Equity markets finally absorbed yesterday’s labor report. The Dow, S&P 500 and Nasdaq are all off 1-2% in mid-day trading.
Gold and bitcoin are down 2% each. Silver is continuing to deleverage, down 7% midday.
The Bureau of Labor Statistics reported 130,000 new jobs, more than double the consensus forecast of 55,000. The unemployment rate edged down to 4.3%.
As we detailed yesterday, the White House seized on the headline. President Trump argued that a country producing solid employment gains should command lower borrowing costs. He estimates that materially lower rates would save the federal government at least $1 trillion annually in interest expense.
Markets responded to the number.
They also absorbed the revision.
The same report showed that 2025 job growth was far weaker than previously believed. The economy added just 181,000 jobs last year — more than 400,000 fewer than originally reported. That revision alters the trend line.
Where the Jobs Are
A deeper look at the January numbers belies a theme we’ve been observing since the Biden BLS was faking the data leading up to the 2024 election.
Probably the most wonky report we’ve seen trying to depict the data from yesterday’s data picture. (Source: Augur Infinity and Global Markets Investor)
Private education and health services accounted for the bulk of job creation over the past year.
Over the last twelve months, that category added roughly 780,000 positions. Excluding those gains, the economy shed approximately 350,000 jobs.
Manufacturing, the purported object of Trump’s tariff strategy, declined by about 100,000 in 2025. Transportation and warehousing fell by more than 100,000. Professional and business services contracted. Information and financial activities declined.
Federal employment dropped again in January, down 42,000. The civilian federal workforce now sits roughly 11% below its October 2024 peak.
Laura Ullrich of Indeed described it to Forbes Daily as “a tale of two economies.” One segment continues hiring. Several others are retrenching.
The unemployment rate ticked lower. The seasonally unadjusted rate rose from 4.1% in December to 4.6% in January. Both figures are now part of the record.
Asset Owners and the Upper Tier
Meanwhile, asset prices remain relatively firm.
Equities reflect forward earnings expectations, liquidity conditions, and the performance of large-cap firms that dominate index weightings. Ownership of those assets remains concentrated.
The top decile of households holds the majority of equities and financial assets. Their consumption patterns carry disproportionate weight in aggregate spending data.
Over the last five years, real retail sales have barely advanced after adjusting for inflation. Yet headline spending has remained supported, in large part because higher-income households continue to spend.
The distribution matters.
Households with substantial asset exposure benefit from rising equity values and higher interest income. Households relying primarily on wages face slower job growth outside health care and continued cost pressure.
Both dynamics operate simultaneously.
Household Credit Expands
Consumer balance sheets reflect that pressure.
Total credit card debt now stands at a record $1.28 trillion, up roughly $500 billion over four years.
The share of credit card balances that are seriously delinquent — 90 days or more past due — reached 12.7% in Q4 2025, the highest level since 2011 and approaching post–financial crisis peaks.
Consumer and household delinquencies have risen five percentage points in the last three years. The trend looks like we’re already in a credit crisis approaching 2008 in severity. (Source: Global Markets Investor)
So what’s the White House cheering?
Higher-income households continue to spend from asset appreciation and income gains. Lower— and middle-income households increasingly rely on revolving credit.
Consumption persists. The funding source shifts.
Corporate Strain Without a Recession Label
Corporate filings reinforce the divergence.
To paraphrase ourselves from yesterday, nine large U.S. companies filed for bankruptcy last week. The three-week average reached six — the fastest pace since 2020. At least eighteen companies with liabilities above $50 million entered bankruptcy over the past three weeks.
In 2025, large corporate bankruptcies rose 61% year over year to 749 filings — the highest level in fifteen years. Since the 2022 low, filings have more than doubled.
High interest rates compress margins first. Refinancing windows narrow next. Cash flow stress emerges last.
Equity indices can rise while leveraged firms restructure. Both conditions can coexist.
Government Debt Carries the Heavy Load
The Congressional Budget Office added a longer-term context.
Debt held by the public stands at 99% of GDP and is projected to exceed the post–World War II record of 106% within four years. By 2036, CBO projects debt at 120% of GDP.
Annual deficits are projected to rise from $1.9 trillion in 2027 to $3.1 trillion in 2036. Interest payments are expected to exceed $1 trillion this year and reach $2.1 trillion by 2036, totaling $16.2 trillion over the next decade.
Short-term rates are projected to settle near 3.1% by 2032. The 10-year Treasury yield is projected to average 4.1% this year and gradually rise to 4.4%.
Interest expense now ranks among the largest federal outlays.
Revenues average roughly 17–18% of GDP over the projection window. Outlays exceed that level consistently.
The difference is financed in bond markets.
The Mechanics of Sustainability
Three “funding channels” are shouldering the entire economy in this phase of the Trump reset… and rapid progress into the AI economy:
• Asset appreciation among the top tier sustains discretionary spending.
• Consumer credit supports broader household consumption.
• Federal borrowing bridges the gap between revenues and outlays.
Each operates under different constraints.
Equity markets respond to liquidity, earnings concentration, and forward guidance. Consumer credit responds to wage growth and delinquency thresholds. Federal borrowing responds to interest rates and investor demand.
At present, equity strength and concentrated spending coexist with slower job creation outside healthcare, rising consumer delinquencies, and accelerating government debt issuance.
No single data point resolves that tension. The labor market shows headline improvement, but relies very heavily on bloated prices and bizarre, grotesque incentives in the health and education industries.
The consumer sector shows continued spending and rising credit stress. Federal projections show steady growth and rising debt ratios.
We’ll let you read the tea leaves today.
Our research team is fast at work trying to understand how new policy initiatives being pushed by the Trump administration will actually play out.
What’s likely to happen to the value of your money as the Dollar 2.0 digital asset world gets the proper guardrails… and what you’re best shot at gaining assets to join the upper 10% without overloading on debt are…
Stay tuned.
~ Addison
P.S. On Grey Swan Live! at 2 p.m. today, February 12, 2026, U.S. Global Investors founder Frank Holmes will share his wisdom on the markets and how it’s playing out in his portfolio of global ETFs.
Here’s what’s driving the conversation:
- Foreign holders were paid a record $292 billion in interest on U.S. Treasurys in Q3 2025 — more than double 2020 levels.
- Foreign investors now hold $9.1 trillion in U.S. debt, four times the amount held just two decades ago.
- Central banks are quietly rebalancing reserves — gold’s share has surged from 13% to 24% since 2021, overtaking the dollar for the first time.
Meanwhile, Washington is betting that crypto assets and stablecoins can create a bigger, more efficient market for U.S. debt, extending the dollar’s reserve-currency status.
But there’s a catch.
As Frank will explain, the banking lobby is pushing hard to lock its monopoly on the U.S. national savings and restrict Dollar 2.0 assets through new regulation.
