Latest / Unspoken Career Truths / Rates, Raises, and Reality Checks: How to Work With the Economy You’ve Got

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Rates, Raises, and Reality Checks: How to Work With the Economy You’ve Got · Unspoken Career Truths

• 0:00
  Welcome to Unspoken Career Truths.
• 0:02
  I'm Lauren Levette Gilbert. And I'm Cara Wood.
• 0:05
  And we're here to be the coworkers you can trust.
• 0:09
  Hello everyone, and welcome to 2026, our first episode of the
• 0:15
  New Year Woo. Hoo, we're back.
• 0:18
  We are back today. We're talking about the reason
• 0:21
  that you probably didn't get a raise the economy.
• 0:25
  I know it's screwing up prices and it's dominating headlines
• 0:29
  and it's full of insider terms, but it's also the logic that
• 0:33
  brings US buy one, get one sales and Amazon Prime Day.
• 0:37
  So the economy is not all bad as a concept.
• 0:41
  No. And multiple Amazon Prime days,
• 0:43
  for the record, now we have more than one.
• 0:46
  But really what I want to know, and I always look to you for
• 0:50
  anything math related, Cara and I want to know what are the
• 0:53
  numbers that we should pay attention to and what actually
• 0:57
  matters. That's a great question.
• 0:59
  I mean, so it's funny, when I first started learning about the
• 1:03
  economy, I was in a Viking bar with a friend of mine who is an
• 1:06
  economist, and he kept reminding me that economics is a social
• 1:11
  science. So, you know, like sociology,
• 1:13
  like psychology, what we analyze is human behavior.
• 1:17
  So you talked about math, but we're actually just looking at
• 1:19
  how human behavior and the choices that people make about
• 1:23
  what they value. So we're delving into things
• 1:26
  like incentives, but instead of delving into one person's
• 1:29
  incentives, we're actually delving into millions and
• 1:32
  millions of people's incentives and what they did.
• 1:35
  And that has a rippling effect on all the choices that they
• 1:38
  could make, and that affects the value of goods and services.
• 1:41
  So that really just leaves economists with two options.
• 1:45
  You mean close your eyes and pin the tail on the donkey?
• 1:49
  Yeah, I mean, it's like you can either look back and guess based
• 1:55
  on the patterns and indicators. You take a bunch of indicators
• 1:58
  and you figure out which pattern or model it actually fits with.
• 2:01
  So when you hear people referencing like other moments
• 2:04
  in history, like the housing market crash in a way, or the
• 2:07
  Internet bubble, that's what they're doing.
• 2:09
  They're just modeling a pattern. Or you can actually just look
• 2:13
  back and say, well, now I understand what happened 10
• 2:15
  years ago. So you're using data to guess,
• 2:20
  right? Is it?
• 2:20
  Did I get that right? Yeah, yeah, OK.
• 2:22
  OK, Yeah. So OK, let's get into the nitty
• 2:25
  gritty of like what economic news we should pay attention to.
• 2:29
  So a couple of headlines. I would love Cara for you, my,
• 2:33
  my economist to dissect them and explain them.
• 2:36
  So we have 4 that we're going to dig into.
• 2:39
  The first one is that the Fed cut rates by 1/4 of a percent in
• 2:42
  December 2025. The second is Colas at 2.5.
• 2:48
  The third CPI inflation rate as of in December 2025 was 2.7 year
• 2:54
  over year in the US. And one of my favorite things,
• 2:58
  it's a bull market. All right.
• 3:01
  Well, yeah, let's let's dig in. So first up, interest rates,
• 3:05
  right, We've all got a bunch of them.
• 3:08
  There's one on your student loan, there's one on your
• 3:10
  savings account, there's a bunch for your credit cards and list
• 3:13
  of I just. Bought a house?
• 3:14
  Yes, there's one on your mortgage and you have to
• 3:17
  research when mortgage rates are going up or down or what's
• 3:20
  happening. But the one that everyone who is
• 3:23
  actually picking these interest rates looks at is the federal
• 3:26
  funds rate. It's what banks use when they
• 3:29
  pay each other in the US. So that first headline that you
• 3:33
  read, the Fed cut rates by 1/4 of a percent in December.
