UPDATE: Goldman Sachs has just announced a stark warning for the US economy: the nation may be entering an era of ‘jobless growth’ fueled by artificial intelligence (AI). This urgent report highlights the growing divide between soaring productivity and stagnant job creation, a trend that could significantly impact workers across the country.
According to Goldman Sachs, 32,000 jobs were lost in the private sector last month alone, as companies increasingly turn to AI to cut costs and streamline operations. The analysts stress that while productivity rises, the modest job growth seen recently may become the new normal, indicating a troubling shift in the labor market.
The report, released on September 2023, warns that AI’s ability to enhance output does not translate to job creation. This trend is already evident, as job growth outside the healthcare sector has recently turned negative. The analysts note a critical focus among corporate management teams on reducing labor costs through automation, a decision that could have long-term implications for hiring practices.
“AI does appear to be hurting the employment prospects of the most closely exposed workers,” the report states, reflecting a growing concern that technological advancements could outpace job creation. Analysts also acknowledged that while past technological progress has led to temporary spikes in unemployment, the current situation presents a unique challenge, particularly for younger technology workers.
As the US economy remains strong, the juxtaposition of productivity gains and job losses poses a significant risk of a ‘jobless recovery’. Historical data shows that after productivity booms, employment in routine occupations has often declined sharply, failing to recover in subsequent years. The early 2000s serve as a cautionary tale, where GDP rebounded quickly post-recession, yet total employment lagged for years as companies capitalized on the downturn to restructure their workforce.
The report also underscores the potential for AI to deepen economic inequality, as it could “hollow out” mid-level jobs, much like past automation trends affected skilled blue-collar workers. The implications are severe; the analysts warn that the technology could disproportionately benefit lower-skilled workers, further complicating the job landscape.
In a twist of irony, there is a silver lining to these developments: increased productivity may help keep inflation in check. This could provide the Federal Reserve with the flexibility to lower interest rates, even if unemployment continues to rise. Such a scenario mirrors the Fed’s approach during the early-2000s recovery.
Goldman’s findings come amid a backdrop of economic uncertainties, including the fallout from President Donald Trump’s import tariffs, ongoing implications from the government shutdown, and the seismic disruptions caused by AI. According to workforce analytics firm Revelio Labs, job openings have plummeted 17.2% from a year earlier, while Challenger, Gray & Christmas reported the smallest number of new hires announced in the first nine months of a year since the Great Recession.
As these developments unfold, the urgency for workers to adapt to a rapidly changing job market has never been clearer. Companies and employees alike must navigate the challenges posed by AI to remain competitive in this evolving landscape.
Stay tuned for further updates as the situation develops and policymakers respond to the economic implications of AI-driven productivity.