Summary: The U.S. economy is entering a phase of “jobless growth,” where GDP grows without proportional job creation. This shift is largely driven by artificial intelligence adoption, which boosts productivity but limits new job opportunities, especially for entry-level workers. While AI investment fuels economic growth now, the long-term effects on the labor market and potential recession risks remain uncertain.
Understanding Jobless Growth
Analysts at Goldman Sachs have identified a new economic trend in America: “jobless growth.” This means the economy is expanding, but the number of new jobs isn’t keeping pace. For those relying on employment—whether they’re seasoned workers or recent graduates—this isn’t great news. However, capital holders benefit from growth without the added expense of payroll costs.
The Role of AI in Economic Growth
Economists David Mericle and Pierfrancesco Mei highlight that the current pattern of modest job growth alongside robust GDP growth is likely here to stay. Much of this growth stems from businesses adopting artificial intelligence (AI), while labor supply growth remains limited due to factors like population aging and reduced immigration.
Challenges for Job Seekers
Although many people are entering the job market, they face significant hurdles. So far, there’s limited evidence that AI has displaced many workers directly. Instead, policies from the previous administration, such as tariffs, may have broadly dampened hiring. However, AI adoption seems to be slowing hiring, particularly for entry-level roles. Job postings for these positions have dropped significantly compared to last year, making it harder for newcomers to get their foot in the door.
The Long-Term Impact on the Workforce
This trend is concerning and short-sighted. Senior roles require experienced individuals, but experience comes from starting in junior positions. If companies continue to limit entry-level opportunities, the pipeline for future leaders will dry up. Perhaps some firms are betting that AI will advance enough to replace human workers entirely, but that remains to be seen.
Economic Outlook and AI Investment
Economists warn that the full impact of AI on the labor market may only become clear during a recession. Deutsche Bank researchers note that AI-related spending is currently the main factor keeping the U.S. economy out of recession. Harvard economist Jason Furman points out that AI accounted for 92% of GDP growth in the first half of 2025.
Massive investments in AI promise significant productivity gains through both enterprise and consumer adoption. While these gains haven’t yet materialized, the anticipation has already disrupted the job market. AI’s influence on the economy will be transformative—whether that means increased productivity or a market collapse due to overleveraged AI bets remains to be seen.