Top analyst warns the economy is figuring out how to grow without creating new jobs, leaving a major vulnerability

Economic Growth and Labor Market Trends - Bank of America Research predicts a "sea change" in the economy with companies becoming more productive with fewer workers, leading to GDP growth without significant job creation [1] - Oxford Economics forecasts GDP growth of 2.8%, driven by improved productivity [2] - The workforce is expected to remain flat due to an aging native-born population and reduced immigration, with net inflows dropping to 160,000 annually from over 3 million [3] Productivity and Employment Dynamics - Economic growth will increasingly depend on higher productivity as the labor force stagnates, with AI expected to enhance productivity later in the decade [4] - The labor participation rate among the native-born population is in a long-term downtrend, contributing to weak labor supply and depressed demand due to policy uncertainty and AI adoption [5] - Job gains are projected to average less than 40,000 per month in 2026, indicating a "low-hire, low-fire" labor market trend [6] Job Market Statistics - The average hiring rate last year was only 15,000 per month, with the jobless rate ending 2025 at 4.4%, showing little change from the start of the year [7] - Productivity improvements may exert downward pressure on job growth as firms optimize operations with fewer employees [7]