🫤Confused job data, complicated AI relations, how to thrive anyway

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In this edition of S3T:

• 📈 Mixed Job Figures: Strong job growth with 272,000 new jobs in May, but 408,000 jobs lost, and unemployment rose to 4%.
• 💼 Economic Health Debate: Conflicting reports create confusion about the economy's health, with job openings at a 3-year low and inflation still a concern.
• 🔄 Inflation Issues: Cumulative inflation since 2021 is 19.3%, contrasting with the current official rate of 3.36%, raising questions about measurement methods.
• 🗳️ Political Implications: Democrats highlight job growth, while Republicans focus on inflation, affecting the 2024 election narrative.
• 📊 Economic Data Challenges: Calls for updated measurement methods and decentralized data analysis to improve the accuracy and meaning of economic reports.
• 🍏 Apple Intelligence Unveiled: Apple showcased its new AI, powered by Microsoft and OpenAI, at WWDC. It integrates seamlessly with Apple devices, with differentiated privacy.
• 🤖 AI Talent War: Big tech firms are poised for intense competition to recruit AI talent, especially from companies demonstrating proven AI value.
• 💼 AI & Crypto Convergence: Vitalik Buterin advocates for using AI in crypto protocol design to enhance security and efficiency, emphasizing AI’s potential for formal verification.

Opinions expressed are those of the individuals and do not reflect the official positions of companies or organizations those individuals may be affiliated with. Not financial, investment or legal advice. Authors or guests may hold assets discussed.

This week saw an interesting conversation about the confusing job figures...with big political implications for the US election

Quick recap of the most recent numbers:

• Last Friday saw a stronger than expected jobs report - 272,000 new jobs added in May. Markets interpreted the numbers to mean no interest rate cuts this summer.
• At the same time the latest reports show 408,000 jobs were lost in May.
• Unemployment ticked up to 4.0%, ending a 28 month streak when it was below 4%. Job openings are now at a 3 year low.

So is the economy healthy or not?

Cumulative change in inflation since 2021 is 19.3% - meaning the prices people are paying are averaging about 20% higher than 3 years ago. That's a very different inflation figure from the official current claim of 3.36%

Economist Anna Wong says the Fed needs to fix its measurement methods, and argues that job growth is being overstated by about a million jobs a year. Summary here.

Likewise, Mishtalk has a technical deep dive here on how "birth-death" estimates (births and deaths of companies not people) tend to skew job growth reports 2 directions depending on their timing:

• Coming out of recessions BLS reports understate jobs growth
• Heading into recessions (when trends are weakening) the BLS reports overstate jobs growth. That appears to be what is happening now.

Political implications

Going into the 2024 election, Democrats continue to tout strong economic figures as Republicans highlight inflation. Democrats have an unusually difficult tight rope walk - taking credit for post-pandemic recovery while not appearing out of touch with very real inflation concerns.

The details that need to be explained or else they will not matter to the average voter:

• The Fed and other agencies have outdated, kludged measurement methods that aren't meaningful.
• The Fed's interest rate hikes can't take credit for the easing of the specific form of inflation driven by pandemic era supply chain shocks - these were going to and did resolve on their own.
• The Fed's interest rate hikes made perennial inflation worse. Perennial inflation is the form of inflation driven by corporate pricing power and by regulatory monopolies (monopolies comprised of regulated industries and their regulators, which allow high prices to persist while blocking or hindering disruptive competitors who could lower prices, or improve value delivery).
• The Fed is supposed to be independent from any administration (and therefore the Biden administration isn't to blame per se for the Fed's actions).

In short, this fall's election could be a repeat of the "It's the economy stupid" dynamic that unseated George Bush Sr and help Bill Clinton win in 1992. Personally, I don't think that an administration change solves the root problem: A new administration that focuses on tax cuts alone would be embraced by Wall St, even as it hollows out the economy and weakens the dollar's future even further. The problem to solve, as Anna Wong notes is to enable more meaningful economic measurements. Well, that's one of the problems to solve (there's a list).

