Jobless Growth Unveiled: 5 Key Trends in 2025

Welcome to the ‘Jobless Growth’ Economy: The New Normal in the Labor Market

The U.S. economy in 2025 is exhibiting signs of what economists increasingly call a “jobless growth” scenario, where economic output grows or remains stable without a corresponding increase in employment. This phenomenon is reshaping labor markets, hiring practices, and the future of work, especially for younger generations such as Gen Z. Major financial institutions like Goldman Sachs and JPMorgan Chase have already signaled that artificial intelligence (AI) and automation are reducing their need for human hires, signaling a structural shift in how jobs are created and maintained.

Understanding Jobless Growth: What It Means

Jobless growth refers to a situation where an economy grows—measured by GDP or corporate profits—but this growth does not translate into job creation or lower unemployment. Instead, productivity gains come primarily from automation, AI, and technological efficiencies that replace or reduce the need for labor. This trend has been reported as likely becoming the “new normal” by Goldman Sachs economists, who describe the current labor market as a "Gen Z hiring nightmare" due to fewer entry-level jobs and hiring freezes in key sectors.

Economic and Labor Market Trends in 2025

Recent data shows that job growth in 2025 has dramatically slowed compared to previous years. Employment growth averaged only 27,000 jobs per month since April 2025, a stark decline from 123,000 monthly jobs added in early 2025 and 168,000 in 2024. This slowdown is not uniform: most new jobs in 2025 have been concentrated in healthcare and social assistance, which account for about 86% of all new employment, while other sectors have seen job losses.

Adding complexity, preliminary revisions by the U.S. Bureau of Labor Statistics revealed that employment growth between April 2024 and March 2025 was overestimated by nearly 911,000 jobs, suggesting the labor market is weaker than previously thought.

Long-term unemployment, while relatively stable compared to historical recessions, is forecasted to increase mildly from 4.1% to 4.7% by 2026, indicating more workers may remain unemployed for longer periods, exacerbated by structural changes in the labor market including AI’s role in hiring processes.

The Role of Artificial Intelligence and Automation

AI adoption by major banks and corporations is accelerating workforce transformation. Firms like Goldman Sachs and JPMorgan Chase are increasingly using AI tools for recruitment and operational efficiency, which reduces the number of new hires and leads to rounds of job cuts. Goldman Sachs has internally warned employees to expect further layoffs as AI reshapes its operations, illustrating the tangible impact of technology on employment in financial services.

This shift means that entry-level and mid-level jobs, particularly those traditionally occupied by younger workers such as Gen Z, are becoming scarcer. The integration of AI in hiring and business operations allows companies to maintain or increase productivity with fewer workers, contributing directly to the jobless growth phenomenon.

Demographic and Structural Labor Market Shifts

The jobless growth trend is compounded by demographic and structural changes:

Aging Workforce: Large-scale retirements of baby boomers reduce the labor supply.
Lower Immigration: A slowdown in immigration diminishes the influx of new workers.
Changing Labor Demand: These factors tighten labor supply but do not necessarily increase hiring, as companies remain cautious in adding staff amid economic uncertainty.

Consequently, economists argue that the benchmark for “healthy” job growth is shifting. Where 150,000 monthly jobs added once signaled a robust labor market, current projections suggest that as few as 40,000 to 50,000 new jobs per month may be sufficient to keep unemployment stable or even declining by 2026.

Implications for Workers and the Economy

The shift to jobless growth has profound implications:

For Job Seekers: Increased competition for fewer jobs, especially for younger workers entering the labor market, creates a “hiring nightmare” scenario.
For Workers' Wages: While nominal wages continue to rise faster than inflation, real wage growth is slowing, indicating less purchasing power improvement for many workers.
For Economic Policy: Policymakers face challenges in stimulating job growth when productivity gains come without significant labor demand. Social safety nets may require enhancement to support longer-term unemployed workers.

Visualizing the Trend: AI in Hiring and Job Cuts

Images relevant to this topic include official logos of firms like Goldman Sachs and JPMorgan Chase, AI-driven hiring platform screenshots, and infographics showing employment trends by sector and age group. Visual data from government labor statistics illustrating job growth slowdown and concentration in healthcare would also provide clear context.

In summary, the U.S. economy is entering an era where growth does not guarantee more jobs. Artificial intelligence, demographic changes, and shifting labor supply-demand dynamics are converging to create a labor market where job creation is muted despite economic expansion. For younger generations and policymakers alike, adapting to this “jobless growth” economy will be a critical challenge moving forward.