You can find original article here Nrn. Subscribe to our free daily Nrn newsletters. U.S. job growth accelerated in January, according to new data released from the Bureau of Labor Statistics, with the economy adding about 130,000 jobs, exceeding expectations of about 75,000. The unemployment rate fell to 4.3%, compared to 4.4% in December.  January marked the strongest month for employment since December 2024, following a lackluster 2025. Payrolls last year increased by 181,000 versus 2.52 million ...

Labor Market Analysis - The labor market is showing signs of weakness, with some indicators suggesting conditions near recession levels [1][3] - Employment growth appears to be close to zero, potentially stabilizing at pre-shutdown levels [5][6] - Job openings and hiring are weak and potentially weakening, as indicated by Indeed numbers [6] - Layoff announcements, as summarized by the Challenger measure, are raising concerns [7][10] Economic Outlook - GDP is considered "doing okay" at 36%, but is distorted by front-loading effects and changes in inventories [8] - The labor market numbers are considered a more reliable measure of the economy's current state than GDP [9] Inflation and Monetary Policy - Inflation numbers have been generally encouraging, despite the pass-through from tariffs [13][14] - The analyst remains comfortable with the expectation of a Federal Reserve rate cut at the December meeting [15] Technology Impact - There is a potential for a more significant and quicker impact from AI on the labor market than previously anticipated [11][12]

Net Interest Income & Margin - Net interest income is expected to continue to grow at double digits into the end of this year and next year [2] - Net interest margin guidance is between 3 and 5 basis points [2] Regional Economic Activity & Lending - Central New York is experiencing strong employment growth, even before the Micron investment [4] - Manufacturing is strong from Western New York through Massachusetts up to northeastern Pennsylvania, driving growth [5][6] - The company is seeing increased activity from contractors and subcontractors preparing for site work, beginning in November [5] Credit Quality & Loan Provisions - Credit quality is very good in the company's markets [7] - The company lowered loan provisions due to strong housing and commercial lending markets [6][7] - The company is not seeing signs of stress in credit markets, except for temporary weakness related to Canadian tourism in Vermont and northern New York [8]

Monetary Policy & Economic Outlook - Ironside's macroeconomics director of research has been advocating for 100 basis points (1%) of rate cuts this year, anticipating an economic downturn [1] - The market views a 0.25% rate cut as a bonus, while Ironside believes more significant action is needed to address the real economy [2] - The Fed's tightening policy, primarily through rate hikes, has created tight financial conditions, especially for small businesses with floating rate loans [3] Regional Banks & Small Businesses - The spread between the return on equity of regional banks and large banks is near historic wides, approximately 4% [3] - Small banks are struggling to earn their cost of capital, hindering credit creation and lending activities [4] - The Fed's tightening policy has disproportionately impacted the small business sector, reflected in the underperformance of the Russell 2000 [4] Impact on Specific Sectors - A steeper yield curve, facilitated by rate cuts, is crucial for reviving the housing market and lowering financing rates for floating rate borrowers [5] - Labor market data may be overestimating monthly job growth by nearly 80,000 jobs per month, potentially indicating zero employment growth or even a recession in the labor market [6] - While financial conditions remain relatively loose for those financing out the curve, Main Street businesses are facing tough conditions [7]