I’m back to the jobs report.
I wrote about it two months ago (Letter #03), and said it plainly: the March report was interesting mainly to historians. It reflected a one-time event — the in-and-out movement of federal workers (that is, people employed by the U.S. government) who had been on strike — and didn’t really tell us much about what was actually happening in the American labor market. I said the April report would be far more interesting.
Well — the April report is here. And it is indeed interesting. Just not necessarily in the way you might have expected.
The good news — which is less good than it looks — is that the U.S. added 177,000 new jobs in April, against economists’ forecasts of only 133,000, and the official unemployment rate held steady at 4.3%. On the surface, the labor market looks strong. But let’s go deeper, because one number should stop you in your tracks: 8.2%.
That’s not the unemployment rate you hear on the news. That’s what the BLS (Bureau of Labor Statistics) calls “U6” — the broad measure of unemployment. I’ll elaborate in a moment. The rate shown to the public (4.3%) counts only those who are out of work and actively looking for a job. U6 is the deeper number. It also includes people working part-time because they couldn’t find full-time work, and people who gave up searching entirely and therefore dropped out of the statistics. Add all of those up — and you get 8.2%, an increase of 0.2% from last month. Doesn’t sound quite so low anymore, does it?
Now for the second problem — the bigger one, in my view, looking forward. Old economy sectors are hiring. Knowledge industries are cutting.
When you break down those 177,000 new jobs by sector, an uncomfortable picture emerges.
Who added jobs? Healthcare and social services — 37,000. Leisure and hospitality. Transportation. In other words, physical, hands-on service sectors, with wages significantly below the national average.
Who lost jobs? The information sector — that is, tech companies, digital media, software — minus 13,000 jobs. Manufacturing — minus 2,000. (And the federal government continues to shrink, though that’s less relevant to the point.)
In my view, this is not a coincidence, and it’s not statistical noise. This is a trend. And what worries me is not the decline itself, but what it signals over time.
We are in the middle of a technological revolution. Everyone talks about it. But what gets less attention is this specific effect on the labor market: the AI revolution is not just eliminating programmers’ jobs — it’s eliminating middle-tier jobs. Analysts, content editors, project managers, operations staff. Exactly the jobs that served as the bridge between the old economy and the new one — the entry point into a kind of salary that allows a comfortable life.
What’s beginning to take shape: fewer knowledge workers, earning higher wages (because the ones who remain are worth more), and more service workers, earning lower wages. This gap — economic polarization — is one of the most dangerous forces for social and economic stability over time. An economy with a thin middle class produces weakening private consumption. Politics become more extreme. We’ve seen this play out over recent decades — this is not a theory.
What does this mean for your pocket? If you’re in the knowledge industry — invest in learning tools that increase your output, and don’t wait for someone to tell you your role is at risk. If you’re an employee at a tech company — pay attention to the signals of hiring versus layoffs around you. If you hold tech stocks — you can no longer treat these holdings as a single “sector” in your portfolio. Some companies will collapse loudly, others will break forward through the efficiency gains. In investor language: volatility is increasing, and will continue to do so.
When Israel Became Less Risky Than the U.S.
Look at the table I shared above. Let’s break it down.
The table shows the yields on 10-year government bonds (meaning, the annual interest rate a government pays to whoever lends it money for ten years) — for five countries. You can see the current figure, what it was at the start of the year, and what it was a full year (12 months) back, for an investor who bought the bond at that time.
Our starting point: 12 months ago. Israel was paying 4.34% interest — the U.S. was paying 4.16%. The meaning: global investors demanded a premium (extra interest) to lend to Israel, because of the risk. War, uncertainty, complex budget management. Entirely reasonable.
Now jump to April 2026. Israel: 3.98%. The U.S.: 4.39%. Israel is below the U.S. In other words, the market is willing to accept less interest from Israel than from America. That’s the complete opposite of where things stood a year ago.
What happened? Two processes moved in opposite directions.
Israel: the Shekel strengthened (as we discussed at length in Letter #05), the economy proved its resilience during wartime, natural gas provides steady income, and the end of the war reduced the risk premium — that is, the “extra” that investors demand because of uncertainty. When risk goes down, the interest rate the government has to pay goes down with it.
The U.S.: moving in the opposite direction. Inflation is still “sticky” (if you’ve forgotten — back to the yoga teacher and the lawyer from Letter #02), the Federal Reserve isn’t cutting rates, the government deficit is growing, and now the information sector is showing cracks as well (in terms of both profitability and employment at software companies). The big investors are pricing forward, and what they see — isn’t reassuring.
The broader global picture reveals that more than this being a U.S. story, it’s actually an Israel-versus-the-rest-of-the-world story. Israel is trending in the opposite direction from every other Western economy. Whoever wants to analyze this properly needs to focus on what’s happening in Israel — less on why the U.S. has to pay more interest, simply because they all have to pay more interest (except Israel).
What does this mean for your pocket? If you’re an Israeli holding savings in Shekels — you got good news. Israel is currently a less risky destination in the world’s eyes than it was a year ago, and that puts money in your pocket — whether through lower interest rates on loans and mortgages, or through a strengthening Shekel (which prices your trips abroad and dollar-denominated purchases — cheaper). If you hold Israeli government bonds you bought a year ago at a higher yield — well played, because in a falling-rate environment, whoever bought earlier will continue to enjoy the interest rate that existed on the day they bought the bond, for the full life of the investment.
So what’s worth doing going forward? Honestly, I’m a believer in most cases in one sentence: the trend is your friend. If the data justifies the trend — stay in. Exactly like the Shekel-Dollar rate — as I’ve written here before, the Shekel will continue to strengthen against the Dollar, and I will continue to answer for free (unfortunately) the question: is now a good time to buy Dollars, when the rate is low?
See you in next week’s letter, or during the week — if I can’t help myself until then...