• 3:38
  That means that it just got a tiny bit cheaper for banks to
• 3:42
  loan each other money. And that means that they won't
• 3:46
  be making as much money on all the money that they're moving
• 3:49
  around. So you could see your long term
• 3:52
  savings account interest rates get lower, but you also it also
• 3:57
  means that they could lower those rates for the loans that
• 4:00
  they grant and give out. So anytime that interest rates
• 4:02
  get a little bit lower, it's why people talk about like, oh, the
• 4:05
  Fed needs to cut the rate. Usually the person who's saying
• 4:08
  that is a business person or a person who believes that
• 4:11
  businesses need to borrow and expand more money.
• 4:14
  And it usually means that people are hoping that it will improve
• 4:18
  the job market by hiring more people.
• 4:20
  Yeah, and the rates fluctuate all the time.
• 4:22
  I mean, thinking about buying a house, right?
• 4:24
  Like you can't predict what the rates are going to be.
• 4:26
  And so right now it's 3.5%. I think in November it was
• 4:31
  3.75%. So like you said, it got cheaper
• 4:35
  for banks to be a bit more generous when they set up their
• 4:39
  loan rates. Yeah, but you probably like any
• 4:42
  mortgage rates you research might not have changed, right,
• 4:44
  when the Fed changed their rate. And, you know, anyone who just
• 4:48
  scrambled to check their savings account, Like, it doesn't mean
• 4:50
  that your bank's going to change it overnight.
• 4:52
  It just means that it got a little cheaper for them to
• 4:55
  borrow money from other banks. So it's still up to each bank
• 4:59
  and it's still up to each business to decide when they're
• 5:01
  actually going to make changes to all the financial instruments
• 5:04
  they have. So it's worth mentioning.
• 5:06
  That we are. Seeing Fed Chairman Jerome
• 5:09
  Powell. In the news.
• 5:10
  This week, it's not because of something about the Fed rate
• 5:13
  itself changing, but it's because of scrutiny from an
• 5:16
  administration that wants the Fed to make bigger rate changes
• 5:19
  and take more counsel in how they consider when to change the
• 5:23
  Fed rate. The Federal Reserve has actually
• 5:26
  been independent since 1951, so that's why all the controversy.
• 5:30
  It makes decisions based on what they think is best for the
• 5:33
  economy and not for any short term interests of any president
• 5:37
  or industry. So if you're seeing that, that's
• 5:39
  the noise. So let's tackle.
• 5:42
  We just, we just talked a little bit about, you know, the cost to
• 5:46
  borrow money. But actually let's just talk
• 5:48
  about the cost of living because that's another like headline
• 5:51
  thing. And you mentioned 2 headlines
• 5:53
  that relate to that. Warren Oh yeah, so the cost of
• 5:56
  living 2.5 and CPI inflation rate is 2.7.
• 6:01
  Yeah. And you said COLA, which
• 6:03
  actually is one of those acronyms that I always have to
• 6:05
  like double check and it means cost of living adjustment.
• 6:08
  So it's not necessarily the cost of living.
• 6:11
  CPI, the consumer price index is a like average across all of the
• 6:17
  all of the all of the goods that are being measured and that one
• 6:21
  went up 2.7. But the COLA, the cost of living
• 6:25
  adjustment is at 2.5. Why are they different?
• 6:27
  Well, Social Security actually sets the COLA and they just base
• 6:31
  it. They base it on the CPI, but
• 6:32
  then they decide how much they actually need to increase it.
• 6:35
  So those numbers often aren't the same.
• 6:37
  It's just Social Security saying how much more should we increase
• 6:42
  people's checks that we send out?
• 6:44
  Like how much more do we think that the the consumer price
• 6:48
  index actually influenced the cost of living?
• 6:51
  That makes a ton of sense. I actually didn't know that that
• 6:53
  was so heavily connected to Social Security.
• 6:56
  Yeah, from those numbers, you know that cost of living just
• 6:58
  got a little bit more expensive and so your paycheck isn't
• 7:01
  actually going to go quite as far as it did last year.
• 7:04
  And so this is a number that you want to pay attention to because
• 7:07
  it sort of tells you how much you should ask for a raise or
• 7:11
  whether or not they're raise you've got is keeping pace with
• 7:14
  the cost of living. Yeah.
• 7:17
  And I think that's always a challenge, especially with
• 7:19
  inflation, right? Like a lot of people's salaries
• 7:21
  may not have kept up with the cost of living changes.
• 7:25
  So I really like that advice. Like if you're thinking about
• 7:28
  asking for an increase or you're trying to do the math, like you
• 7:32
  can use that as a baseline number to understand.
• 7:34
  Like, hey, can I live the life that I currently live the same
• 7:38
  way with my salary? Exactly.
