①The United States is experiencing what some call a “jobless boom”: capital is flowing healthily through the economic system but is not translating into new job creation; ②If technology companies begin to reap the rewards of AI, this “jobless boom” could further intensify.
The U.S. economy continues to grow beyond expectations, with the exception of the labor market.
Strong economic growth is typically accompanied by more active hiring and higher personal incomes, which in turn support sustained consumer spending. However, this year’s situation in the U.S. economy is quite the opposite: spending is driving growth, while the labor market has fallen into a “complete freeze.”
Diane Swonk, Chief Economist at KPMG, wrote in a report on Tuesday: “Economic growth has become decoupled from labor market performance.”
This is gradually becoming the central narrative for 2026. The United States is experiencing what some call a “jobless boom”: capital is flowing healthily through the economic system but is not translating into new job creation.
Market attention has shifted to artificial intelligence (AI). This year’s economic growth has been largely driven by AI investments, while consumer spending has remained resilient.
The primary investors in AI are large corporations, including those leading the wave of white-collar layoffs. In some cases, these companies have seen substantial profit surges, adopting the operating mantra of “achieving more with fewer people” this year.
“Companies are achieving more with fewer employees,” Swonk wrote. “Many firms became overstaffed during hiring sprees and are now bringing headcounts back to reasonable levels through natural attrition or layoffs. Some companies are offsetting tariff-induced margin pressures through layoffs and hiring freezes.”
In addition to a grim labor market, consumers experienced almost no income growth in the last quarter. Nevertheless, despite facing tariff uncertainties and persistent inflation, consumer spending has remained robust.
A significant portion of this growth came from healthcare and medical service expenditures, as hospital and nursing costs continued to rise. This year, Americans’ spending on medical services hit a new high since 2022.
This indicates that, despite robust spending by affluent households, the rise in consumer expenditure is not entirely driven by confidence. In fact, the consumer confidence index remains at one of its lowest levels historically, and many Americans are exercising caution in their spending due to uncertainties surrounding tariffs.
The weak labor market has undoubtedly exacerbated this situation. The U.S. unemployment rate currently stands at 4.6%, the highest since 2021, and overall job growth remains sluggish. Worse still, the situation may continue to deteriorate.
Since the rise of the AI boom in 2023, major technology companies have poured vast sums of money into the field on an unprecedented scale, and more importantly, they plan to invest even more.
Meanwhile, investors are scrutinizing whether the spending by tech giants will yield commensurate returns.
However, if technology companies begin to reap the benefits of AI, a 'jobless boom' may only intensify further. Companies aiming to enhance productivity through AI without hiring more employees would only worsen an already sluggish job market.
Editor/Doris