The economy is creating plenty of wealth. It\u2019s just not creating many jobs.<\/p>\n
Forecasters expect Friday\u2019s report on gross domestic product to show the economy expanded 2.7% in 2025, a solid pace by any standard for a developed country. But employment barely grew, and the combination is drawing comparisons to the infamous \u201cjobless recovery\u201d of the early 2000s that followed the tech bubble and collapse.<\/p>\n
There\u2019s one major difference between then and now that makes the current divergence all the more unusual: The 2000s episode kicked off with a recession. This time, the \u201cjobless boom\u201d is happening without one. That marks a first in the postwar era.<\/p>\n
\u201cWe have never seen anything later in an expansion like what we are seeing today, and that\u2019s what makes it so unusual and hard to judge about where we are going,\u201d said Diane Swonk, the chief economist at KPMG. \u201cAt the end of the day we are sitting on a one-legged stool, which is not the most stable place to be.\u201d<\/p>\n
President Trump will likely tout strong GDP numbers during his first year back in the White House at his annual State of the Union address to Congress on Tuesday. The economy was supported in 2025 by resilience in consumer spending alongside rising stock prices, and a pickup in business investment driven by the artificial intelligence boom, despite drastic changes in trade and immigration policies that imposed restraints on growth.<\/p>\n
Trump and his allies are urging the Federal Reserve to cut interest rates, arguing the central bank should take a page from the playbook of its former chairman, Alan Greenspan, who in the 1990s famously predicted rising productivity could be setting the stage for a period of faster growth without higher inflation.<\/p>\n
But the economy today is starting to look less like the one in the 1990s than what came after, which then-Fed Governor Ben Bernanke identified in a 2003 speech on the \u201cjobless recovery.\u201d Much like then, nationwide headcount flatlined in 2025 amid a broad-based pullback in hiring across industries, despite the strength of GDP.<\/p>\n
A big focus of Bernanke\u2019s speech was the loss of manufacturing jobs, which had already been in a decades-long decline and were at the time being dealt another major blow from China\u2019s rise as factory floor to the world.<\/p>\n
Between 2001 and 2005, though, the segment of the workforce employed in office and administrative support roles experienced job losses of a similar scale as the tech boom left a trail in its wake, shedding 1.3 million positions alongside the 1.7 million decline in production roles.<\/p>\n
Michael Pearce, the chief U.S. economist at Oxford Economics, drew an explicit parallel to the aughts in a Feb. 11 report on the outlook: \u201cConditions that led to the jobless recovery in the early 2000s are aligning, such as overhiring, robust productivity growth, technological advancements, and increased policy uncertainty,\u201d he said. \u201cThis leaves the economy vulnerable to shocks, because the labor market is the main firewall against a recession.\u201d<\/p>\n
In the 2000s episode, the pain of unemployment was spread across the spectrum of educational attainment. This time around, college-educated Americans are bearing the brunt of the slowdown, faced with rising unemployment even as jobless rates among their non-college counterparts have declined.<\/p>\n
Office Jobs<\/p>\n
Many of them are on the front lines of the battle to expand AI in white-collar workplaces across the country, the success of which may be key to keeping the current productivity boom \u2014 already being reflected in official statistics as the GDP-jobs gap widens \u2014 going in the years ahead.<\/p>\n
\u201cAI could bring productivity gains over the next few years, and it could be quite significant, which of course means that we may see less job growth than you would ordinarily,\u201d said Stephen Stanley, the chief U.S. economist at Santander Capital Markets. \u201cBut I would be surprised if that is making a huge impact just yet.\u201d<\/p>\n
Crystal Mason, 45, was notified in mid-December that she was being laid off from her job as a contractor at a call center. In that role, she helped military service members schedule mental health assessments and handled after-hours calls from suicidal individuals.<\/p>\n
Now the Holly Ridge, N.C., resident is looking for similar work, and says her search has been distinctly more challenging than the last one two years ago, when she consistently received offers following job interviews.<\/p>\n
Mason, who has an associate\u2019s degree, says she wonders how AI will impact the availability of such positions going forward. She also suspects she\u2019s up against a flood of other laid-off job-seekers who are applying for anything they can find. Of the applications she\u2019s submitted this time around, two have resulted in interviews, 42 have been rejected and 64 haven\u2019t even received responses.<\/p>\n
