Gen Z Jobless Rate Surges Past 10%

August’s Producer Price Index (PPI) slipped 0.1%, the first drop in producer prices in four months. On a year-over-year basis, producer prices rose 2.6%. Markets cheered the headline as the S&P 500 hit a record high, and futures priced in three Fed rate cuts in 2025. Trump weighed in on Truth Social, declaring “No Inflation!!!” and urging Powell to slash rates “BIG.”

However, the headline decline is misleading. Once you strip out food, energy, and trade services, core PPI rose 0.3% in August, its fourth straight increase. In other words, manufacturers’ costs are still climbing. The apparent “drop” came from wholesalers and retailers cutting margins, especially in tariff-heavy sectors. Machinery and vehicle margins fell 3.9% in a single month, masking the fact that underlying inflationary pressure remains.

Meanwhile, CPI showed consumer prices increasing 0.4% in August, pushing annual inflation to 2.9%. Shelter led the gains, with airfare, cars, and apparel prices also rising.

CPI (Consumer Price Index) tracks how prices change for the goods and services households buy (food, rent, clothes, gas, etc.). It’s one of the most common measurements of inflation.

PPI (Producer Price Index) measures changes in what businesses pay for the raw materials and wholesale goods they need to produce things. It’s not a direct measure of consumer inflation, but it often acts like a preview: If producers’ costs rise, they may later raise prices on consumers, which then shows up in CPI.

Markets are pricing in a 25 basis point cut, and I think we’ll get it – but that doesn’t mean it makes sense. Inflation is still running 90 basis points above the Fed’s 2% target. This isn’t a demand problem. Consumers are spending, and stores are full: There are literally lines to get into shops in SoHo. 

The real issue is supply-side inflation. Tariffs are increasing input costs, forcing businesses to raise their prices or cut margins. Lowering rates won’t fix that. It might put more money in people’s pockets, but that just fuels demand while input prices remain high. Worst-case scenario, we walk right into stagflation.

Since 1997, the number of publicly listed U.S. companies has dropped more than 55%, while, over roughly the same period, the number of private equity–backed firms has increased more than 500%.

Last week, the Long-Term Stock Exchange (LTSE), a competitor to the NYSE and Nasdaq, pitched an idea to change that. They want the Securities and Exchange Commission (SEC) to scrap quarterly earnings reports and let companies report just twice a year. The exchange argues this would allow companies to focus on the future, rather than on quarterly expectations. 

Since 1997, the average length of annual corporate reports has increased by almost 200%. 

Having fewer public companies is problematic because when the most-promising firms avoid public markets, everyday investors who can’t invest in private markets are locked out of early-stage growth.

Additionally, concentration risk rises. Investors who want exposure to high-quality businesses end up piling into the few mega-cap stocks that are already public.

If the SEC and LTSE can reduce the quarterly reporting grind, more companies might go public — broadening opportunities for investors and easing the market’s dependence on a handful of mega-caps.

It doesn’t make any sense that we have all of these investor protections when it comes to stocks, and then at the same time, the crypto industry exists. Why is it that we make sure people really understand what stocks they’re buying, and then at the same time, we allow investors to buy Fartcoin or place bets on every topic — from the Rotten Tomatoes score of The Avengers movie to the presidential election — on Kalshi?

Maybe how we level the playing field is to require fewer disclosures for public companies and more disclosures for private companies.

Why is it important to know what’s going on behind the curtains at these private companies? Take Oracle’s recent deal with OpenAI. Oracle’s valuation is dependent on whether you believe OpenAI is going to pay them $300 billion over the next five years for their compute. OpenAI doesn’t have $300 billion right now, which means they’re going to have to borrow, which means that all of this is dependent on the creditworthiness of OpenAI. Now, how do we determine the creditworthiness of OpenAI? We don’t have enough information, but OpenAI’s investors do. That’s a serious asymmetry.

The lower the regulation, the greater the likelihood for fraud. One of the reasons U.S. companies trade at 27x earnings versus 15x for emerging markets is because we’re more risk aggressive, we have better access to capital, but also because of the rule of law and regulation. If you’re a widower and you invest in SPY, you’re unlikely to get Bernie Madoff-ed. 

So how do you thread the needle between adequate investor protection and reducing regulatory burden on public companies? The answer might be AI: You could create a tool that acts like the rating agencies and accesses all relevant data on a company and determines its riskiness, or assigns it a score.

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Unemployment is rising, and young people are feeling it the most. Overall U.S. unemployment hit 4.3% in August, the highest since 2021. But for 16- to 24-year-olds, the rate is 10.5%.

