Squawk on the Street Squawk on the Street: 12/29/25
Dec 29, 2025
Claudia Sahm, a former Federal Reserve economist and chief economist at New Century Advisors, shares her optimistic outlook for the 2026 economy focusing on the labor market and fiscal stimulus. She discusses the potential rise in unemployment and implications for Federal Reserve policy, particularly regarding expected rate cuts. The conversation also touches on how to measure AI's productivity impact and the challenges of detecting gains in broad data. Sahm's insights provide a thought-provoking perspective on the economic landscape ahead.
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Why 2025 Rally Hinges On AI And Policy
- The market's year-end strength rests on a sweet spot of solid growth, easing policy and heavy AI investment.
- Investors must judge whether AI-driven capex actually translates into enterprise productivity gains over coming years.
Look For Use Cases Not Instant Productivity
- The AI investment wave is huge but its enterprise payoff remains uncertain and likely slow to show in aggregate stats.
- Real evidence will come via concrete use cases, earnings commentary, and business surveys rather than immediate productivity jumps.
Assess AI Adoption At The Company Level
- Track company-level adoption by studying earnings calls and sector surveys to spot real AI traction.
- Don't rely solely on macro GDP numbers to infer AI productivity; dig into firm-level evidence.