While the U.S. economy appears to be expanding and worker productivity is high, job growth has drastically slowed this year, and these mixed signals have confounded the Federal Reserve, whose job it is to maintain a stable economy.
We used to pound the pavement when we needed a job, visiting businesses and asking for applications, sometimes filling them out right then and there and interviewing immediately after. That was when “Now Hiring” signs meant something. These days, it feels more like decoration — the economic equivalent of those fake lemons people put in a bowl on the counter. Cute to look at, but nobody’s actually using them. That’s the vibe in the American labor market right now: GDP is strong, productivity is solid, and companies … aren’t hiring. And if it keeps up, it could put the entire economy in a pretty uncomfortable spot heading into 2026.
A Growing Economy Without Growing Payrolls
On paper, the economy shows solid growth, workers’ productivity is high, and businesses keep pouring money into new tech — especially Artificial Intelligence. Normally, that’s the recipe for a hiring surge. Instead, job growth has slowed to a crawl. The economy even lost jobs in June and August, and the three-month average heading into fall was only around 62,000 per month.
Many companies are allocating their budgets toward AI upgrades and high-efficiency software rather than actual people. And with major policy changes reshuffling the business environment this year, employers aren’t eager to add staff until they know what the next six months look like. Even lower interest rates haven’t coaxed them off the sidelines.
Why the Federal Reserve Is Nervous
Here’s the slightly comforting part: businesses aren’t rampantly firing people. Layoffs remain low, which means the labor market isn’t crashing completely. A paused job market is better than a collapsing one, but it’s also unsettling. The economy relies on steady hiring to keep spending strong and confidence stable. When hiring dries up, even without layoffs, everything becomes more fragile.
The Fed isn’t loving this setup. Strong GDP tells them not to cut rates more aggressively. Weak job growth suggests they maybe should. Those two signals don’t match, and this is a central bank that prefers clean, tidy data stories — not a “choose your own adventure” economy.
More News From Cheapism
- Amazon, UPS Among Companies Announcing Mass Layoffs This Week — From Amazon to Target, major corporations are announcing massive layoffs ahead of the holidays.
- ‘Nurses Will Leave the Bedside’: The U.S. Government No Longer Considers Nursing a Professional Degree, and the Financial Impact Is Huge — As part of the One Big, Beautiful Bill, the U.S. Government no longer recognizes nursing as a professional degree, making it harder to get substantial loans.
- 10 Middle-Class Jobs That Are Disappearing the Fastest — From office clerks to computer programmers, here are the top 10 middle-class jobs that may not be around in the future.
