U.S. Job Market Lags Despite Booming Economy

Economists puzzled by disconnect between strong GDP growth and weak hiring numbers

Published on Feb. 11, 2026

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The U.S. economy is growing at a rapid pace, with GDP expanding 4.4% in the third quarter of 2026. However, the job market is struggling, with employers adding just 75,000 jobs in January, far below the hiring boom of a few years ago. Economists are trying to understand this disconnect, pointing to factors like the lingering impact of high interest rates, uncertainty around trade policies, and the increasing use of automation and AI.

Why it matters

The sluggish job market is puzzling given the strong economic growth, raising questions about the sustainability of the recovery and the ability of workers to benefit from the expansion. The disconnect between GDP and hiring also has implications for consumer spending, inflation, and the Federal Reserve's monetary policy decisions.

The details

The Labor Department is expected to report that companies, government agencies, and nonprofits added 75,000 jobs in January, an improvement over December's 50,000 but still well short of the hiring boom of 2021-2023. Moreover, the January numbers are likely to be overshadowed by Labor Department revisions that will sharply reduce 2025 job creation, possibly even wiping it out altogether. The job market's weakness reflects the lingering impact of high interest rates, Elon Musk's purge of the federal workforce, and uncertainty arising from President Trump's erratic trade policies.

  • The Labor Department is expected to report the January jobs numbers on Wednesday, February 11, 2026.
  • The government will also release annual benchmark revisions on Wednesday, which are expected to sharply reduce 2025 job creation.

The players

Elon Musk

The billionaire CEO who oversaw a purge of the federal workforce last year.

President Donald Trump

The former U.S. president whose erratic trade policies have left businesses unsure about the economic outlook.

Jerome Powell

The chair of the Federal Reserve, who has said the current jobs numbers may overstate job creation by 60,000 a month.

Shruti Mishra

The U.S. economist at Bank of America who believes recent revisions likely reduced job creation by 20,000 to 30,000 a month from April 2025 onward.

Stephen Brown

The economist at Capital Economics who believes the revisions could mean the U.S. economy actually lost jobs in 2025, the first annual drop since the pandemic and lockdown year of 2020.

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What they’re saying

“The revisions could mean that the American economy actually lost jobs in 2025, the first annual drop since the pandemic and lockdown year of 2020.”

— Stephen Brown, Economist, Capital Economics (AP)

What’s next

The Labor Department will release the final benchmark revisions to 2025 job numbers on Wednesday, which could provide more clarity on the state of the job market.

The takeaway

The disconnect between the booming economy and the lagging job market highlights the complex and sometimes unpredictable nature of the labor market. Policymakers and economists will need to closely monitor the situation and consider how factors like automation, trade policy, and immigration are impacting employment.