WSJ's Greg Ip: The euphoria around U.S. economic prospects isn't translating to job creation

Market Dynamics & Economic Disconnect - The S&P index reached a new record with a 13% increase, showing a strong disconnect from declining retail sales and job creation [1][2][3] - The AI-driven economic euphoria has significantly boosted corporate earnings, outpacing price index growth, while job growth declined in July for the 5th time in 12 months [3] - Unlike historical technological shifts like PCs or the dot-com boom, the AI innovation wave tends to replace existing human labor rather than complement it, resulting in a hiring rate that is about half of pre-pandemic levels [5][6][7] Labor Market & Demographic Trends - The economy is experiencing a secular shift toward very low job growth, driven by low population growth and virtually zero immigration [9][13] - Labor demand remains tepid, evidenced by hourly earnings rising only 3.2% year-over-year (the lowest since pre-pandemic), increasing long-term unemployed workers (over 26 weeks), and falling job vacancies on Indeed [14][15] - Specific sectors such as construction, manufacturing, and natural resources show higher wage growth for job changers, reaching up to 13.7% in the construction business [16] Corporate Performance & Monetary Policy - Corporate profit margins are steadily widening as revenues increase without proportional hiring, directing more cash flow to the bottom line for capital owners [19][20] - The Federal Reserve may no longer rely primarily on the labor market as the key indicator for overheating and inflation, shifting focus instead to tech pricing driven by the AI boom, commodity prices from geopolitical conflicts, and tariff cost pass-throughs [22][23]