RJ Hamster
The Danger Lurking Behind a Strong GDP Number
Louis Navellier projects 6% growth while hiring stays flat… here’s the dynamic behind it… new data on the K-shaped economy… how Luke Lango is positioning for jobless growth
The economy is growing…so where are all the jobs?
Last Wednesday’s jobs report didn’t offer an answer, but it did appear to bring some encouraging news…
Employers added 130,000 jobs in January, beating expectations. That helped push the unemployment rate down to 4.3%.
This was a welcome counter to the troubling revisions to last year’s job growth.
As I highlighted here in the Digest, the Bureau of Labor Statistics’ (BLS) updated numbers revealed the U.S. had nearly 900,000 fewer jobs than previously reported during its 12-month “benchmark” window in 2025. Separately, the BLS updated its numbers for the full calendar year 2025. What initially looked like 584,000 jobs created turned out to be just 181,000.
In practical terms, that’s barely a heartbeat for an economy the size of the U.S.
Meanwhile, according to outplacement firm Challenger, Gray & Christmas, January’s corporate job-cut announcements totaled 108,435 – up 118% from a year ago and the highest January total since 2009.
And hiring plans? They fell to their lowest January level on record.
So, yes, January’s jobs numbers showed improvement. But 2025’s hiring was anemic, and companies remain cautious about expanding headcount.
Which brings us back to our question…
If businesses didn’t hire as many people last year as we thought, how did the economy still grow? And what’s behind robust forecasts for GDP in 2026?
The economy is expanding – but the source of that growth is shifting
The Atlanta Fed’s GDPNow model currently estimates Q4 2025 growth at 3.7%. That’s solid performance for a mature economy.
Better still, legendary investor Louis Navellier believes this number underestimates what’s coming. In his February Breakthrough Stocks issue, Louis projects the U.S. could hit 6% GDP growth in 2026, driven by three powerful tailwinds.
Here’s Louis:
First, the U.S. is experiencing productivity enhancements from AI.
Second, the data center boom and the AI Revolution both persist.
And third, there is an estimated $20 trillion of onshoring from the data center, semiconductor, pharmaceutical and automotive industries.
All of which should continue to boost economic growth.
Now, while 6% GDP would be fantastic, it would represent a disconnect that we must address…
There’s a massive gap between U.S. GDP at 6% and Wednesday’s jobs report showing 130,000 new jobs – not to mention last year’s anemic 181,000 total job growth.
To understand the scale of this inconsistency, Goldman Sachs Research and its Chief Economist, Jan Hatzius, analyzed what job growth we’d typically expect from a 6% GDP expansion.
Using Okun’s Law – which measures the relationship between GDP growth and the unemployment rate – they found that a U.S. economy growing at a 6% annual clip would historically generate approximately 460,000 jobs per month.
That’s two-and-a-half times the number we got last week.
And again, last week’s number was magnitudes better than the revised monthly figures from 2025.
So, today’s job growth numbers are nowhere in the same galaxy as what 6% GDP would traditionally produce.
How do we reconcile this?
Simple. Something fundamental has changed in how growth is being generated.
Economic output is rising without corresponding increases in labor demand. Companies are achieving productivity gains not by hiring more workers, but by deploying more sophisticated technology.
I’ve been writing about this dynamic frequently in recent Digests because it represents one of the most impactful storylines that will affect your wealth, and potentially your job, in the next three to five years.
Our technology expert Luke Lango has been tracking it too, and he’s developed a framework for understanding what’s happening – and more importantly, what it means for investors.
Recommended Link
I taught my daughter to double the market
That’s right: my Gen-Z, art-student daughter, ran laps around the S&P 500. The year after, she did it again. So, what was the powerful strategy I taught her that allowed her to do better than most money managers on Wall Street? It’s surprisingly straightforward, and incredibly effective. It’s the strategy that earned me the reputation of an “icon” and a “wunderkind” among top investors… It’s the same strategy I use to manage the billions of dollars my clients ask me to manage… And it’s the only strategy I knew I could trust with my daughter’s inheritance. If it’s good enough for my own family, it’s good enough for you. I reveal all the details in this new video, which I urge you to watch today.
“The greatest deflationary force in human history”
Luke describes the current moment as the collision of two powerful economic forces.
On one side, AI represents what he calls “the ultimate cost-cutter”:
When a company can replace a $120,000-a-year mid-level manager with a $20-a-month subscription to an AI Agent, they don’t think about it. They just do it. It’s their fiduciary duty.
This collapses wages and labor demand through “Technological Deflation.”
Recent data support Luke’s thesis.
A December 2025 research report from Microsoft titled “AI Exposure of Occupations” analyzed the vulnerability of various job categories to AI automation. It found that roughly 5 million white-collar positions face high AI exposure, including management analysts, customer service representatives, and sales engineers. These aren’t entry-level roles. They represent core middle-class employment.
Meanwhile, Goldman Sachs research found that generative AI could automate tasks equivalent to 300 million full-time jobs globally. In the U.S. alone, roughly two-thirds of current occupations are exposed to some degree of AI automation, with up to one-quarter of all work potentially being fully automated.
These numbers suggest a broad restructuring is on the way – but not one without historical parallels…
Luke compares the current climate to an era during Britain’s Industrial Revolution that economists call the “Engels’ Pause,” named after Friedrich Engels, who documented it:
Between 1790 and 1840, Great Britain’s GDP growth rate exploded from 0.2% to 3.2% annually…
Corporate profits doubled, increasing by over 20% from the late 18th to the mid-19th century.
But here’s what Engels noted: while the Industrial Revolution was making Britain incredibly rich, most Brits saw their lives get much worse, not better.
