Why U.S. GDP Keeps Rising While Job Growth Stalls: The Paradox of Productivity, AI, and Global Economic Shifts
As the world prepares for the holiday season, the global economy is starting to resemble a luxury car speeding down the highway—with every warning light on the dashboard flashing, and the driver (in this case, the U.S. Federal Reserve) no longer sure whether the gas pedal is even responding.
It has been a week in which paradoxes became the norm. The American economy is growing, productivity is jumping, stock markets are in the green, yet the workers who are supposed to create that value seem increasingly unnecessary.
The World: An Equation With Too Many Unknowns
If you thought inflation was a tough puzzle, try solving the Fed’s new riddle: How is it possible that GDP is rising, companies are reporting profits, and employment is flat?
Fed governor Christopher Waller has called this situation a “conflict” that must be resolved. The numbers are unforgiving, showing that American companies have drastically slowed hiring. An average of 62,000 new jobs over the three months ending in September looks anemic for an economy boasting robust GDP growth. Ryan Sweet of Oxford Economics poses the million-dollar question: “How do you convince businesses to hire?”
The answer may lie in what investor Michael Burry—famous for predicting the 2008 mortgage collapse—has called a new bubble. Burry has returned to the spotlight by launching a newsletter symbolically titled Cassandra Unchained, and he immediately targeted artificial intelligence.
His thesis is simple: history doesn’t repeat itself, but it rhymes. Just as Alan Greenspan argued in 2005 that there was no housing bubble, today Jerome Powell claims that AI companies are a “different thing” because they are profitable. Burry, however, sees parallels with the dot-com mania: investors expect exponential growth to continue indefinitely, ignoring the possibility that this growth might not be flowing to real people—i.e., workers. If AI boosts productivity without the need for new employees, are we entering an era of “jobless growth” that could be the antechamber of a recession?
While Burry is shorting Nvidia and Palantir, the pharmaceutical sector is experiencing its own drama. Eli Lilly has become the first healthcare company worth a trillion dollars, surpassing tech giants on the strength of its weight-loss drugs. On the other hand, Denmark’s Novo Nordisk suffered a cold shower. Its attempt to apply the “miracle” compound semaglutide to Alzheimer’s disease ended in failure. Its stock fell to a four-year low, reminding investors that the biology of the human brain is not the same as appetite regulation—and that there are no “sure bets” on the stock market, even if your name is Novo Nordisk.
Germany’s economy, once Europe’s engine, is still sputtering. The Ifo business climate index fell to 88.1 points. Pessimism has seeped into every corner of manufacturing and trade, with the only glimmer of hope coming from services and tourism. German managers don’t believe in a recovery, and order books are thinning. In such an environment, Bayer’s success with a new stroke-prevention drug is like aspirin for Germany’s industrial headache—but one drug cannot cure a systemic illness.
Alibaba, meanwhile, is seeing double-digit growth in its cloud division, fueled (imagine that!) by artificial intelligence. But the real Chinese story is unfolding in Africa—and not thanks to grand infrastructure projects or government lending. China’s new strategy is soft power through the consumer basket. The Chinese private sector is flooding Africa with diapers, smartphones, and home appliances, targeting the continent’s growing middle class.
The European Central Bank (ECB), on the other hand, has raised a red flag over stablecoins. Tether and USDC have grown so large that their reserves in U.S. Treasuries rival those of the world’s biggest funds. The ECB warns: if the crypto market sneezes, traditional finance could catch pneumonia, because the links between digital money and the real banking system have become dangerously intertwined.
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