Steve Moore Calls U.S. Economy 'Hotter Than the NY Knicks' After Jobs Blowout

The Headline and the Hype

Economist Steve Moore appeared on Maria Bartiromo's Wall Street over the weekend, offering a characteristically colorful take on the May employment data: the U.S. economy, he said, is "hotter than the NY Knicks." The remark came days after the Bureau of Labor Statistics reported that nonfarm payrolls rose 172,000 in May, nearly double the consensus estimate of 85,000. Unemployment held steady at 4.3%.

Moore, a longtime proponent of deregulation and tax cuts, attributed the strength to what he described as President Trump's pro-business policies. For a certain slice of the commentariat, the report landed as vindication. But for anyone watching the Fed, the implications are more complicated.

The Numbers in Context

The May report wasn't just a beat on the headline figure. Prior months were revised sharply higher as well. March payrolls moved from 185,000 to 214,000, and April climbed from 115,000 to 179,000. Combined, that's 93,000 more jobs than previously reported across those two months.

Leisure and hospitality drove the gains with 70,000 new positions, well above the sector's 14,000 monthly average over the prior year. Some of that surge reflects hiring ahead of the 2026 World Cup, which kicks off this month. Local government added 55,000, and health care contributed 35,000, roughly in line with its recent trend. Financial activities was the notable laggard, shedding 22,000 jobs.

Average hourly earnings rose 0.3% for the month and 3.4% year over year, both matching expectations. That's a modest deceleration from April's 3.6% annual pace, but not the kind of cooling that would give the Fed cover to move.

What It Means for the Fed

The labor market's resilience is not in dispute. The question is what the Federal Reserve does with it. Chair Kevin Warsh has inherited a central bank that's been on hold for an extended stretch, and the May data does nothing to change that posture.

Goldman Sachs Asset Management's Lindsay Rosner called the report a "payroll blowout" and said the Fed doesn't need to worry about the labor market right now. The focus, she said, remains squarely on inflation. Morgan Stanley's Ellen Zentner struck a similar tone, noting that the Fed remains in "watching and waiting" mode, focused on the inflation side of its mandate. Principal Asset Management's Seema Shah was more direct: job creation above 150,000 and broad-based in nature "reinforces that there is little basis for an easing bias."

Fed funds futures adjusted accordingly after the release, pushing out expectations for a first cut. For months, markets have been trying to front-run an easing cycle that hasn't materialized. This report makes that trade harder to justify.

Supply-Side Optimism vs. Market Reality

Moore's bullish framing fits a familiar template. Supply-siders have long argued that tax cuts and deregulation unleash growth that Keynesian models underestimate. The May data offers some support for that view, at least on the surface. But the macro picture is more nuanced.

The labor market has been operating in a low-hire, low-fire equilibrium for over a year now. Layoffs remain subdued, but job openings have only recently started to recover. Some analysts see structural shifts at play, including rising AI adoption that may be reshaping labor demand in ways the headline numbers don't fully capture. The unemployment rate has been stuck at 4.3% since early spring, which is neither hot enough to spark wage spirals nor soft enough to signal recession.

The soft landing narrative remains intact, but soft landings are fragile by definition. Credit spreads have tightened since the spring, and cyclical sectors continue to outperform defensives. That's consistent with a benign growth backdrop. What it's not consistent with is an imminent cutting cycle.

The Rate Regime Matters More Than the Quote

Moore's Knicks analogy will get play on social media, but the more important signal is what this report means for the duration of the current rate regime. The Fed has held rates at restrictive levels for longer than most forecasters anticipated a year ago. The May data suggests that patience will extend further.

Two-year Treasury yields moved higher after the release, and the curve flattened modestly. That's the market pricing in higher-for-longer. For equity investors, the implication is that multiple expansion driven by rate cut hopes will remain elusive. Earnings growth will have to do the heavy lifting.

The [sector rotation dashboard](/sector) shows cyclicals holding leadership, which is consistent with the soft landing thesis. But if the labor market remains this strong through summer, the Fed's inflation focus could evolve into something more hawkish. That's not the base case, but it's a tail risk that wasn't on the table a month ago.

What to Watch Over the Next Month

The June employment report drops July 2. Between now and then, markets will parse the June CPI print and any signals from the Fed's next meeting. The key question is whether wage growth continues to moderate even as job creation stays elevated. If it does, the Fed can maintain its current stance without risking credibility. If wages reaccelerate, the narrative shifts.

The other variable to monitor is credit conditions. High yield spreads have been well-behaved, but financing costs for leveraged borrowers remain elevated by pre-2022 standards. A labor market this strong should support corporate cash flows, but rate sensitivity hasn't gone away. The [breadth dashboard](/breadth) will be worth watching for signs of rotation beneath the surface.

For now, the economy is running warmer than consensus expected, and the Fed isn't in a hurry. That's the setup. Whether it's "hotter than the Knicks" depends on your view of the Knicks.