Additional Coverage:
- Economists are concerned America could witness a ‘jobless boom’ in 2026 — should you be worried? (marketrealist.com)
The “Jobless Boom”: Is America Headed for a Disconnected Economy in 2026?
U.S. economy sees robust growth while job market lags, raising concerns among economists.
The U.S. economy closed out 2025 with a surprising surge, posting a remarkable 4.3% growth rate in the third quarter-far exceeding expert predictions. This unexpected boost has fueled optimism for 2026, with some forecasts anticipating a 5% GDP growth. However, beneath this rosy economic surface, a concerning trend is emerging: a “jobless boom.”
While consumer spending continues to drive economic expansion, the job market remains stubbornly stagnant, prompting economists to warn of a significant “decoupling” between economic growth and employment.
Newsweek reports that the U.S. economy is currently operating like “two countries at once.” Despite the impressive 4.3% annual growth rate-the highest in two years-job creation has barely crawled, averaging a mere 51,000 new jobs per month.
The total job additions for 2025 stood at just 500,000, a stark contrast to the 1.6 million jobs created during the same period in 2024. Furthermore, the unemployment rate has climbed to 4.6%, its highest level since 2021, according to the Federal Reserve.
For decades, such a disparity between growth and employment was considered nearly impossible. “Growth and labor market outcomes have decoupled.
Firms are doing more with fewer workers,” noted Diane Swonk, chief economist at KPMG. Swonk attributes this to companies “overshooting on staffing during the hiring frenzy” and now using attrition or layoffs to align staffing with demand.
Additionally, tariffs are squeezing profit margins, leading some businesses to implement layoffs and hiring freezes.
Beyond cyclical adjustments, economists suggest a more profound structural shift is underway in how economic growth translates into jobs. “The economy can expand without hiring much.
We’re building a system that runs faster than it employs. That’s a long-term shift, not a one-year blip,” explained Lawrence J.
White, an economist at New York University’s Stern School of Business.
White points to the Trump administration’s fiscal policies, specifically large corporate tax cuts and the full expensing of capital investments, as a key driver of this capital-intensive growth. Companies can now write off the cost of equipment and software, incentivizing investment in technology over labor.
“The policy framework is designed for investment-led expansion. That means the returns show up in productivity and profits before they show up in hiring,” White stated.
Consequently, businesses are experiencing significant productivity gains and are hesitant to expand their workforce when they can achieve “more with less.” While AI’s full impact is yet to be realized, companies are currently maximizing output from existing or shrinking workforces rather than increasing headcount to meet new demand.
Adding to this complex picture, the “K-shaped recovery” of the U.S. economy has solidified. Household consumption grew by 3.5%, with affluent households accounting for half of that increase. Investment in automation and AI has further contributed to this economic bifurcation.
“The great decoupling of jobs and growth will take some explaining to the American public. That interplay is going to be the major economic narrative next year,” commented Joseph Brusuelas, chief economist at RSM. As 2026 approaches, the nation watches to see how this unprecedented economic landscape will unfold.