Recent upward revisions to U.S. GDP at a time of labor market weakness highlight a striking contradiction — one that, according to Apollo chief economist Torsten Slok, can only be reconciled by two structural shifts: AI adoption and declining immigration.
In a new research note, Slok pointed to the widening gap between robust GDP growth and sluggish job creation. The government recently revised second-quarter GDP to reflect 3.8% annual growth, up from 3.3% previously reported — signaling stronger economic momentum even as nonfarm payroll gains slowed.
The revision paints an ironic picture: the economy appeared to accelerate over the summer, even as the Trump administration’s “Liberation Day” tariffs took effect and employment growth began to crater.
Those trends culminated in a large downward revision to job growth over the past year, revealing a much weaker labor market than initially believed.
The difficulty lies in reconciling robust GDP growth with a labor market where unemployment is rising and job openings are falling.
“The economy cannot be on the brink of a recession with a weaker labor market, and at the same time accelerating with stronger GDP growth,” Slok wrote.
“What is likely happening is that job growth is weaker because of AI implementation and lower immigration,” he added.
The view aligns with recent InvestorsObserver reporting showing employers ramping up AI adoption, particularly in sectors reliant on entry-level or routine labor, increasing the risk of workforce displacement.
At the same time, the Trump administration has tightened immigration policy, especially around visa programs. A Pew Research Center analysis found that more than 1.2 million immigrants have exited the U.S. workforce this year — a sharp decline that supports Slok’s assessment.
A two-speed economy with winners and losers
The health of the U.S. economy depends largely on who you ask. On the one hand, high earners and Baby Boomers enjoy stronger wealth creation as their 401(k)s and home values continue to climb.
On the other hand, lower-skilled and younger workers are struggling to find jobs and grow their incomes, with the threat of AI-driven displacement looming in the background.
“The two-speed U.S. economy is back, as low-income Americans lose their gains,” The Wall Street Journal observed in its Careers & Leadership newsletter.
For Americans without financial assets — a group that may include tens of millions — the challenges are mounting, especially as persistent inflation erodes purchasing power.
According to experimental research by the Federal Reserve Bank of Minneapolis, low-income households experience about 10% higher inflation over time than higher-income families, largely because a greater share of their budgets goes toward essentials like food, housing, and fuel.
Inflation itself remains stubbornly elevated, with the Consumer Price Index running above the Federal Reserve’s 2% target for more than four years, underscoring the uneven financial realities facing American households.
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