Unprecedented 'Jobless Boom' Tests Limits of US Economic Expansion

The U.S. economy is creating wealth but not many jobs, drawing comparisons to the 'jobless recovery' of the early 2000s.

Published on Feb. 22, 2026

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The U.S. economy expanded 2.7% in 2025, but employment barely grew, creating an unusual 'jobless boom' that is drawing comparisons to the 'jobless recovery' of the early 2000s. Experts say this divergence between GDP growth and job creation has never been seen this late in an economic expansion, making it hard to predict where the economy is headed. While the economy was supported by consumer spending, stock prices, and business investment, hiring has pulled back across industries, impacting office and administrative support roles in particular.

Why it matters

The 'jobless boom' highlights the disconnect between economic growth and job creation, raising concerns about the stability of the recovery and the impact of technological advancements like AI on the labor market. It also raises questions about the Federal Reserve's policies and whether they should take a more aggressive approach to stimulate hiring.

The details

The economy expanded 2.7% in 2025, but employment barely grew, drawing comparisons to the 'jobless recovery' of the early 2000s. Unlike that episode, this 'jobless boom' is happening without a recession. Experts say this divergence between GDP and job creation is unprecedented this late in an expansion. The economy was supported by consumer spending, stock prices, and business investment, but hiring has pulled back across industries, impacting office and administrative support roles in particular. Many of these white-collar jobs are on the front lines of the battle to expand AI, which could bring productivity gains but also mean less job growth.

  • The economy expanded 2.7% in 2025.
  • Employment barely grew in 2025.

The players

Donald Trump

The former U.S. president who will likely tout the 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.

Alan Greenspan

The former Federal Reserve chairman who in the 1990s famously predicted rising productivity could be setting the stage for a period of faster growth without higher inflation.

Ben Bernanke

The former Federal Reserve governor who in a 2003 speech identified the 'jobless recovery' following the early 2000s recession.

Jerome Powell

The current Federal Reserve chair who argued the current wave of rising productivity started five or six years ago, before the mass rollout of large language models.

Crystal Mason

A 45-year-old resident of Holly Ridge, North Carolina who was laid off from her job as a contractor at a call center and is now struggling to find similar work, concerned about the impact of AI on such positions.

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What they’re saying

“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.”

— Diane Swonk, Chief Economist at KPMG (kansas.com)

“Conditions that led to the jobless recovery in the early 2000s are aligning, such as overhiring, robust productivity growth, technological advancements, and increased policy uncertainty. This leaves the economy vulnerable to shocks, because the labor market is the main firewall against a recession.”

— Michael Pearce, Chief U.S. Economist at Oxford Economics (kansas.com)

“I've noticed other companies I've worked at, or where friends work, are already using AI and reducing roles for people who do what I do. The sad part is, from my years of experience in customer service and health care, I've learned that almost everyone I interact with prefers talking to a real, empathetic, professional person.”

— Crystal Mason (kansas.com)

“This market has been really crazy, unlike anything I've ever seen.”

— Danielle Williams, Senior Lead Recruiter (kansas.com)

“It's too early to compare this episode of strong GDP, weak employment to earlier episodes, where the relationship was sustained for much longer. Economic growth will be slowing significantly to reflect the stagnant labor markets.”

— Mickey Levy, Visiting Fellow at the Hoover Institution (kansas.com)

What’s next

The judge in the case will decide on Tuesday whether or not to allow Walker Reed Quinn out on bail.

The takeaway

This 'jobless boom' highlights the disconnect between economic growth and job creation, raising concerns about the stability of the recovery and the impact of technological advancements like AI on the labor market. It also raises questions about the Federal Reserve's policies and whether they should take a more aggressive approach to stimulate hiring.