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Rick Rieder Fears Higher Rates Are Hurting Two- Tier Economy
A Fed chairman candidate, Rieder laid out the case for lower rates at Schwab’ s annual conference. By Eric Rasmussen
WHEN YOUR NAME IS BEING BANdied about for the job of Federal Reserve chairman, people tend to listen to you, especially when you might be making the counterintuitive argument that interest rates ought to be lowered while other people— spooked by inflation— might be egging the Fed on in the opposite direction.
But Rick Rieder, the chief investment officer of global fixed income at BlackRock, the world’ s largest asset manager, has his own reasons for thinking rates ought to be lowered, and it’ s not, as people might think, that he’ s just kissing up for a job leading the U. S. central bank. It comes down to a few important concepts, including housing and what’ s going to happen to workers amid a revolution in AI and increased productivity.
“ I think you’ re seeing a productivity revolution,” and that will have a greater impact on inflation than interest rates, said Rieder, who oversees $ 2.4 trillion in assets at BlackRock.
Rieder, in fact, predicted that GDP could grow next year at 4.6 % or 4.7 %.
The productivity part of the argument is that companies are trying to become leaner and meaner, which is going to mean less hiring. While there’ s been explosive growth in capital expenditures keeping the economy humming( notably the build-out for data centers and AI infrastructure), hiring is slowing down, Rieder argued in a presentation at the Schwab IMPACT conference, which was held in Denver in early November.
Rieder noted that the healthcare industry is the leader of new hires, and yet that hiring is starting to stall amid government cuts to outfits like the National Institutes of Health. Take healthcare out of the picture and he says you have negative job growth— that, in fact, healthcare jobs become 160 % of the new hires in the last four months( larger than 100 % because of what it’ s making up for).
He also believes that automation will hurt job growth in areas like trucking, which could be affected by self-driving vehicles— technology that, he said, executives hope will lower safety risks and fill roles as the truck driver workforce grows older. These changes will take an unholy toll on young workers as the service jobs they might have used in the past to get a toehold in life dry up, he said.“ Take people age 22 to age 25. Young people in our country are having a brutal time getting a job,” Rieder said.
This problem is going to be more difficult as companies are doing everything to get costs down— through automation, but also through more optimal supply chains and order fulfillment and“ enhanced procurement through predictive analytics,” he said. The upshot of all this is a bifurcated economic story. Haves are spending but have-nots can’ t. Older savers are doing well with higher interest rates because they get more interest. They are flush and keeping the economy flush with their spending, which is buoying the stock market.
“ The bottom 40 % of the country, almost half the country, is only 22 % of the spending. The top 10 % is 23 %,” he said. First-
32 | FINANCIAL ADVISOR MAGAZINE | DECEMBER 2025 WWW. FA-MAG. COM