For the average worker, real wages remained flat or fell for 50 years. Workers’ share of the national income dropped from 50% to 45%, even as total wealth soared…
The wealth did eventually trickle down… and the Industrial Revolution did eventually lead to more jobs… half a century later.
Luke believes we’re entering a compressed, AI-driven version of this phenomenon:
The steam engine took a century to deploy. ChatGPT hit 100 million users in two months.
We’re compressing 50 years of displacement into a single decade.
This compression creates a paradox. The economy can grow robustly – driven by AI-enhanced productivity – while a growing number of workers experience financial strain.
Which brings us to a CNBC article last Friday…
The data showing who’s benefiting from growth – and who isn’t
On Friday, CNBC reported on something striking about the current expansion…
According to the Bank of America Institute, while spending growth among higher-income Americans remained steady between January 2025 and January 2026, it slowed substantially for lower- and middle-income households during the same period.
This is the K-shaped economy my fellow Digest writer Luis Hernandez and I have been writing about frequently – where the upper spoke (those with assets) sees their wealth rise while the lower spoke (those relying on wages) struggles with stagnant or declining purchasing power.
David Tinsley, senior economist at the Bank of America Institute, said that this “K” divergence is “beginning to look more like the jaws of a crocodile.”
The article goes on to highlight a projection from the National Foundation for Credit Counseling that financial stress will reach an all-time high in Q1 2026.
Worse, their data reveals something particularly noteworthy: the stress is “creeping up the income and age ranks,” now affecting middle-income consumers in their mid-40s-to-60s who historically maintained financial stability.
So, this brings us back to the central paradox: GDP growth projections of 5% to 6%…alongside record consumer financial stress.
This isn’t a temporary imbalance that will self-correct. It reflects a structural feature of how wealth is created and distributed in an AI-enhanced economy.
Cue the political responses…
Policy changes are coming – but they won’t alter the investment calculus
Washington is beginning to grapple with these dynamics.
In recent Digests, I’ve been tracking state-level legislative proposals targeting investment wealth and high-income earnings. But now, a different approach is gaining traction…
Taxing the companies doing the automating.
Senate Democrats recently published a report projecting that AI and automation could displace nearly 100 million U.S. jobs over the next decade. Their proposed solution is a “robot tax” that would fine companies for replacing workers with AI, using the revenue to assist displaced workers.
The intention is understandable. But as Reason.com analyzed, the approach faces serious challenges.
First, all countries face a “prisoner’s dilemma” situation wherein if they fail to pursue AI aggressively, they risk falling behind the countries that do. So, plenty of international competitors are unlikely to adopt similar taxes. Rather, they’ll deploy AI aggressively, gaining cost advantages.
American firms facing automation penalties may lose market share – and then be forced to cut jobs anyway due to competitive pressure rather than technological choice. Politicians will only tolerate so much of that dynamic before they’re forced to reconsider.
But more fundamentally, even if robot taxes are enacted, they won’t alter the economic/investment reality: AI-driven productivity gains will still accrue to the owner/investor class – even if they’re taxed.
And this raises a critical question for anyone building long-term wealth…
In an economy where growth comes from technology rather than labor expansion, how do you position your portfolio?
As I’ve been highlighting here in the Digest, AI enables companies to expand output without proportionally expanding headcount.
Productivity rises, costs decline, margins improve – often with flat or declining workforce levels.
Now, from a societal perspective, this creates legitimate questions about income distribution and long-term demand. After all, if fewer workers participate in productivity gains (and thereby have disposable income), who ultimately buys the products?
But from a portfolio perspective, the implications are more straightforward…
If productivity gains accrue to owners/investors rather than to labor, then wealth accumulation requires a position on the capital side of that equation.
Here’s Luke making this exact point:
The only way to win is to join the capital class.
This requires a fundamental shift in how you think about money. You cannot save your way out of a currency devaluation spiral. You must think about “owning the machine.”
If AI is stealing jobs, you must own AI companies.
If tech giants are capturing GDP, you must own their equity.
And if the grid powers everything, you must own the infrastructure.
Luke identifies three tiers of opportunity.
First, infrastructure…
AI requires massive computing power, advanced semiconductors, and unprecedented energy resources. Companies like Nvidia (NVDA), AMD (AMD), and Taiwan Semiconductor (TSM) aren’t optional components. They’re essential infrastructure for the entire AI buildout.
Second, Luke flags what he calls “the sovereigns”…
Think Microsoft (MSFT), Alphabet (GOOGL), Meta (META), and Amazon (AMZN). These companies operate with R&D budgets exceeding NASA’s. They control platforms, data, and customer relationships at scale. In an AI-driven economy, they’re positioned to capture value from virtually every digital interaction.
Third, there are the “agents”…
These are companies building AI software that directly replaces high-value professional work. This carries a higher risk but offers potential for asymmetric returns as certain categories of work get fundamentally restructured.
Luke has been working with his research team on identifying companies positioned to benefit as government capital flows into strategic AI infrastructure – what he calls the “President’s Market” dynamic, where President Trump’s policy priorities are creating investment tailwinds.
You can check out Luke’s research on these AI investment opportunities right here.
As we wrap up, let me add some perspective
None of this implies we face an imminent crisis or labor market collapse.
But let’s be candid – we’re in the early stages of a structural economic shift where productivity increasingly originates from technology rather than expanded human employment.
While bumpy societally, this shift will create enormous investment opportunities. After all, the wealth generated by AI productivity will flow somewhere – to the owner/investor class of the companies behind this AI revolution.
We’re beginning that transition today. Recognizing this – and positioning accordingly – will have a massive impact on your long-term wealth creation.
We’ll continue tracking both the economic dynamics and investment implications here in the Digest.
Have a good evening,
Jeff Remsburg
