In a U.S. economy that defies traditional metrics, a perplexing paradox is emerging: robust growth paired with stagnant job creation. Federal Reserve officials are increasingly alarmed by what they’re calling a ‘jobless boom,’ driven largely by artificial intelligence’s rapid infiltration into corporate operations. Something in the US economy isn’t adding up, and it’s rattling the people charged with wrangling inflation and keeping the labor market intact, CNN Business reports.

The latest jobs report showed nonfarm payrolls rising by 12,000 in October, far below expectations, while the unemployment rate held steady at 4.1%. Yet GDP growth clocked in at 2.8% annualized for the third quarter, fueled by surging productivity. Fed Chair Jerome Powell has publicly acknowledged the shift, stating in late October that ‘job creation is pretty close to zero,’ attributing it to AI enabling companies to ‘do more with fewer people.’ This sentiment echoes across recent Fed speeches and analyses.

AI’s Productivity Surge Masks Hiring Freeze

Powell elaborated during a speech, warning that AI-fueled investment is propping up growth but eroding hiring. ‘The adoption of labor-saving artificial intelligence technology could help push down inflation to pre-pandemic levels, but it could also lead to job losses along the way,’ one economist predicted in Investopedia. Enterprises are deploying AI for tasks from customer service to coding, slashing the need for entry-level roles. Tech giants like Microsoft and Google have reported productivity gains of 20-30% in AI-integrated divisions, per earnings calls, without corresponding headcount increases.

Federal Reserve data reveals private-sector job growth at just 8,000 last month, with gains concentrated in government and healthcare—sectors less exposed to AI disruption. Manufacturing and professional services, prime AI targets, saw outright declines. New York Fed research from September noted that while AI adoption is rising, its job impact has been muted so far, but recent trends suggest acceleration, as per Reuters.

Fed’s Tightrope Walk Amid Uneven Recovery

Jerome Powell’s October remarks at an economic forum underscored the Fed’s dilemma: ‘Powell said the Fed is walking a tightrope as AI-fueled investment props up growth but erodes hiring,’ Yahoo Finance detailed. Interest-rate decisions now hinge on this imbalance. With inflation cooling to 2.4% core PCE, the Fed has signaled potential cuts, but weakening labor data risks tipping into recession territory. Vice Chair Jefferson recently spoke on financial stability, highlighting labor market fragilities in a Federal Reserve X post.

Jefferies strategist David Zervos warned of a ‘serious labor market problem,’ noting ‘spectacular’ AI growth could freeze jobs even as capex booms, according to CNBC. Corporate surveys from the New York Fed show 25% of firms citing AI as a reason for not hiring, up from 10% a year ago. This ‘doing more with less’ ethos is evident in Big Tech: Amazon’s AWS reported AI-driven revenue jumps without workforce expansion.

Dissecting the Jobless Boom’s Anatomy

The term ‘jobless boom’ captures this anomaly—economic expansion without broad-based employment gains. CNN’s analysis points to AI as the culprit, with white-collar professions like software engineering and legal research hit hardest. Powell noted statistical overcounting in payroll data may overstate job growth, adjusting figures closer to zero net creation, as covered in Fortune.

Sectoral breakdowns reveal the pain: Information technology jobs fell 5,000 last month, per BLS data. Meanwhile, AI investments hit $200 billion in 2025, per McKinsey estimates, channeling capital into hardware like Nvidia chips rather than human labor. Fed Governor Waller’s recent speech on the economic outlook reiterated vigilance on these trends, via Federal Reserve X.

Policy Pivots in the Face of AI Disruption

The Fed’s response is calibrated caution. Powell has indicated monitoring AI’s effects ‘very carefully’ for rate policy, as Futurism reported. Potential measures include extended forward guidance and targeted stimulus for retraining. Yet, with consumer spending resilient—entering the week with negative perceptions but strong earnings, per CNN Business—the central bank treads lightly to avoid inflating asset bubbles.

Broader implications loom for inequality: AI boosts high-skill wages while hollowing mid-tier jobs, widening the divide Powell flagged. HR Grapevine USA noted Powell’s concern that this complicates monetary policy, with firms ‘doing more with fewer people,’ from HR Grapevine. Posts on X from the Federal Reserve highlight ongoing symposia on AI in banking, signaling institutional focus.

Global Echoes and Future Trajectories

Europe faces similar headwinds, with ECB officials citing AI in tepid hiring. In the U.S., reskilling initiatives like those from the Marketing AI Institute emphasize adaptation, as Marketing AI Institute analyzed. Powell’s admissions mark a pivot: fears of AI job apocalypse are ‘real,’ per Times of India.

Looking ahead, the December FOMC meeting will scrutinize November jobs data, expected weaker. If trends persist, expect dovish shifts. Fed extensions on stress tests and balance sheet reviews, announced recently on X, underscore preparedness for AI-induced volatility.