The Jobless Boom: Why AI and Wealthy Spending Are Driving Economic Growth Without Creating Jobs

The Jobless Boom: Why AI and Wealthy Spending Are Driving Economic Growth Without Creating Jobs

A Dr. Jekyll and Mr. Hyde story is playing out in the US economy right now. The stock market is at record levels, and the latest economic growth reading is above 4 percent, a boom-like scenario. But this positive tale has a dark side: There is virtually no hiring, and that has left many Americans feeling stuck and anxious.

This is a jobless boom. It’s an unusual situation that is ideal for Wall Street, but tough for many on Main Street. The economy is growing at a rapid rate, due largely to the AI boom and spending by wealthy Americans (what I dubbed the return of the “K-shaped economy” where the top 20 percent are thriving and the bottom 80 percent are just getting by). Normally, a strong year of economic growth leads to ample hiring, but that isn’t happening. Last year was the worst year for job gains outside of a recession since 2003 — when the economy was in a “jobless recovery” after the dot-com bubble burst.

The United States would have lost jobs in 2025 if it weren’t for health care and social assistance hiring. Most blue-collar and white-collar industries shed jobs last year. Nearly 85 percent of the job gains that did occur happened in these sectors, highlighting a growing divide in the labor market.

The AI Factor

The AI boom is sending stocks soaring, but it’s not translating into widespread job creation. Companies are investing heavily in artificial intelligence to boost productivity and profits, which benefits shareholders and executives but often leads to automation and job displacement rather than new hiring. This technological shift is creating a paradox where economic indicators look strong while employment stagnates.

Wealth Disparity and Spending

Rich people are spending big, driving consumer demand in luxury goods and services, but this spending isn’t trickling down to create jobs for the average worker. The K-shaped economy means that while the wealthy thrive, many middle- and lower-income Americans are left behind, facing stagnant wages and limited job opportunities. This disparity is exacerbating economic inequality and contributing to the jobless boom.

Historical Context

The current situation mirrors the jobless recovery of the early 2000s, but with modern twists like AI and increased wealth concentration. Understanding this history is crucial for job seekers and policymakers alike, as it highlights the need for adaptive strategies in a changing labor market.

Implications for Job Seekers

For those looking for work, this means focusing on resilient sectors like health care and social assistance, while also upskilling in areas less susceptible to automation. The job market is becoming more competitive and specialized, requiring a proactive approach to career development.