💸 Economy

The latest round of economic numbers from January came in better than expected.

• Unemployment decreased to 4%

• There were about 16% fewer jobs added than expected in January

• However, December’s new jobs numbers were revised up 20%

• Wages increased 4.1% on a yearly basis. That’s more than December and about 8% more than what economists expected.

Since September, the unemployment has held fairly steady at 4.1%. Even with the impact of fires in Los Angeles, unemployment reached the lowest level since May of 2024.

Taken together, the data suggests the economy is continuing to hold up well. It may also hint that risks of inflation still remain.

Many investors are keeping an eye on this to try to predict what the Federal Reserve will do. Interest rates greatly affect how investors choose to position. This data mostly supports a continuation of their new “wait and see” approach on interest rates.

🏠 Real Estate

What is the financial impact of climate change, natural disaster, and unaffordable home insurance prices? According to one analysis, a staggering $1 Trillion dollars.

Some of the riskiest areas are also seeing the most current growth. They expect that properties in Tampa, Florida will lose 25% of their value over the next 30 years.

As a whole, the most at-risk areas are classified as “Climate Abandonment.” These are areas seeing limited population growth or even decline in the face of high insurance premiums. They’re projected to see a 38% decline in population over the next 30 years along with an average loss of 6.2% of property values.

This is just one analysis though. If anything, we know for sure that things won’t play out exactly as they expect. It does, however, add more support behind the idea that real estate investors need to seriously consider long-term climate risks and the state’s insurance markets in their decisions.

💡 Startups

As we previously covered, Chinese startup DeepSeek recently debuted a new AI model. That model made waves for offering capabilities similar to other industry leaders, but at a fraction of the cost.

This poses an implicit question about whether the future of AI will continue to be extremely capital intensive. If AI were cheap, then there’s less need for hardware, data centers, and power. The value of the AI products (and companies themselves) might also be lower as well.

Microsoft’s CEO has put a different spin on the discussion though. He’s brought up an old economic theory called “Jevons paradox.” That basically states that things becoming cheaper and more efficient increases demand for them, and ultimately results in a much higher level of usage.

There are some examples of this in the past as well. A more recent one is LED light bulbs. Once we could make fairly bright lights very cheaply, we just started adding more lights everywhere and to everything.

Why does this matter?

First, if AI adoption increases as the technology becomes more efficient, then companies providing AI infrastructure (like Microsoft) should still benefit.

Second, mass adoption of efficient, paid AI products could ultimately increase the margins and profitability of AI companies - if they can provide valuable enough products at the right price for customers.

🎵 Music Royalties

On their most recent earnings call, Spotify shared new information about upcoming products.

They are currently testing their long-rumored “Premium” streaming product. That is expected to add higher fidelity and maybe more, at an increased monthly price. They also spoke about accelerating the delivery of new products into the marketplace in 2025. It sounds like the company is exploring a range of potential offerings to target different types of customers.

If Spotify successfully launches new products that increase subscribers or revenue per user, it will also increase the amount of money paid in royalties. Considering Spotify paid $10 Billion of royalties in 2024, even a 10% increase in revenue could have a substantial impact on payments to the music industry.

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Sources

Economy - Yahoo Finance, BLS 

Real Estate - USA Today

Startups - Inc

Music - Variety, Billboard