health aides. Averaging the two pulls the overall healthcare wage number down even though neither group's own pay is falling much. Strip healthcare out, Varghese said, and wage growth is running much stronger. He added that wage data tends to lag every other signal in the economy regardless.
5. The Fed's Coin-Flip Bet
The odds of a Fed rate increase at next Wednesday's meeting have been swinging with each data point and each Fed official's comments — a genuinely unusual position for a Fed that, a year ago, was expected to be cutting steadily.
Odds moved sharply after Friday's jobs report. They stood near 50-50 at the start of Friday and rose to about 58%, with Detrick and Varghese saying by the time of taping the odds were closer to 60%.
Nominal GDP growth — economic growth before stripping out inflation — is running well above what the Fed usually tolerates. Varghese pegged the current pace at 6% to 6.5%, with the second quarter at 8%; the Atlanta Fed's real-time tracker points to roughly 4.5% real (inflation-adjusted) GDP growth for the third quarter, which combined with inflation would put nominal growth back in the 6%-to-7% range.
Fed officials sent conflicting signals last week. Governor Christopher Waller told Reuters he's content to hold rates given signs of cooling inflation, which knocked hike odds down to 50% before they jumped back to near 60% the next day. Vice President JD Vance — Varghese's neighbor, he noted — publicly said the Fed should cut. Markets rallied on the Vance comments, with the S&P 500 posting its first roughly 1% up day in a long stretch, Snowflake up 16% on strong revenue, and Broadcom reporting revenue up 221% on AI demand so strong that companies say supply bottlenecks are the limiting factor.
Even a hike wouldn't do much, in the hosts' view. Markets are pricing a cumulative 240% probability of rate increases over the next year — equivalent to full pricing of two hikes plus a 40% chance of a third. As Detrick put it up top, that wouldn't do anything to an economy running this hot — his read is the Fed is effectively willing to let it run even if individual officials keep talking about cuts.
History offers the hosts some comfort even if a hike does come. Varghese noted six Fed hiking cycles since the 1990s; five of the six, all starting with a 25-basis-point increase, preceded a stock market that was higher a year later, often by double digits. The exception was March 2022, when the Fed was seen as badly behind the curve and hiked in bigger 50- and 75-basis-point steps; stocks fell more than 10% over the following year.
6. Prices Run Hot Everywhere
The ISM's September purchasing-managers surveys, which track business activity and are read as a real-time gauge of the economy, came in strong across the board — and so did the price components inside them.
Both manufacturing and services activity are expanding at a strong pace. The ISM manufacturing index hit 54.6 and the services index hit 55.4; readings above 50 mean expansion, and above 55 means expansion at a strong pace. Within manufacturing, production activity hit 58.3. Services activity accelerated to its strongest pace in more than five years.
Both readings are running hotter than in 2019, a year the hosts described as already a strong one for the economy.
The price components are the highest since 2022. The services prices index hit 72.6, the highest since August 2022 — and unlike 2022, when prices were already heading down, Varghese said the direction now is up. Manufacturing's prices index was 71.1, though that reflected a temporary dip in gasoline prices in July and early August that Varghese expects to reverse.
Commodity prices are climbing across categories. "Copper prices up 15% year to date. It's up 46% from the last year," Varghese said. Brent crude has moved back above $100 a barrel, with WTI trading in the mid-$90s. "Diesel prices are at a record $5.90 a gallon," he said, and gasoline is at $4.15 a gallon nationally, the highest for this time of year on record.
7. Inflation Data Ahead
Looking ahead to this week's CPI and PPI releases, Varghese expects both to come in somewhere between 2.5% and 3% annualized, alongside an elevated core PCE — the Fed's preferred inflation gauge, based on personal consumption expenditures rather than the CPI's fixed basket.
The PCE measure itself is about to change. Government statisticians are revising how the index treats stock prices moving through portfolio-management fees and how it measures computer software, changes Varghese expects to pull the reported year-over-year core PCE rate down from about 3.3% to roughly 3%.
Even the revised number stays hot. Varghese said that pace is still running hard at 3%, noting inflation has now run above the Fed's target for five straight years, with oil and copper prices both moving higher again.
The hosts frame it as one supercycle. "We're in a commodity super cycle, which is the same thing as an investment super cycle," Varghese said, tying the inflation story directly to the stronger-growth story from earlier in the episode.