• 7:40
  And it's a number that's really like relatable because we're all
• 7:43
  looking at like what costs more and trying to decide like how
• 7:46
  much more did I spend this year versus last year?
• 7:49
  But you now have a federal number that you can just look at
• 7:51
  and sort of gauge like here's here's, you know, here's what
• 7:54
  everyone else is saying, and here's how much Social Security
• 7:56
  is paying more people. Like remember when eggs were
• 7:58
  $12.00? Yeah.
• 8:03
  Well, OK, last up for that headline that you already
• 8:06
  mentioned you love and that is let's talk about bears versus
• 8:09
  bulls. And we're in a bull market.
• 8:12
  So I, you know, I feel like there's a lot of sayings,
• 8:16
  especially in corporate America that center around bull, like
• 8:20
  I'm bullish about this or they talk about the bull market.
• 8:23
  And so I always find it interesting this specific 1.
• 8:27
  So when the when the stock market is doing well and has
• 8:30
  been growing consistently, investors will tell you it's
• 8:34
  going to keep growing and to invest in stocks as opposed to
• 8:38
  if it's like a sleepy bear market where you might want to
• 8:41
  hibernate for a bit because things have been in decline.
• 8:44
  So bonds or safer investments are the way to go.
• 8:47
  That's how you kind of think about a bull market versus a
• 8:50
  bear market. Is that right, Carl?
• 8:51
  Yeah, that's totally right. That's awesome.
• 8:53
  And I love that you, like, use those little metaphors.
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  You can picture like a nestling bear hibernating or you can
• 8:58
  picture like a bull charging at you and.
• 9:01
  That's why there's the bull in the stock market in New York
• 9:03
  City. Yes, exactly.
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  Specifically right now, what's sort of interesting is we're in
• 9:07
  a high risk bull market. And so even though the stock
• 9:10
  market has been growing just like you said consistently all
• 9:13
  of those gains are coming from just one specific center like
• 9:16
  sector, which is AI tech. And usually investors like to
• 9:20
  see that all the stocks that they're picking for your
• 9:23
  retirement accounts are actually coming from like quote UN quote
• 9:25
  balanced portfolios. So you've got, you know, if, if
• 9:29
  one industry like fails, you won't, you'll be sort of
• 9:32
  protected. That's not happening right now.
• 9:35
  We've got a lot like our stock market right now has a lot
• 9:39
  invested in AI and that's where all the growth is coming from.
• 9:42
  So even though we're in a bullish market and usually that
• 9:45
  just tells you everybody's super optimistic about continued
• 9:50
  growth, there's still a mood right now where you're there's a
• 9:54
  little bit of pessimism or a little bit of like tentativeness
• 9:57
  around that optimism. So let's try to send like first,
• 10:02
  I think this is super helpful. I mean, I learned a lot already
• 10:05
  from this. That's why I always look to you,
• 10:06
  Cara, as my economist. So let's center it back around
• 10:10
  kind of like how this is affecting careers, how it's
• 10:13
  affecting people in jobs today. So other than asking for a raise
• 10:17
  of 2.7%, how are how would we connect this to careers and like
• 10:22
  how it's affecting people today? So there's no straightforward
• 10:26
  answer. Again, there is this one
• 10:28
  headline though, and we didn't talk about that yet, but we
• 10:31
  really should. And it's that the US
• 10:33
  unemployment rate is 4.4% in December.
• 10:37
  That's slightly down from 4.6 in November of last year, which was
• 10:41
  actually its highest level since 2021.
• 10:44
  The new job numbers and long term unemployment numbers are
• 10:47
  much worse than people were predicting.
• 10:49
  Wow. Yeah, I mean, unemployment has
• 10:51
  been a topic. I mean, you've seen a lot of the
• 10:54
  layoffs from tech, you've seen big announcements of companies
• 10:57
  making layoffs. So that's definitely like a big
• 11:01
  headline. And why didn't we originally
• 11:03
  include that in the stats? Well, I actually unemployment
• 11:07
  rate is not on my personal shortlist for economic
• 11:10
  indicators that I pay attention to all the time.
• 11:12
  And the reason is because it's got a lot of factors to it.
• 11:16
  So whenever I hear an unemployment rate, I always want
• 11:18
  to ask another like 6 or 7 questions, partly because
• 11:22
  there's always a bigger delay when they're reporting
• 11:25
  unemployment numbers. This year's numbers got delayed
• 11:28
  because there was some staffing changes and they didn't release
• 11:31
  one of the jobs reports. I think it was Q3 of 2025.