There were 15% fewer job postings to the entry-level job-search platform Handshake this school year, while the number of applications per job rose 30%.

Rising youth unemployment isn’t just happening in America. Nepal’s prime minister just resigned following deadly protests sparked by Gen Z, which faces a 21% unemployment rate. In India, more than 40% of college graduates under the age of 25 are unemployed. Canada’s youth unemployment rate is the highest it’s been since 2010, at 14.5%.

Why is this happening? AI is partly to blame:

Economists at Stanford published a paper that found early-career workers ages 22 to 25 in the most AI-exposed jobs have experienced a 13% relative decline in employment. 

AI is already proficient at generating code: Researchers at Linkedin estimated that AI might be able to replicate 96% of a software engineer’s skills. This is especially hurting entry-level developers. The number of employed software engineers ages 22 to 25 was 20% lower this July than in 2022. 

But this is also a symptom of macroeconomic trouble. As economist Kathryn Anne Edwards said on the pod last week, young workers are a labor market indicator: They are usually the last to get hired and the first to get fired. If we see high rates of youth unemployment, we are likely either heading into a weak economy or out of one.

The impact is that young people are feeling worse than ever about America. Only 41% of Gen Z are extremely or very proud to be Americans, compared with 75% of the baby boomer generation and 71% of Gen Xers.

There’s been a big shift. Layoffs used to be a negative indicator, and now they’re a sign of strength. From the company’s perspective, there’s a valuation incentive to demonstrate that they’re using AI to get rid of people. It’s become a bragging point.

According to Satya Nadella, CEO of Microsoft, 30% of the code written at Microsoft now is written by AI. That’s striking in and of itself, but also it’s striking that he’s bragging about it. Meta’s saying the same thing. Half of its code, according to Mark Zuckerberg, will be written by AI by 2026. 

The market is basically saying: We love you, young people, you guys are great; however, we really need to make sure that we can prove to Wall Street how much we do not need you.

Check out our guide to staying irreplaceable in the age of AI. 

More than 70 major movies and albums came out this summer, from Lorde and Sabrina Carpenter to Materialists and 28 Years Later. But none of them came close to the success of an animated film about a K-pop girl group who fight demons with the power of their fans. 

K-pop Demon Hunters became Netflix’s most-watched movie ever with 266 million views in just 10 weeks, and its soundtrack became the first in Billboard's 67-year history to feature four simultaneous top 10 songs.

Unlike typical Netflix releases that decline after their initial weeks, K-pop Demon Hunters maintained nearly 0% decline in viewership over three consecutive weeks.

Why did Demon Hunters break through when nothing else could?

The K-Culture Assembly Line

K-pop Demon Hunters was created by Korean-Canadian and Korean-American filmmakers and produced by Sony and Netflix. That it was made outside Korea shows the evolution of South Korea’s cultural exports — what began with K-dramas in the ’90s has matured into a global industry thanks to strong institutional support. In 2024, the South Korean government allocated $5 billion to content and culture, framing “overseas expansion of culture” as a key strategy.

However, the real genius isn’t just government money, it's how the business is structured. In the U.S., entertainment is fragmented: managers, labels, studios, PR firms, and distributors all operate separately. In Korea, giants like SM, YG, and JYP are vertically integrated. The same company that discovers and trains the talent also produces their music, runs their marketing, sells their merch, and places them in shows or brand campaigns. Because everything is connected, a hit song easily spills into a TV role, which brings new fans and fuels merch sales. 

Amplified by Netflix

Instead of pushing promos, Netflix amplified the Demon Hunters content that fans created:

Originality Still Matters

Hollywood is trapped in a risk-averse franchise loop: 70% of major studio releases this year are sequels, prequels, or remakes, up from just 12% in 2020 to 2024. Demon Hunters stood out by being original.

Audiences are starting to hunger for new content. A24, a studio that exclusively backs bold, original stories, has 6x’ed its share of the U.S. box office over the past decade. Demon Hunters may not share A24’s indie aesthetic, but it proves the same point: In a world drowning in algorithmic content and franchise fatigue, original content can still cut through the noise.  

Poland is a member of NATO and subject to Article 5, meaning if they are attacked, all member nations are obligated to respond. Putin flying drones into Poland could qualify as an attack. 

What does that mean? The best-performing stocks over the fourth quarter are going to be EU defense stocks as European nations feel threatened and ramp up spending.

Last week, Scott joked about the risks Prof G Media would have to disclose if we ever went public (e.g.: Scott is in a midlife crisis and is unpredictable). What would you add to the list? Drop your best ideas in the comments. We might feature them in the next episode.