8. Software's Rare Rally
Detrick shared a chart from a market technician the hosts follow, plotting the S&P 500 against the 10-year Treasury yield over the last three or four years. The 10-year has traded in a wide range through that whole stretch — around 4.90% in late 2023, 4.80% in early 2025, and roughly 4.80% now — without stopping the S&P's climb. Varghese said yields still matter in theory, but if the 10-year broke out sharply higher, to something like 5.50%, "that might mess things up a little bit."
Software just posted one of its rarest rallies in 25 years. "Software is up almost 25% the last five weeks," Detrick said. The only prior comparable moves, going back roughly 25 years to when software ETFs began trading, came off the market lows of 2020, 2009 and 2002.
Money is rotating out of semiconductors and into software, which Detrick called a sign of a healthy bull market rather than a warning sign. On the day of taping, Intel was up 8%, Qualcomm up 5% and Oracle up 3%.
Oracle and Adobe are the earnings to watch. Both were expected to report soon, and Varghese called Adobe the poster child for whether AI is genuinely disrupting a specific company's business. Oracle has fallen about 20% for the year and has drawn scrutiny over its credit default swaps, a signal the market uses to price the risk of a company defaulting on its debt.
9. Positioned for the Heat
The hosts closed by tying the data back to how Carson Group's models are actually positioned, and by naming the numbers behind the "running hot" thesis at the portfolio level.
The firm remains overweight risk assets. "Yes, we're overweight equities, we're underweight fixed income," Detrick said, alongside a long-standing overweight in hard assets — real assets, managed futures, gold and commodities — which he said have outperformed fixed income significantly over the last two to three years.
The S&P 500 is up 13% for the year, and Detrick argued a 20% total-return year is realistic given the last three years came in around 25%, 23-24% and 16% respectively. He pointed to the mid-to-late 1990s, when the S&P gained roughly 20% or more in five consecutive years, as a precedent for a hot economy and an accommodative Fed extending a rally.
Not everyone is feeling the heat the same way. Detrick recounted paying $82 for a single Lululemon T-shirt for his daughter, days after the stock fell 19% on weak same-store sales and soft guidance. Varghese pointed to the same divergence at Walmart. But restaurant stocks have been strong, and the hosts said the aggregate picture — not the anecdotes on either side — still points to a solid consumer and a solid labor market.
Detrick and Varghese's bottom line: with the labor market, ISM data and commodity prices all running hot at once, a Fed rate hike would barely register economically — which is exactly why markets are now pricing one instead of a cut.
Bonus Insights
Sonu Varghese doesn't like heat or humidity and called Chicago's mild late-summer weather "my good zone," joking that winter is his best season because everything outside is dead.
The hosts marked the 25th anniversary of September 11 with personal stories. Varghese was at a Purdue University job fair scheduled for September 11-12, 2001, when a roommate told him "some idiots hit the World Trade Center." The fair was canceled, the job market for his graduating class collapsed soon after, and he said the day changed the trajectory of his career. Detrick had two close college roommates working at Morgan Stanley in the second tower who both survived.
Detrick said he went briefly viral, and had his X account temporarily suspended, after sharing an old internal Morgan Stanley chart with credit given — a ding the bank later reversed. "I will never for the rest of my life share anything for Morgan Stanley," he said, adding that Bank of America enforces similar restrictions on its own research.
The hosts announced a live one-hour stream of the podcast on September 18th, an hour before the market close, featuring CNBC's Morgan Brennan and Freedom Capital Markets Chief Market Strategist Jay Woods, timed to react to that week's Fed decision.
Detrick and Varghese previewed the midterm elections as their likely focus for the next two months, floating scenarios from a split Congress to a Democratic sweep of both chambers, and referenced a Bank of America chart suggesting a Democratic sweep could be viewed as bearish for markets.
Products, Companies & Tools Mentioned
Lululemon (Fell 19% last week on weak same-store sales and soft guidance — the anecdote behind Detrick's $82-T-shirt story)
Snowflake (Jumped 16% on strong revenue the day markets rallied on Vance's rate-cut comments)
Broadcom (Reported revenue up 221%, citing AI demand strong enough that supply bottlenecks are limiting sales)
Oracle and Adobe (Both report earnings soon and are being watched as tests of AI's real business impact; Oracle is down about 20% for the year with its credit default swaps drawing scrutiny)
Amazon and Microsoft (Cited as examples of companies announcing layoffs while still advertising open roles — the gap Varghese says makes Challenger, Gray & Christmas job-cut data misleading)
Walmart (Its stock fell on disappointing results, the other side of the consumer split that hit Lululemon)
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