Bloomberg Talks Veronica Clark Talks Market Expectations for 2026
Dec 29, 2025
Veronica Clark, Director of Citi Research at Citigroup Global Markets, provides keen insights into the labor market landscape. She discusses the validity of recent labor data and the expectation for a cleaner December. Clark highlights that labor demand has weakened more than supply, contributing to rising unemployment rates. She delves into the impact of AI on hiring practices and reveals a sectoral bifurcation influenced by interest rates. Additionally, she forecasts potential Fed rate cuts while addressing inflation risks.
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Demand, Not Supply, Driving Unemployment
- Labor demand has weakened more than labor supply, driving the rise in unemployment.
- Low hiring with low firing risks eventual layoffs if weak demand persists.
Hiring Pullback Started In 2023
- The hiring pullback began around mid-2023 and hit rate-sensitive sectors first.
- Manufacturing and small businesses are showing earlier and larger weakness.
A Bifurcated, K-Shaped Economy
- The economy is bifurcated: winners (tech/AI) and rate-sensitive losers (small firms, manufacturing).
- That creates a K-shaped recovery where aggregate indicators mask uneven pains.