Connecting the dots: what is needed

I think what we are seeing here is the rise of decentralized data and analysis capabilities that make it easier to challenge the economic reporting from federal agencies or central banks. These incumbents have long standing methods that are often unclear, nuanced and in desperate need of modernization. The democratization of more modern data & analytics tools spawns debate and discussions that raise legitimate questions about of what these economic figures mean and how meaningful they really are.

Former BLS Commissioner William Beach points out from direct experience with the Current Population Survey (CPS) the shrinking sample sizes and holes in the measurement process due to budgetary constraints and modernization gaps. In other words, there is acknowledgement that the measurement processes need to be fixed.

Apple Intelligence: ChatGPT with better privacy?

This week at Apple's World Wide Developers Conference (WWDC) Apple unveiled "Apple Intelligence" (technically Microsoft-powered OpenAI intelligence nicely integrated into Apple devices). You can use your iPad like a whiteboard to write out math problems and Apple Intelligence will write the answer just to the right of the equal sign. Awkwardly, Siri is still in the mix. Like we said, it's complicated.

Apple seeks to differentiate its version of AI via a unique approach to strong privacy:

• When possible, Apple Intelligence processes your requests on your own device without collecting your data.
• If more computational power is needed, it uses Private Cloud Compute, a cloud intelligence system designed for private AI processing, which securely handles the task without storing or accessing your data.
• Private Cloud Compute servers use features like Secure Enclave and Secure Boot to enhance security, and their privacy is verified by independent experts.

Did this fly over the heads of Wall St traders? Apple's stock (AAPL) fell 2% after the Apple Intelligence demo. 🤷 …and the next day Apple stock hit a new record.

AI impact to Talent

Expect an AI Talent War between big tech firms. Those looking to fill gaps will attempt to steal from firms delivering proven value with AI.

AI & Crypto Convergence: Vitalik Buterin calls for AI based verification

At the 2024 Hong Kong Web3 Carnival, Buterin, the co-founder of Ethereum shared a keynote on the need to push the envelop on crypto protocol design as crypto adoption and usage scales up, in order to enable security, efficiency and extended capabilities. Full text of speech here.

"One interesting thing that I think is worth investigating in the future is using AI tools for formal verification...In 2019, no one thought that AI could make really beautiful pictures today. We've made a lot of progress, and we've seen AI do it. The question is, can we try to turn similar tools toward similar tasks. Like automatically generating mathematical proofs for complex statements in programs that span thousands of lines of code." -Vitalik Buterin speech at Hong Kong Web3 Carnival

🧭 Creating achievement experiences for your team: thrive in spite of what else is going on in the world

For years, a key part of my work has involved coaching individuals and being a listener to help them think about and plan their career paths. What I see over and over again: people are hungry for achievement experiences. It turns out, there's a huge win-win for both company and talent, when leaders focus on creating achievement experiences tailored for each individual on the team.

Learn this step by step framework for creating achievement experiences that empower your teams to create positive change and thrive in spite of whatever else is going on in the world.

🪜Top AI Learning Options for change leaders this week

S3T Panorama: Evolution of AI - with latest updates

Understanding the evolution of AI can safeguard against unwise decisions based on hype, and help identify best opportunities for investment. Panoramas take a specific sector or issue, provide a quick view of how we got here, the need-to-know points that are critical right now, and where we're headed.

S3T Playbook: Shift to effective gatekeeping in the age of generative AI

GenAI tools can produce in 1 hour more material, media, content, words and software code than a human could read, consume or review in a month. The world's supervisory workloads are about to explode and our staffing models are not ready. Organizational leaders and talent recruiters must navigate an unusual shift in the composition of the workforce, by focusing relentlessly on 4 key priorities.

S3T Playbook: How to validate AI use cases

Unfortunately it's not always easy to identify actionable use cases for emerging technologies like AI.  This playbook provides 8 crucial questions that will tell you whether and when an AI use case is worth pursuing.

S3T Playbook: How to prevent and stop Zombie Projects (Gen AI or otherwise) from stealing your team's time and focus.

Zombie projects are ideas - usually involving new or emerging technology - that actually can't work because something fundational is missing or insufficient.

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