Job Seekers Not Leaning Into AI will Stay on Shelf Longer, Says ECRI's Lakshman Achuthan

Lakshman Achuthan, Co-Founder & COO at ECRI, discusses the state of the US labor market and the so called 'jobless boom.'

The US economy is creating plenty of wealth. It’s just not creating many jobs.

Forecasters expect Friday’s report on gross domestic product to show the economy expanded 2.7% in 2025, a solid pace by any standard for a developed country. But employment barely grew, and the combination is drawing comparisons to the infamous “jobless recovery” of the early 2000s that followed the tech bubble and collapse.

There’s one major difference between then and now that makes the current divergence all the more unusual: The 2000s episode kicked off with a recession. This time, the “jobless boom” is happening without one. That marks a first in the postwar era.

“We have never seen anything later in an expansion like what we are seeing today, and that’s what makes it so unusual and hard to judge about where we are going,” said Diane Swonk, the chief economist at KPMG. “At the end of the day we are sitting on a one-legged stool, which is not the most stable place to be.”

President Donald Trump will likely tout strong GDP numbers during his first year back in the White House at his annual State of the Union address to Congress on Feb. 24. The economy was supported in 2025 by resilience in consumer spending alongside rising stock prices and a pickup in business investment driven by the artificial intelligence boom, despite drastic changes in trade and immigration policies that added uncertainty to the mix. Data out Wednesday confirmed business investment ended 2025 on a high note, and manufacturing output rose in January by the most in nearly a year.

Trump and his allies are urging the Federal Reserve to cut interest rates, arguing the US central bank should take a page from the playbook of its former chairman, Alan Greenspan — who in the 1990s famously predicted rising productivity could be setting the stage for a period of faster growth without higher inflation.

But the economy today is starting to look less like the one in the 1990s than what came after, which then-Fed Governor Ben Bernanke identified in a 2003 speech on the “jobless recovery.” Much like then, nationwide headcount flatlined in 2025 amid a broad-based pullback in hiring across industries, despite the strength of GDP.

A big focus of Bernanke’s speech was the loss of manufacturing jobs, which had already been in a decades-long decline and were at the time being dealt another major blow from China’s rise as factory floor to the world.

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