As some economists and market-watchers crowed over the improved employment numbers released on Wednesday, showing the U.S. added 130,000 jobs in January (1), one leading financial expert suggested that context is key to revealing the bigger picture in the report.
“I keep hearing people talk about blowout non-farm payroll number,” Barry Ritholtz, co-founder, chairman and chief investment officer of Ritholtz Wealth Management LLC, told Moneywise. “Well, first of all, 130,000 is pretty mediocre for the past 15 years. Hold aside the post-pandemic recovery, we typically see 200,000, 300,000 in a robust, expanding economy.”
Ritholtz, who also hosts the finance podcast Masters in Business on Bloomberg Radio, writes for his finance website The Big Picture and, most recently, authored the book How Not to Invest: The Ideas, Numbers and Behaviors That Destroy Wealth — and How to Avoid Them, added that focusing on the 130,000 new jobs buries the larger story.
That, he noted, is how the Bureau of Labor Statistics (BLS) chopped the 2025 employment gains by nearly 70%, revising them down from 584,000 to 181,000. “Some of it is deportation related. But whatever it is, last year was pretty mediocre for hiring.”
In addition, the 130,000 jobs created in January — while an improvement compared to the 2025 stats — does, as Ritholtz noted, mark one of the lower monthly gains in the last 15 years. Given the 2025 monthly job numbers peaked at 108,000 last April, the 130,000 marks a very modest step up. As well, the unemployment rate dipped a hair from 4.4 to 4.3, while hourly earnings increased year-over-year by 3.7%.
“You need to have the broader context,” Ritholtz said. “I called [the] report ‘the confirmation bias’ because you can find whatever you want … Something bullish, here it is. You want to find something bearish, here it is. Again, almost nothing is black and white.”
The uneven pace of job growth so far during President Trump’s second term has added to broader uncertainty about the economic outlook.
“There were a lot of issues last year,” Ritholtz explained, though he added that he doesn’t agree that 2.5%-3% inflation is too concerning. “I think other people think it’s much more problematic because of the silly 2% target. But there were a lot of issues last year and it’s complicated.”
He pointed to the fact that the economy is still expanding, the stock market is reaching all-time highs and that “it’s hard to become too bearish in the light of that.”
But, he warned, “you have to have your eyes open” to what the back half of the year could bring.
He puts the chance of a recession in the first half of the year at 25% to 30%, or “really unlikely,” saying that those chances could tick up to 35% to 40% in the second half.
“But as we’ve learned with this administration, you’ve really got to look at the policies that are announced,” he continued. “A giant trillion-dollar tax cut is very stimulating. A giant set of tariffs is inflationary and takes consumer spending to a not great level. And you’ve seen the consumer sentiment is pretty punk. So it’s never black and white. It’s always shades of gray.”
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Another looming issue hanging over the economy is the pending Supreme Court decision regarding whether or not to strike down Trump’s signature tariffs. The tariffs raked in an estimated $287 billion last year (2), while contributing to trade tensions with allies and coinciding with job losses in some sectors, including manufacturing (3), leaving U.S. households to absorb much of the price impact.
Ritholtz believes that a Supreme Court decision that strikes down tariffs could help keep inflation in check while flowing hundreds of billions of dollars in tariff refunds back into the corporate sector. In fact, he noted that he invested in Walmart, Caterpillar, Ford, GM and other companies requesting tariff refunds following last November’s oral arguments regarding the Trump administration’s use of the International Emergency Economic Powers Act (IEEPA), based on how “dubious” the court seemed of the government’s argument.
“I’m not the only one who did that. So the nuance question is how much of this is already reflected in price?” he asked. “And I would guess probably half, maybe, just spitballing. So if nobody has thought about it, you would see an immense rally the day the IEEPA tariffs are overturned and it would probably run for weeks.”
Ritholtz added his belief that, if the Supreme Court offers a thorough tariff rebuke, it could signal to the Federal Reserve that “all these inflationary tariffs that have raised prices 10%, 15%, they’re gone. You want to cut? You just got a giant deflationary ruling.”
And if the court upholds the tariffs, Ritholtz said that, given they’re arguably a tax hike, it could benefit the deficit and bond markets.
“There’s always multiple opportunities on all these big events,” he explained. “The challenge is not only do you have to know which way the event is going to fall, you have to figure out how much of it’s already in the price and what the second and third effects are. And so you’re guessing what other people are going to do and then responding to that. It’s pretty impressive.”
Whether the economy tilts toward expansion or slowdown, Ritholtz says investors should expect volatility — and remember that policy shifts, not headlines, are likely to drive what comes next.
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Bureau of Labor Statistics (1); Federal Reserve Bank of Richmond (2); Yahoo Finance (3)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