• 11:35
  Plus people who are unemployed for actually a longer period of
• 11:38
  time, they end up not getting counted.
• 11:40
  I, when I learned how they calculate the unemployment rate,
• 11:44
  it really like changed my mind a little bit about like just
• 11:48
  taking it within some context. So some context is that the data
• 11:52
  comes from two groups who are reporting numbers.
• 11:54
  And then those numbers are looked at by the government and
• 11:57
  they recalculate and say, OK, we've decided here's what that
• 12:00
  unemployment rate is. And they put out an entire jobs
• 12:02
  report to tell you what's happened across all those
• 12:04
  sectors. So they're 2 groups are workers
• 12:07
  who are newly on the unemployment list and then
• 12:09
  employers who are saying, like, here's how many people work for
• 12:12
  me. And so that's sort of where we
• 12:13
  got the unemployment numbers. You can imagine they're a bunch
• 12:15
  of people who aren't sort of like, captured in those lists.
• 12:19
  Yeah. I know a lot of people that have
• 12:21
  been out of a job for more than six months, right?
• 12:24
  So that puts a lot of context around that number.
• 12:27
  It could be even bigger. Exactly.
• 12:29
  And then the other piece of it is like, is that OK?
• 12:33
  Well, you and you mentioned at the top like, well, which
• 12:35
  sectors actually saw like unemployment?
• 12:38
  And that's where when you get a jobs report, you can sort of
• 12:40
  look and see like where did unemployment happen?
• 12:42
  Were there certain areas or certain ages or certain
• 12:45
  industries like, and that will give you a sense.
• 12:47
  And it also like, again, how it's impacting your career.
• 12:51
  You want to dig into like what are the specific circumstances
• 12:53
  of the skill set you have in the industries you've already worked
• 12:56
  in? Yeah.
• 12:58
  And would you say, I mean, this is the highest level since 2021,
• 13:03
  right? Like since people coming out of
• 13:06
  COVID recession levels? Yeah, exactly.
• 13:10
  And that is really I think like the, the bigger piece of this
• 13:14
  headline is that we've hit this other high.
• 13:15
  I mean, so many industries are seeing like hiring slow down.
• 13:20
  And you know, even though interest rate was just like the
• 13:23
  Fed interest rate was just lowered just a bit.
• 13:26
  There's so many other things that have happened this year
• 13:29
  like that, it makes it pretty nervous for businesses to expand
• 13:33
  and invest. Yeah.
• 13:34
  And tariffs are also a really big factor in that, right?
• 13:37
  Like it was a big topic of conversation last year, but I
• 13:39
  think people were waiting to kind of see what panned out and
• 13:43
  like how it would happen and where it would be reflective.
• 13:46
  And a lot of businesses took a hit on their PNL last year, but
• 13:50
  a lot of the tariffs are being implemented this year.
• 13:54
  Well, and there was a tariff rate like a, if everyone
• 13:57
  remembers back in April of 2025, there was a tariff rate that was
• 14:00
  announced across all countries. And then from there our federal
• 14:05
  government said actually we're going to negotiate tariffs with
• 14:08
  each individual country. So tariff rates kept changing,
• 14:11
  and businesses like to make decisions based on consistency
• 14:15
  and projections. Because back to the point, the
• 14:17
  economy is not something you can, like, predict in the
• 14:20
  moment. You're looking back at patterns
• 14:22
  and you're trying to predict how decisions made today are going
• 14:25
  to impact the millions and millions of people who are
• 14:28
  making decisions over the course of the next six months.
• 14:31
  And so to like invest when tariff rates keep changing is
• 14:35
  even harder for businesses. And you to your point, you said
• 14:39
  that a lot of the economy is, is kind of staying afloat around AI
• 14:44
  right now and those who are optimistic are charging ahead
• 14:49
  from a bull perspective around growth in that area.
• 14:52
  So depending on how you feel about AI, you may or may not be
• 14:56
  optimistic. And depending on how you feel
• 14:58
  about AI impacting, like how many people you need to
• 15:02
  hireright, because then there's a lot of people who are like
• 15:04
  optimistic. About AI.
• 15:05
  Because they're like, hey, I don't need to hire folks.
• 15:08
  So, you know, Peep business leaders are dealing with like a
• 15:11
  ton of risk and change and workers are super worried too.
• 15:14
  Actually, the term job hugging turned up in my feed.
• 15:17
  And it's such a depressing concept for, like, anyone who's
• 15:20
  listening to this podcast and thinking like, I want to expand
• 15:23
  my skills and do new things. So I've heard it a bunch.
