Goldman Sachs has issued a warning that the U.S. economy may be entering a period of "jobless growth" driven by artificial intelligence, where strong economic output coexists with weak job creation. In a research note released Monday, the bank highlighted that recent economic trends—robust GDP growth paired with only modest employment gains—are likely to become more common in the years ahead, largely due to AI-powered productivity gains. The analysts noted that while population growth and immigration could marginally boost the labor supply, they are unlikely to offset the broader shift toward automation. They pointed to signs of a weakening job market, particularly outside healthcare, where employment growth has turned negative in recent months. Corporate leaders are increasingly turning to AI to cut labor costs, a trend that could suppress hiring over the long term. The impact of AI is already being felt, especially among young tech workers, who are among the most exposed to automation. Employment in AI-intensive industries has declined, even as overall economic output rises. While Goldman Sachs remains skeptical of extreme predictions of mass unemployment, it acknowledges that the transition could bring temporary disruptions. Historically, technological advances have led to short-term job losses and workforce realignment, but eventually created new opportunities. However, the nature of AI matters—many AI tools are designed to replace human labor rather than complement it. If AI continues to substitute workers, maintaining full employment could become more difficult. The bank warns that the true test of this shift may come during the next economic downturn. Past recessions, such as the one in 2001, saw rapid recovery in GDP but slow job growth, a phenomenon known as a "jobless recovery." Companies often use downturns to restructure and eliminate less productive roles, especially after periods of productivity booms. With AI enabling greater efficiency, firms may be more inclined to cut jobs permanently rather than reinvest in labor. Beyond employment, AI could also widen economic inequality. Middle-income white-collar jobs—particularly those involving routine tasks—may be especially vulnerable, mirroring the way automation once affected skilled manufacturing roles. Early evidence suggests AI might benefit lower-skilled workers more than higher-skilled ones in certain contexts, but the overall effect remains uncertain. There is a silver lining: faster productivity growth can help keep inflation in check. This could give the Federal Reserve more flexibility to lower interest rates even if unemployment rises, similar to its approach after the 2001 recession. The warning comes amid broader economic uncertainty. The government shutdown has delayed official job data, while President Donald Trump’s proposed import tariffs and the rapid pace of AI disruption add to the instability. Recent reports show a 32,000 job loss in the private sector in September, a 17.2% drop in job openings from a year earlier, and the lowest hiring plans since the Great Recession.