Powered by strong consumer spending, the U.S. economy grew at the fastest pace in two years from July through September, the government said Thursday in a slight upgrade of its first estimate.
America’s gross domestic product — the nation’s output of goods and services — rose at a 4.4% annual pace in the third quarter, the Commerce Department reported Thursday, up from 3.8% in the April-June quarter and from the 4.3% growth the department initially estimated. The economy hasn’t grown faster since third-quarter 2023.
Consumer spending, which accounts for 70% of U.S. GDP, grew at a healthy 3.5% pace. Spending on services such as healthcare rose 3.6% versus a 3% uptick on goods spending, including an increase of just 1.6% on so-called durable goods such as cars that are meant to last at least three years. A surge in exports and a drop in imports also contributed to robust third-quarter growth.
Business investment (excluding homebuilding) rose at a 3.2% clip, partly reflecting bets on artificial intelligence.
The economy has remained resilient despite uncertainty caused by President Donald Trump’s economic policies, particularly his double-digit taxes on imports from almost every country on Earth.
Despite the strong growth numbers, many Americans are dissatisfied with the state of the economy, and especially the high cost of living.
The gap between how consumers say they feel and the strong spending numbers might reflect what is known as a “ K-shaped economy.” Wealthier Americans are spending more, their incomes boosted by market gains and growing investments, while lower-income households struggle with stagnant pay and high prices.
The job market also looks a lot weaker than the overall economy. Employers have added a lackluster 28,000 jobs a month since March. In the 2021-2023 hiring boom that followed COVID-19 lockdowns, by contrast, they were creating 400,000 jobs a month. Still, the unemployment rate remains low at 4.4%, suggesting a no-hire, no-fire labor market with companies hesitant to bring on new employees but reluctant to let go of the ones they have.
“The United States is experiencing a jobless boom where strong growth is powered by AI investments and consumption by wealthier families, but there is almost no hiring,’' said Heather Long, chief economist at Navy Federal Credit Union. “It’s an uneasy situation for many middle-class families. One of the big questions for 2026 is whether the middle class will start to feel the uplift from the boom.”
The Federal Reserve’s preferred inflation gauge ticked up in November in the latest sign that prices remain stubbornly elevated, while consumers spent at a healthy pace.
Consumer prices rose 2.8% in November from a year earlier, the Commerce Department said Thursday, up from a 2.7% annual pace in October. Excluding the volatile food and energy categories, core prices also increased 2.8% in November from a year ago, slightly higher than October’s 2.7%.
Consumer spending climbed 0.5% in November from the previous month, the report also showed, a solid increase that hits an economy growing at a healthy pace in the final three months of last year.
The figures point to a mostly strong economy with inflation still elevated, but down sharply from a four-decade peak in June 2022. Hiring has slowed to a crawl, however, leaving job-seekers frustrated even as the unemployment rate stays low. Thursday’s figures suggest that the Federal Reserve will be less likely to reduce its key interest rate when it meets next week, a tactic typically used if it is worried about a stumbling economy.
“Today’s data should reassure the Fed that the economy remains on a solid footing, despite a cooler labor market,” said James McCann, an economist at Edward Jones. “Indeed, there looks to be little urgency to cut rates at next week’s meeting, and the central bank could stay on hold for longer should growth remain robust into 2026 and inflation continue to run at above target rates.”
Every month, prices were milder: Both overall inflation and core inflation moved up just 0.2% in November from October. At that pace, over time, inflation would move closer to the Federal Reserve’s target of 2%. Thursday’s data was delayed by the six-week government shutdown last fall.
The solid figures on consumer spending follow a separate report Thursday, which showed that the economy expanded at a healthy 4.4% annual rate in the July-September quarter, the fastest growth in two years. Thursday’s data points to continued solid growth in the final quarter of 2025.
The AI Paradox: Innovation vs. The 1.2 Million Job Loss "Bloodbath"
The vision sold by tech titans like Elon Musk and Demis Hassabis is nothing short of a utopia: a world where AI cures cancer, supercharges the labor force, and creates high-paying "dream jobs" we haven't even imagined yet.
But for the American worker in 2026, that promise feels increasingly out of reach. While the C-suite talks about a "win-win," the data tells a story of a "lose-lose" for over a million families. According to a recent report from Challenger, Gray & Christmas, 2025 saw a staggering 1.2 million job cuts—a 58% surge from the previous year and a level of disruption not seen since the 2008 financial crisis.
The Hard Numbers: Where the Ax Fell
The layoffs of 2025 weren't just a ripple; they were a tidal wave that hit both the public and private sectors with unprecedented force.
| Sector | Jobs Cut in 2025 | Key Drivers |
| Federal Government | 308,000 | Extreme cost-cutting via DOGE; impacts at USAID, Education, and HHS. |
| Tech Industry | 154,000 | AI implementation and correction of pandemic-era overhiring. |
| AI-Specific Roles | 54,836 | Direct replacement of human tasks by automated systems. |
Since 2023, AI has been explicitly linked to over 71,000 job cut announcements. As companies pivot to "AI-first" strategies, the "human" element is being treated as a redundant legacy system.
"Mid-Level Engineer" Status: AI is Moving Up the Ladder
The narrative that AI only replaces "menial" tasks is officially dead. CEOs are becoming increasingly transparent about the fact that AI is climbing the corporate ladder:
Microsoft: CEO Satya Nadella revealed that AI now writes 20% to 30% of the company's code. Following this efficiency gain, the company slashed 15,000 roles in 2025.
Meta: Mark Zuckerberg reduced the workforce by 5% to weed out "low-performers," noting that AI is on the verge of becoming the equivalent of a mid-level engineer.
Amazon: Following a memo from CEO Andy Jassy stating that fewer people will be needed for current roles, reports indicate the company plans to cut up to 30,000 positions.
The "Tale of Two Cities": Why Gen Z is Hurting Most
If there is a "ground zero" for this displacement, it is the entry-level workforce. Data from Pave highlights a grim reality for Gen Z:
In January 2023, Gen Z (ages 21–25) made up 15% of the workforce at large public tech firms. By August 2025, that number plummeted to just 6.8%.
The reason is simple: Human judgment is still a premium at the senior level. However, the tasks traditionally used to train "junior" employees—data entry, basic coding, and spreadsheet management—are now being handled by algorithms.
As Pave CEO Matt Schulman puts it, if you’re a 40-year-old manager, your job is safe for now. But if you’re a 22-year-old "Excel junkie," your career path is being automated before it even begins.
What’s Next?
The "AI Revolution" is here, but it’s not just creating jobs; it’s aggressively re-coding the labor market. While tech leaders promise a brighter future, the current transition is leaving a trail of empty desks in its wake.