Ask ten people whether a booming economy should look like more hires and higher pay, and most will say yes. This year the answer from the data is: not necessarily.
The U.S. recorded surprisingly strong GDP growth late in 2025 — driven in large part by corporate investment and continued consumer spending — even as hiring cooled and unemployment ticked up to about 4.6%. Economists have a name for the mismatch: a "jobless boom." Companies are generating profits and buying new tools, but those gains are not translating into broad hiring. For workers, it feels like the economy is doing fine without them.
How growth happened without more people
Part of the story is where businesses are putting their money. Large firms poured capital into artificial-intelligence projects and other productivity tools, and those investments can boost output without adding headcount. As KPMG chief economist Diane Swonk put it, growth and labor market outcomes have decoupled: firms are trying to “do more with fewer workers.” The result looks odd on a headline: healthy GDP numbers side-by-side with sluggish job openings and elevated layoffs in some white-collar pockets.
At the same time, consumer spending held up — but not because incomes surged. Healthcare and medical services (+ hospital and nursing costs) accounted for much of the spending rise, while consumer sentiment stayed low. In practice that means households spent on essentials even as wages and hiring didn’t accelerate, creating the illusion of a confident consumer base while many job seekers felt frozen out of the market.
Automation and AI are an accelerant. From agentic booking tools and workplace copilots to content and code generators, new systems are changing how work gets done. For a sense of how fast that shift is moving in tech and services, see how some firms are already rolling out agent-based features across products like Google’s AI tools, which aim to streamline tasks that once required human intervention Google's agentic AI tools. At the same time, deeper integrations — like Google’s Gemini research features inside productivity apps — hint at even broader workplace transformations Gemini Deep Research. Those changes can lift productivity, but they also let companies postpone or reduce hiring.
Where demand still exists (and who’s being left behind)
Not every corner of the labor market is frozen. Some sectors remain hungry for workers: home health aides, medical assistants, delivery drivers, information-security analysts and certain hospitality roles are projected to add jobs. Older workers and part-time seekers may find openings tied to big events — the 2026 World Cup and the U.S. semiquincentennial are expected to create seasonal roles in accommodations, venues and tourism, a point that groups focused on older workers have highlighted.
Public projections also show steady needs in health-care administration, financial compliance and grounds maintenance. But the gains are uneven: tech and corporate finance saw headline layoffs even as other industries quietly added staff.
And demographic and policy shifts can tighten some labor pools. For example, sectors that rely on immigrant labor — like construction — could see wage pressure if the supply of workers shrinks, a dynamic economists say might push localized pay gains even as nationwide wage growth stays tepid.
What wages and raises look like next year
Expect modest raises, not windfalls. Surveys of employers indicate average planned raises around the low-3% range for 2026 — a step down from the unusually strong pay increases seen when the labor market was tight during the pandemic rebound. Advertised wages and payroll data both show slower growth, and if hiring stays soft the pressure on employers to offer big lifts will be limited.
That said, pockets of stronger wage growth can appear where labor is scarce or risk-heavy — think cybersecurity specialists or certain construction trades — or in places where consumer-facing employers must compete for scarce skilled workers.
What workers and policymakers can do
For job seekers: skill focus beats broad application blasts. Employers are buying tools that change job tasks more than they eliminate every role wholesale; people who can partner with AI (data-literate analysts, cybersecurity specialists, health-care technicians) still look attractive. Upskilling in areas tied to durable demand — healthcare support, delivery logistics, information security — can pay off.
For employers: there’s a reputational cost to hoarding gains without sharing them. Companies that invest in technologies while cutting staff risk eroding morale and long-term talent pipelines. Some firms are experimenting with redeployment — moving workers into roles that complement new tools — rather than outright headcount cuts.
For policymakers: smoothing the transition will matter. That can mean support for re‑training programs, incentives for firms to retrain rather than lay off, and targeted help for regions and industries hit hardest by automation and tariff-driven uncertainty.
A complicated moment
It’s tempting to reduce this to a single cause: AI replaces jobs, therefore fewer hires. The reality is messier. A mix of heavy corporate investment, shifting consumer spending patterns, policy uncertainty and selective layoffs has produced a labor market that’s softer than headline GDP would suggest. That doesn’t mean the hiring freeze will be permanent — some sectors may re‑tighten — but it does mean workers and communities should treat the next year as a period of adaptation rather than a quick rebound.
If you’re watching for signals, look beyond GDP. Job openings by industry, wage postings, and local hiring trends will tell you whether growth begins to translate into more paychecks. In the meantime, practical moves — updating skills, targeting sectors with steady openings, and watching how firms integrate new tools — will be the best ways for people to protect their careers as the jobless boom plays out.
For a sense of how automation is already reshaping specific workplaces, the game industry provides a case study: one studio plans to automate much of its QA work in coming years, showing how even creative sectors are experimenting with replacing routine tasks game-company automation plans.