The U.S. economy is expanding fast, but the labor market is not sharing the upside. A shutdown-delayed government report showed Q3 GDP running at an annualized 4.3%, while the unemployment rate has climbed to 4.6%, the highest since 2021, creating what some economists call a “jobless boom.” Business Insider described how growth and jobs decoupled as firms invest in AI and productivity while holding headcount steady through hiring freezes and selective layoffs.
Consumers are still spending, but increasingly without the psychological tailwind of job security or real income momentum. CNBC’s recap of the GDP release highlighted that consumer spending rose 3.5% in Q3, while holiday retail spending increased 4.2% this season and 37% of Americans took on holiday debt averaging $1,223. Meanwhile, CNN reported essentials inflation remains painful for many households, citing year-over-year increases including electricity up 7%, natural gas up 9%, and coffee up 19%, even as gasoline fell to about $2.86 per gallon.
Under the hood, near-real-time labor data is sending mixed signals. Initial jobless claims fell to 214,000 for the week ending Dec. 20, but continuing claims rose to 1.92 million, according to Labor Department data. That combination suggests layoffs are still low, but displaced workers may be taking longer to land new jobs, consistent with a slower hiring engine.
Likely next steps center on revisions and policy response. Moody’s Mark Zandi has warned that the GDP strength is fragile without job creation, and Fed officials have already signaled concern that jobs data may be weaker than it looks. Readers should treat “strong GDP” headlines cautiously until payrolls and wage growth re-accelerate. Positioning for 2026 should prioritize sectors and companies that can grow earnings with flat headcount, because that appears to be the operating model firms are betting on.
