Being productive may also be referred to as navigating a challenging employment landscape

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Productivity Surge Drives Economic Growth

A is shedding light on recent trends in the US economy.

In the past quarter, worker productivity climbed at its fastest rate in two years, fueled by substantial investments in artificial intelligence and a slowdown in hiring. This means businesses managed to boost GDP with less labor, achieving growth without requiring more effort from employees.

According to the Labor Department, output per hour for each worker rose at an annualized pace of 4.9% in the third quarter, a level not seen since 2023.

Joe Brusuelas, chief economist at RSM, noted in a Thursday report that the average productivity increase of 4.5% over the last half-year is “unambiguously positive.”

If companies continue to use their workforce and AI technology effectively, this could signal a rise in living standards across the country.

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Mixed Signals for the Job Market

Despite the economy expanding at a 4.3% rate during this period, job creation has remained sluggish.

Essentially, while signaling that they aren’t seeking additional staff.

This surge in productivity, coupled with expectations of higher unemployment, a , and growing concerns about automation, points to both economic and social challenges. The same productivity improvements that are may also be contributing to a weaker job market and widening disparities in the so-called K-shaped economy.

Further reading: Understanding the 'K-shaped' economy and its underlying causes

A visual representation of "AI artificial intelligence" with a keyboard and robotic hands, captured on January 27, 2025. REUTERS/Dado Ruvic/Illustration/File Photo · Reuters

AI and Workforce Trends

It’s no surprise that companies by the benefits of operating with fewer employees. If AI-driven efficiencies—or simply reduced hiring—are cutting labor expenses and boosting profits, leaner teams could become standard practice.

Over time, economic theory suggests that GDP growth should support job creation. However, at present, American workers are not seeing the benefits of this growth, and the AI revolution is only beginning.

Christopher Rupkey, chief economist at FWDBONDS, remarked in a Thursday note, “So far, predictions of a US recession haven’t materialized, as productivity continues to underpin expansion.”

He added, “The missing piece is that American workers appear to be left behind, as companies keep costs low by limiting new hires.”

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