Exchanges Making Sense of Weak Job Growth Alongside Solid GDP Growth
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Oct 22, 2025 
David Mericle, Chief U.S. economist at Goldman Sachs Research, unpacks the puzzling dynamics of the economy. He explains why solid GDP growth contrasts with slower job growth, attributing it to increased productivity and restricted immigration. The discussion also touches on the minimal impact of AI on hiring and the implications of recent tariffs. Additionally, David assesses the potential risks of labor market softening and how the Fed may adapt amidst incomplete data. His insights provide clarity on the current economic landscape.
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Why Tariffs Didn’t Tank Growth
- Tariffs hurt less when retaliation is limited and the dollar depreciates instead of appreciating.
- Financial conditions also matter: muted stock-market reaction reduced negative spillovers from tariffs.
Assess Shutdown Effects Quickly
- A short shutdown mechanically subtracts about 0.1 percentage point from quarterly annualized GDP per week, but expect spillovers if it lasts longer.
- Monitor contractor payments and layoffs because longer shutdowns can raise the weekly drag to 0.15–0.20 percentage points.
Productivity Explains Jobless Growth
- Productivity rebounded toward its historical average, allowing GDP to grow without matching job gains.
- Slower immigration and an aging population mean fewer workers available, limiting job creation despite 2% GDP growth.