The economy is booming but jobs are hard to find.

Second quarter GDP growth was 3.8% thanks to robust investment in information processing equipment, software and R&D, mostly to build out Artificial Intelligence.

The Wall Street Journal survey of private forecasters indicates 3^rd quarter growth was 2.5%—right on the trend for the eight years of the first Trump and Biden presidencies.

Wells Fargo’s economists and the proprietary service Action Economics estimated 3.7% and 2.7%. My estimate is 3.0%

Over the long haul, most economists believe that the best the economy should accomplish is about 2%, perhaps less, owing to slower labor force growth in the wake of President Trump’s limits on immigration.

Hence, they expect growth to slow next year. I don’t agree, thanks to an even faster pace of AI investment and an upshift in workplace efficiency to compensate for fewer workers.

We are not in an AI bubble, rather an AI revolution.

Enthusiasm extends well beyond ChatGPT creator OpenAI, established Big Tech and investors driving up share prices for other publicly traded companies.

Venture capitalists are chasing AI startups, not the other way around.

Innovators like Decagon, which makes AI tools for customer service applications, are getting showered with gifts and offers of favors by VCs who hope to lead or get a good piece of their next funding round.

How’d you like to receive NBA tickets from bankers hoping to land your next car loan?

The lion share of fresh money is going into AI, because the folks who sniff out the winners—the next Nvidia, Apple or Salesforce—sense that AI will pay off but not necessarily by enabling computers to think like Nobel Laureates. Rather advanced AI will spawn specialized agents that permit computers to replace millions of middle-level workers in administrative, managerial and research functions.

Just as the tractor and moving assembly line radically altered farms and factories in the 20^th Century, AI will drive paradynamic change.

Since April, jobs creation has been well below the 55,000 per month that may be possible from indigenous population growth and the immigration regime President Trump now has in place.

That’s well below the 141,000 monthly pace during the first Trump and Biden administrations.

So how can the economy be growing so fast with so little uptake of new workers?

One factor is uncertainty about how President Trump’s tariffs and trade tensions with China will sort out.

Still, we are far into 2025 with a lot of growth under our belts and an almost stagnant level of employment.

The answer must be AI is paying off with elevated productivity growth, but you should be careful of economists on this.

During the 1980s, desktop computers emerged and reduced headcounts in clerical and administrative tasks and in the 1990s, the Internet accelerated this process. But the bean counters couldn’t find it in the data.

The Nobel Prize-winning economist Robert Solow lamented “you can see the computer age everywhere but in the productivity statistics.”

The same thing may be happening again—economists are equivocating about AI.

Some latch onto stories about AI creating workslop.

For example, AI generated content that contains nonexistent sources and fictious claims. But all those indicate is what computers spit out still must be fact checked by human beings.

Importantly, economists get tenure at universities, raise money for projects and keep corporate bosses happy doing surveys and parsing data—the stuff of Freakonomics.

Those tend to distort or lag what’s going on in real time.

Journalists who speak directly to business leaders tend to bring back a more optimistic picture.

Axios recently spoke with 20 CEOs from a wide range of companies, and each said they were reducing hiring ambitions as AI comes into sight.

Over the next three years, Walmart plans to keep its headcount constant. Along with Amazon, it’s rapidly replacing workers in warehouses with robots aided by AI.

The real challenge ahead is what’s next for all those displaced workers.

Some things can’t be automated—for example, much of the more mundane work nurses do.

Rural hospitals are at the leading edge of the return to vocational secondary education by training teenagers.

Most challenged maybe colleges and universities. High school graduates are shunning majors and institutions that deliver big debt but too few employment opportunities.

The data center boom, for example, is encouraging more young people to become electricians.

To be employable, Americans may have to come full circle by working with their hands as more machines become the mind of man.
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Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.