The U.S. economy is experiencing an unusual situation: strong growth in overall wealth and output, but very little job creation. This phenomenon, dubbed a “jobless boom,” is challenging traditional ideas about how economic expansions work.
Economists forecast that the latest report on gross domestic product (GDP)—a key measure of the economy’s total output—will show the U.S. grew by about 2.7% in 2025. That’s a healthy rate for a developed nation like the United States. Strong consumer spending, rising stock prices, and increased business investment—especially fueled by advances in artificial intelligence (AI)—drove much of this growth. Even with policy shifts in trade and immigration creating some uncertainty, manufacturing output rose sharply in early 2026, and business investment finished 2025 on a positive note.
However, job growth told a different story. Employment barely increased throughout 2025, with revised data showing only about 181,000 net new jobs added for the entire year—far weaker than initial estimates and one of the slowest non-recession years in recent decades. Nationwide hiring slowed across many industries, creating a flatlining in total employment despite the GDP strength. This marks the first time in the postwar era that such a sharp gap between GDP growth and job creation has occurred this late in an economic expansion, without a preceding recession.
Diane Swonk, chief economist at KPMG, described the situation as unprecedented. “We have never seen anything later in an expansion like what we are seeing today,” she said. “At the end of the day we are sitting on a one-legged stool, which is not the most stable place to be.”
This pattern echoes the “jobless recovery” after the early 2000s tech bubble burst, when the economy grew but jobs lagged for years. Back then, former Fed official Ben Bernanke highlighted widespread job losses, especially in manufacturing and office/administrative roles. But that followed a recession. Today’s version is different—no downturn preceded it.
Economists like Michael Pearce of Oxford Economics point to similar factors now: overhiring during prior years, strong productivity gains, technological changes (including AI), and policy uncertainty. These make the labor market more vulnerable to shocks, as jobs usually act as a buffer against recessions.
Interestingly, the slowdown hits different groups unevenly. In 2025, college-educated workers faced rising unemployment, while rates for those without college degrees actually declined. White-collar office and administrative jobs saw the biggest jumps in joblessness, as companies cut costs and restructured—often experimenting with AI to handle tasks like customer service or recruiting. Blue-collar sectors, meanwhile, held up better in some areas.
Personal stories highlight the human side. Crystal Mason, 45, from North Carolina, lost her call center contractor job in late 2025, where she assisted military members with mental health scheduling and crisis calls. Her job search has been tough: out of many applications, only a few led to interviews, with most rejected or ignored. She worries AI is reducing roles like hers, even though people often prefer talking to a real, empathetic person.
Danielle Williams, 40, a recruiter in Miami with 12 years of experience, was laid off after five months in a new role and has only found short-term contract work since. “This market has been really crazy, unlike anything I’ve ever seen,” she said.
AI’s role remains debated. Fed Chair Jerome Powell has noted that recent productivity gains began years ago, before widespread AI tools like large language models. Others credit pandemic-era business changes now paying off. While AI may boost productivity significantly in coming years—potentially meaning fewer jobs for the same output—economists like Stephen Stanley of Santander Capital Markets doubt it’s the main driver yet.
Corporate profits and stock indexes have stayed near record highs, benefiting investors from these efficiency gains. But wage growth has slowed as workers lose bargaining power, raising concerns about whether productivity can sustain the economy long-term without broader wage increases.
The latest jobs data from February 2026 showed a pickup—private employers added 172,000 workers in January, mostly in health care, social assistance, and construction. White-collar sectors lagged. Forecasts generally predict continued steady GDP growth in 2026 with only modest labor market improvement.
Still, some experts warn of risks. Mickey Levy of the Hoover Institution notes it’s too early for full comparisons to past episodes, but stagnant labor markets could slow overall growth if productivity gains aren’t shared more widely through wages.
This “jobless boom” shows the U.S. economy can generate wealth without adding many jobs—at least for now. Whether it proves sustainable or signals deeper vulnerabilities remains a key question for policymakers, businesses, and workers alike.
