The Labor Department announced Friday that April unemployment remained stable while the U.S. gained 115,000 jobs, exceeding forecasts. Amna Nawaz discusses the figures and their economic implications with Mohamed El-Erian, a professor at the Wharton School of Business and chief economic advisor at Allianz.

Notice: Transcripts are machine and human generated and lightly edited for accuracy. They may contain errors.

Amna Nawaz:

The Labor Department announced today that April unemployment stayed steady and the U.S. added 115,000 jobs, beating projections. Both the Nasdaq and S&P 500 reached record highs today amid the news, following solid earnings from various sectors.

To delve deeper into these figures and their message about the U.S. economy, we welcome Mohamed El-Erian. He serves as a professor at the Wharton School of Business and chief economic advisor at Allianz, a financial services firm.

Good to have you here. Thank you for being with us.

Mohamed El-Erian, Chief Economic Adviser, Allianz:

Thank you for inviting me.

Amna Nawaz:

Those job gains were nearly twice the analyst consensus. Unemployment is steady at 4.3 percent. Annual wage growth stands at 3.6 percent. What catches your eye in today's report?

Mohamed El-Erian:

Three elements really stood out to me.

First, the job growth - as noted, double the forecast - highlights robust labor demand, despite all the pressures on the economy. Yet the labor market proves remarkably durable. Second, worker supply faces hurdles.

Labor force participation dipped, and the overall labor force shrank. So supply lags even as demand thrives. Third, earnings: average weekly earnings fell short of expectations, confirming a broader trend evident yesterday - labor's share of national income is declining to historic lows.

Amna Nawaz:

You referenced the barrage of challenges hitting the economy. Note that despite the Iran conflict, soaring energy costs, and tariff ambiguities, U.S. stocks have shattered multiple records lately - up 10 percent in April alone. In a recent Financial Times column, you cautioned this rally has limits, writing: "There is a geoeconomic ceiling to even this market rally, and we will get there if the war is not resolved."

With the war dragging past two months and no clear end, where do you place that ceiling, and how soon might we hit it?

Mohamed El-Erian:

This piece appeared earlier this week, underscoring the striking disconnect between markets and geopolitical tensions.

What's driving it? Three factors. First, tech dominance: five firms drive half the market's advances - it's largely a technology narrative. Second, corporate profits have endured so far, despite CEO alerts on looming household strains.

Third, the U.S. stands out as the best among flawed global options, drawing investment flows. But can this persist indefinitely? No. Prolonged war, sustained high gas prices, and widening gaps - Wall Street vs. Main Street, affluent vs. struggling - could force markets to reconnect with geopolitical pressures.

Amna Nawaz:

Expand on those divergences. Today's University of Michigan consumer sentiment index plunged to a record low, down almost 8 percent year-over-year.

Any signs consumers might rebound soon?

Mohamed El-Erian:

Not at all.

This marks the second straight month of record lows in consumer confidence. This time, current conditions dominate the drop, unlike last month's future outlook focus - likely tied to fuel costs.

Consumers present a puzzle: they report dire feelings yet keep spending. The worry is this won't last, particularly for low-income groups under severe strain.

The jobs data details reveal more: Black and Hispanic unemployment worsens, while Asian and white rates hold or improve. Black unemployment now doubles white levels.

Amid aggregate strength, these divides demand attention.

Amna Nawaz:

Since you're here, let's touch on Jerome Powell's final week as Fed chair, ending next week. President Trump has pushed for rate cuts repeatedly. If confirmed, what should we anticipate from his nominee, Kevin Warsh, on rates?

Mohamed El-Erian:

Markets anticipate no cuts until deep into next year. A split Fed grapples with both inflation and jobs mandates. Warsh can't impose changes right away.

Expect no cuts soon. Powell's twist - resigning as chair but staying on the board - adds friction. Overall, the Fed likely holds steady through much of this year and beyond.

Amna Nawaz:

Mohamed El-Erian, thanks for your insights. Much appreciated.

Mohamed El-Erian:

Thank you. Glad to join.