By Michel Saugné, CIO, La Financière de l’Echiquier

With GDP growth revised higher to 3.8% at an annualised rate in the second quarter, notably on the back of stronger-than-expected consumer spending, the US economy appears to be on solid footing. Admittedly, growth for the first half of 2025 as a whole stands at just 1.6% annualised, well below the levels to which the United States has become accustomed in recent years, but still far from abnormal by historical standards.

Yet alongside this resilient growth, the labour market has stalled. Job creation has been only marginally positive in recent months, and plainly negative when cyclical private-sector industries are taken into account^[1]. The unemployment rate is rising only moderately, but mainly because many people are leaving the workforce without ever passing through the “unemployment” box. And while layoffs have not yet surged, corporate headcount remains under pressure, with no additional hiring and no replacement of departures.

To explain this apparent contradiction, the AI boom offers several answers. First, it helps account for the resilience of US growth. Investment in computer equipment accounted, in volume terms, for 70% of total investment made in the United States in the first half of 2025, and represented nearly 50% of real GDP growth. Symbolically, it contributed almost as much as private consumption, a key engine of the US economy. In other words, without computer-related investment, largely directed toward AI, the US economy would have been close to stagnation over the past two quarters.

This is consistent with the weakness of the labour market, especially as AI is directly contributing to it. According to a recent Stanford University study^[2], AI adoption has sharply curbed hiring of recent graduates in the sectors and jobs most exposed to substitution by AI. In those sectors, employment among 22- to 25-year-olds has fallen by 13% relative to the least exposed sectors since late 2022. The finding is particularly striking among software developers and in customer service activities, while no downturn is observed in jobs not threatened by AI, such as nursing assistants.

This study corroborates remarks by certain companies, which say they would rather train a Gen-AI^[3] model than a junior employee. More importantly, it sheds light on data about youth employment from the latest official US labour reports. While the national unemployment rate has edged up modestly from 4.1% at the end of 2024 to 4.3% in August, the youth unemployment rate jumped over the same period from 8.4% to 10%. Admittedly, uncertainty linked to the economic backdrop, particularly US trade policy, is undoubtedly weighing on companies’ willingness to hire. But the fact that the sharpest decline in job postings is being seen for entry-level positions in the sectors most exposed to AI is no coincidence.

This unusual situation may be viewed positively, with solid growth and no job creation suggesting a sharp rise in productivity. Nevertheless, questions arise over the sustainability of this surge in computer investment, the main driver of recent growth, not least because the issue of the profitability of such colossal spending will sooner or later have to be addressed. Moreover, the concentration of investment in a single sector will not necessarily spread throughout the wider economy, thereby masking underlying fragilities beneath the surface of resilient growth. Chief among them are employment and, by extension, consumption. If the AI tide eventually goes out, the US economy will need to avoid being left exposed.

^[1] Except for the “Health and Education Services” sector, which has been countercyclical for several decades.

^[2] Canaries in the Coal Mine? Six Facts about the Recent Employment Effects of Artificial Intelligence, Brynjolfsson, Chandar & Chen, 26 August 2025

^[3] Generative AI

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Opinion written on 26.9.2025

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