For decades, that combination would have seemed impossible. Now, some economists warn it could become the new normal.<\/p>\n
Lawrence J. White, an economist at New York University\u2019s Stern School of Business, said the disconnect is structural.<\/p>\n
\u201cThe economy can expand without hiring much,\u201d he told Newsweek. \u201cWe\u2019re building a system that runs faster than it employs. That\u2019s a long-term shift, not a one-year blip.\u201d<\/p>\n
The data show how that shift is taking shape. Household consumption climbed 3.5 percent, accounting for more than half of total growth, but much of that spending came from upper-income households. Investment in automation and artificial intelligence also played an outsized role, according to Joseph Brusuelas, chief economist at RSM.<\/p>\n<\/p>\n
\u201cThe great decoupling of jobs and growth will take some explaining to the American public,\u201d Brusuelas wrote on X. \u201cThat interplay is going to be the major economic narrative next year.\u201d<\/p>\n
In a deeper analysis published Tuesday on RSM\u2019s Real Economy Blog, Brusuelas described a powerful but uneven recovery driven by automation, high-income consumption, and AI-related capital spending. He noted that nominal GDP expanded 8.2 percent, while real private demand\u2014a measure that excludes trade and inventory effects\u2014rose 3 percent. Inflation held near 3 percent<\/a>.<\/p>\n Despite those strong headline figures, he warned that hiring continues to lag. \u201cThe economy and financial markets will continue to expand at a strong clip,\u201d he wrote, \u201cbut job creation will remain tepid.\u201d<\/p>\n Americans seem to agree. Unemployment ticked up to 4.6 percent in November, and consumer sentiment, tracked by the University of Michigan, has fallen to levels typically seen during recessions.<\/p>\n \u201cHouseholds don\u2019t experience GDP,\u201d White said. \u201cThey experience prices, wages, and hours worked. Right now, all three feel out of sync with the official data.\u201d<\/p>\n When Growth No Longer Means Hiring<\/strong><\/p>\n The U.S. economy has added just under 500,000 jobs so far this year, down sharply from 1.6 million during the same period in 2024. The unemployment rate has risen through the second half of the year<\/a>, reaching 4.6 percent in November \u2014 the highest level since 2021.<\/p>\n The weaker hiring pace isn\u2019t just a sign of a cooling labor market. Economists say it points to broader structural changes in how growth translates into jobs. Trump\u2019s second-term fiscal policy, featuring large corporate tax cuts and the full expensing of capital investments, has accelerated a long-running trend toward capital-intensive growth.<\/p>\n Firms can now write off the cost of equipment and software almost immediately, encouraging investment in technology instead of labor.<\/p>\n \u201cThe policy framework is designed for investment-led expansion,\u201d White said. \u201cThat means the returns show up in productivity and profits before they show up in hiring.\u201d<\/p>\n At the same time, the Federal Reserve\u2019s higher-for-longer interest rate stance has dampened small-business borrowing, giving larger firms an advantage. The result is a two-tier economy: big corporations are automating and scaling efficiently, while smaller employers remain cautious about adding workers.<\/p>\n RSM\u2019s Middle Market Business Index, which tracks midsize companies, shows that hiring intentions remain flat even as business confidence improves.<\/p>\n \u201cThat\u2019s an important signal,\u201d Brusuelas said in his report. \u201cThe middle market typically drives job creation during expansions. The fact that it\u2019s not now tells you this recovery is different.\u201d<\/p>\n Economists compare the current moment to earlier \u201cjobless recoveries,\u201d particularly in the early 2000s, when productivity outpaced employment. But they note that today\u2019s pattern is broader, touching manufacturing, logistics, and services alike.<\/p>\n \u201cThe difference now is scale,\u201d Foudy said. \u201cAI and digital automation are spreading across nearly every sector. The productivity gains are real, but the employment payoff is delayed\u2014maybe by years.\u201d<\/p>\n Brusuelas expects that trend to continue. The October government shutdown will likely trim up to 1.5 percentage points off fourth-quarter growth, but he still projects expansion \u201cwell above the long-term trend\u201d through 2026, powered by tax incentives and private investment. Inflation will stay sticky, and the labor market will remain soft.<\/p>\n Prosperity Without Perception<\/strong><\/p>\n For the White House, the paradox is now as much political as economic. The administration points to GDP growth and stock market highs as proof of success, yet voters remain skeptical. Polling shows that most independents and lower-income Republicans feel worse off financially than a year ago<\/a>.<\/p>\n Economists warn that this disconnect\u2014between measurable strength and lived experience\u2014can shape public opinion as powerfully as any recession.<\/p>\n \u201cIt\u2019s not that people deny the data,\u201d White, the NYU Stern professor, said. \u201cIt\u2019s that they don\u2019t feel represented in it.\u201d<\/p>\n![\"\"](\"https:\/\/www.europesays.com\/us\/wp-content\/uploads\/2025\/12\/GettyImages-2253313407.jpg\"\/)
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