\u201cI\u2019ve noticed other companies I\u2019ve worked at, or where friends work, are already using AI and reducing roles for people who do what I do,\u201d she said. \u201cThe sad part is, from my years of experience in customer service and healthcare, I\u2019ve learned that almost everyone I interact with prefers talking to a real, empathetic, professional person.\u201d<\/p>\n
Americans working in office and administrative support positions saw the biggest increase in unemployment in 2025. It was the clearest part of a broader pattern of reallocation within the pool of unemployed workers last year toward white-collar occupations and away from blue-collar roles.<\/p>\n
Investors, meanwhile, are reaping the benefits of such cost-cutting programs across corporate America. U.S. stock indexes are near record highs, and corporate profit margins remain near the widest levels of the post-World War II era.<\/p>\n
How much work has actually been replaced by AI to date is a matter of some debate among economists. Fed Chair Jerome Powell argued in a recent news conference that the current wave of rising productivity started five or six years ago \u2014 in other words, before the mass rollout of large language models.<\/p>\n
Some of his colleagues have instead suggested process improvements and reorganization of business models originally spurred by the pandemic are now starting to pay off. In December, the last time Fed officials issued economic projections, they boosted their outlook for GDP growth in 2026 while leaving their estimates for the unemployment rate unchanged.<\/p>\n
\u2018Unlike Anything\u2019<\/p>\n
Danielle Williams, 40, took a job last year as a senior lead recruiter for a midsize firm focused on civil and commercial electrical projects, then was laid off in November after five months in the role. Since then, the Miami resident has only been able to find a six-month contract position at a similar company.<\/p>\n
\u201cI\u2019m very familiar with the labor market and market trends because I have been in the recruiting industry for the past 12 years,\u201d Williams said. \u201cThis market has been really crazy, unlike anything I\u2019ve ever seen.\u201d<\/p>\n
The latest monthly jobs report published on Feb. 11 by the Bureau of Labor Statistics showed job growth was weaker in 2025 than initially reported, but it also showed hiring picked up in January. Private-sector employers added 172,000 workers to payrolls, a figure representing almost half of last year\u2019s entire increase.<\/p>\n
January\u2019s gains, however, were overwhelmingly concentrated in healthcare and social assistance, much as in 2025. Construction jobs were also a major driver of the jump, whereas employment sectors predominantly staffed by white-collar workers mostly lagged behind.<\/p>\n
By and large, the outlook is for continued steady economic growth and only a slight improvement in the labor market. But some economists, like Mickey Levy, aren\u2019t optimistic that rising productivity can continue to carry the economy if it\u2019s not passed on in the form of higher wages. Right now, that\u2019s not happening \u2014 wage growth has been decelerating as workers have lost bargaining power in negotiations with their employers.<\/p>\n
\u201cIt\u2019s too early to compare this episode of strong GDP, weak employment to earlier episodes, where the relationship was sustained for much longer,\u201d said Levy, a visiting fellow at the Hoover Institution. \u201cEconomic growth will be slowing significantly to reflect the stagnant labor markets.\u201d<\/p>\n
Saraiva and Curran write for Bloomberg.<\/p>\n","protected":false},"excerpt":{"rendered":"The economy is creating plenty of wealth. It\u2019s just not creating many jobs. Forecasters expect Friday\u2019s report on…\n","protected":false},"author":2,"featured_media":305603,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[220,72,143967,113,44279,143966,143965,61,60,4752,143968,1685,13387,1820,749,3322,2237,8829],"class_list":{"0":"post-305602","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-ai","9":"tag-business","10":"tag-crystal-mason","11":"tag-economy","12":"tag-episode","13":"tag-feb","14":"tag-first-year","15":"tag-ie","16":"tag-ireland","17":"tag-job-growth","18":"tag-jobless-recovery","19":"tag-labor-market","20":"tag-outlook","21":"tag-productivity","22":"tag-role","23":"tag-time","24":"tag-unemployment","25":"tag-worker"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/305602","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=305602"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/305602\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/305603"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=305602"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=305602"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=305602"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}