• 15:27
  Tell me what it is, Cara. OK, so job hugging is that
• 15:30
  people are hanging on to jobs in fear that the market is
• 15:33
  terrible. So again, goes back to this
• 15:36
  whole idea of like this. When we study economics, we're
• 15:39
  studying how people behave. If they're nervous, then they're
• 15:42
  like, I don't want to leave my job.
• 15:43
  And it means that employers actually have way more leverage
• 15:46
  to say not increase your pay, which is where we started.
• 15:49
  Maybe you didn't get a raise this year, and maybe you're
• 15:51
  still job hugging because you're afraid.
• 15:54
  Or maybe your employers expanded the amount of responsibility you
• 15:58
  have and they're not paying you more money for it.
• 16:01
  But Cara, it's a new year, it's January, it's 2026.
• 16:06
  What are some things that people can do to think about, some
• 16:10
  tactics to use in this moment? Well, for me, like kind of where
• 16:14
  I start is just literally, it's separate how you feel from what
• 16:19
  you can actually know. So remember that economic news
• 16:24
  is not math. It's not a straightforward like
• 16:28
  equation. There are thousands of variables
• 16:30
  and unseen impacts. And so, you know, right now
• 16:34
  there's a ton of optimism about AI.
• 16:37
  There's some hyperbole around how quickly all of our prices
• 16:40
  might come down, but the economy moves super slowly and it's not
• 16:44
  so predictable. So you shouldn't get swayed by
• 16:47
  other people's projections or, you know, emotions and kind of
• 16:50
  notice your own. If you're making decisions based
• 16:53
  on like these got reactions, they might not be as grounded as
• 16:59
  just kind of like making a decision based on a bunch of
• 17:01
  other facts. I'm not saying you're going to
• 17:04
  keep studying economics and get to the right answer, but don't
• 17:08
  get swept up in sort of like day-to-day headlines.
• 17:12
  That's sort of why we also kept our, like, metrics to a pretty
• 17:14
  small number to just say, like, what is this actually telling
• 17:17
  me, like overtime. Yeah.
• 17:20
  And also a big one is to understand how your company and
• 17:24
  your role are funded. So like, what all these
• 17:28
  different economic indicators might mean to your actual
• 17:31
  business, your business bottom line and how they pay you.
• 17:34
  That really helps you understand how risky or safe you are in any
• 17:38
  new career decisions or at your current career.
• 17:41
  I feel like understanding your role, how your role is funded is
• 17:43
  actually like can tell you more about your job security than
• 17:46
  most of these other headlines. Yeah, just being aware of what's
• 17:50
  happening in the world, I think is important to also identify
• 17:54
  like where you should make your next career move or what skills
• 17:58
  you should double down on. And I just think it's always
• 18:01
  helpful to keep up with your portfolio, with your resume,
• 18:05
  with your LinkedIn, grow your network, have conversations,
• 18:09
  whether it's a good or a bad economy because you don't know
• 18:12
  if you're going to need it. But it's always helpful to chat
• 18:16
  with people. Every job I've ever gotten was
• 18:18
  because I knew someone who knew someone who connected me, right?
• 18:21
  So that networking piece, that human piece is still super
• 18:24
  important. Yeah.
• 18:25
  So OK, before we go, three things to remember. 1, you do
• 18:29
  not need to track the entire economy, just a few numbers like
• 18:32
  the CPI and interest rates that actually affect your life.
• 18:36
  And two, your job security has more to do with how your role is
• 18:40
  funded than whatever the headlines are yelling about.
• 18:42
  Remember that those big unemployment numbers don't
• 18:44
  necessarily reflect what's going on in the industry, but they
• 18:46
  could tell you something and it's worth digging into a larger
• 18:49
  jobs report. And then three, the economy is
• 18:52
  slow and it's messy. There's millions of people as a
• 18:55
  part of it. So just take a deep breath and
• 18:57
  you know, panic is optional, but patience is actually one of the
• 19:00
  most powerful tools in your in your economic tool belt.
• 19:04
  And don't get overwhelmed. Focus on just these small little
• 19:08
  pieces and focus on your role and your job and your career and
• 19:13
  it'll be OK. Yes.
• 19:15
  All right. Bye everyone.
• 19:16
  Bye everyone. That's a wrap.
• 19:19
  Thanks for. Joining us.
• 19:20
  On Unspoken Career Truths, don't forget to follow us on Spotify
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