A stronger-than-expected jobs report is offering a fresh indication that the U.S. economy remains resilient despite ongoing geopolitical and economic challenges, according to James L. Perry, founder and CIO of Perry International Capital Partners LLC.
Appearing on Chicago’s Morning Answer with Chris Krok, who was filling in for Dan Proft, Perry said the latest employment figures were encouraging and may indicate that job growth has been stronger than previously reported. The economy added 162,000 nonfarm jobs, significantly exceeding expectations, while the unemployment rate held steady at 4.1%. Perry said he was not surprised by the results, arguing that government employment statistics are frequently revised and can lag behind the underlying strength of the economy.
Perry said investors should expect continued economic strength, but he warned that the ongoing conflict in the Persian Gulf remains a significant risk. Oil exports through the region have fallen sharply, and Perry pointed to crude prices near $90 a barrel as a potential drag on consumer spending and disposable income.
With Brent crude trading around $94 a barrel and West Texas Intermediate near $90 at the time of the interview, Perry said elevated energy costs could keep inflation expectations higher than policymakers and investors would prefer. He argued that the outlook for the stock market remains closely tied to whether oil prices eventually fall back toward the $65-to-$70 range seen before the conflict intensified.
Perry cautioned that the situation in the Gulf is difficult to assess because of the limited information coming out of the region and the involvement of major global powers, including China, Russia and India. While longer-dated oil contracts appeared to be pricing in an eventual end to the conflict, he said investors should remain cautious about assuming a quick resolution.
The conversation also turned to the U.S. bond market and the country’s roughly $40 trillion national debt. Krok raised concerns that higher Treasury yields could draw capital away from private-sector investment, potentially creating another challenge for economic growth.
Perry acknowledged the concern but said he does not currently view Treasury yields as a major threat to the economy. He pointed to the government’s ability to fund itself through shorter-term Treasury bills at lower rates and argued that the size of the U.S. economy and the amount of liquidity in the global financial system provide important context for the country’s debt load.
Perry also noted strong demand for corporate and infrastructure-related bonds, saying institutional investors continue to seek yields in the 6% to 7% range. In his view, that demand demonstrates that investors still have substantial capital available and are willing to put it to work.
Rather than seeing higher bond yields as an immediate threat to stocks, Perry argued that the current environment remains supportive of equities. He pointed to strong cash flow in the technology sector and said the rapid expansion of artificial intelligence is beginning to affect the broader economy, from technology and construction to other industries.
Perry described the AI-driven industrial transformation as being in its early stages and said rising productivity could continue to support corporate profitability. He argued that declining costs and increasing profit margins make the S&P 500 and technology stocks appear relatively inexpensive despite their recent gains.
The discussion also touched on demographic changes and the potential economic consequences of a slowing working-age population. Krok raised concerns about the effects of a shrinking labor force and the removal of hundreds of thousands of Haitian migrants from the U.S. workforce.
Perry said the American labor market is undergoing a broader transformation, with technology and artificial intelligence increasing productivity across a wide range of industries. He pointed to the country’s approximately 170 million-person labor force and the 4.1% unemployment rate as evidence that the economy remains close to full employment.
According to Perry, higher productivity could help offset some of the challenges created by changes in the labor supply. He argued that businesses increasingly can accomplish more with fewer workers than they could five, 10 or 15 years ago, particularly as automation and AI reshape manufacturing, distribution and service-sector jobs.
Despite the uncertainty surrounding energy prices, geopolitics, government debt and demographic trends, Perry maintained a bullish outlook on the U.S. economy and financial markets. He said the combination of strong employment, abundant liquidity and accelerating technological productivity continues to provide a favorable backdrop for investors.
The interview concluded with Perry reiterating his view that the current AI-driven economic transformation could have significant staying power, potentially supporting corporate earnings and the broader economy for years to come.