The Fed’s rate cut may have been justified as job growth outside the healthcare sector is slowing while corporate America increasingly turns to AI, according to Goldman Sachs.
Goldman’s analysis shows that outside of healthcare, many industries are reporting flat or negative payroll growth, suggesting the sector is doing most of the heavy lifting in sustaining overall job creation.
Payroll processor ADP reported last week that the private sector shed 32,000 jobs in September, with the steepest losses seen in professional services, leisure and hospitality, financial services, and construction.
Meanwhile, education and health services added 33,000 new positions, underscoring the unevenness of the labor market.
Goldman’s research also highlighted that roughly 13% of management teams now mention using AI in the context of labor savings during corporate earnings calls.
The data suggests that AI adoption aimed at cost reduction is quickly becoming a mainstream corporate strategy, not a niche experiment.
These findings sow fears that an AI-driven productivity boom coinciding with a labor market slowdown is leaving millions of workers behind.
“Job growth is weaker because of AI implementation and lower immigration," said Apollo chief economist Torsten Slok
The warning comes as Anthropic CEO Dario Amodei cautioned that AI could eliminate roughly half of all entry-level white-collar jobs within the next five years.
The Fed can’t stop the AI replacement
While the Fed has many tools at its disposal, the wave of job displacement driven by artificial intelligence may be beyond its reach because monetary policy is not designed to slow technological advancement.
Jefferies chief market strategist David Zervos told CNBC last month that AI-related job losses pose “a dilemma for the Fed,” envisioning a scenario in which GDP grows at 4% even as unemployment continues to rise.
“The smartest AI guys I know [...] are telling me in meetings we’re going to lose three ot five million jobs in the next three to four years,” he said.
Meanwhile, as a counterpoint, Minneapolis Fed President Neel Kashkari said he’s skeptical that AI will lead to widespread worker displacement.
He argues that past technological revolutions, from automation to the internet, ultimately created new jobs even as they eliminated others.
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