In 2025, the U.S. economy underperformed, with the annual real GDP growth rate at only 2.2%, falling short of the market's expectation of 3% and declining from 2.8% in 2024. Final data from the Bureau of Economic Analysis indicated that the annualized real GDP growth rate for the fourth quarter was 1.4%, significantly lower than the 4.4% during the third quarter. Excluding the AI-driven equipment and software investments, the growth of the U.S. real GDP almost stagnated, falling below 2%.
Although the U.S. still leads among the G7 economies, its growth rate pales in comparison to that of China and India. China achieved a 5.0% GDP growth in 2025, maintaining its target range of "around 5%", whereas India's growth rate was as high as 6.2%. In contrast, the U.S. growth rate was less than half of China's and substantially lower than India's.
Implicit Pressures of Inflation and Employment Market
Regarding inflation, although the U.S. official Consumer Price Index (CPI) decreased year-on-year, several independent studies suggest that official statistics significantly underestimated the actual price pressures. If mortgage rates and financing costs are included, the inflation rate could potentially double. The U.S. core PCE rose by more than 3% over three months, and the overall CPI reached 3%. Furthermore, the tariff policies imposed by the Trump administration were declared illegal by the Supreme Court, but their actual impact persists. Consumers and businesses continue to bear additional tax burdens, with import tariffs on food rising by 44%, driving up price levels.
In the employment market, while the U.S. unemployment rate remained low, non-farm job additions in 2025 were only 181,000, averaging 15,000 per month, marking the lowest level in nearly 20 years. There was a significant decline in manufacturing jobs, particularly with the unfulfilled promises of "manly jobs" from the Trump administration. Although the healthcare industry faced labor shortages, tightened immigration policies led to a loss of many foreign workers, further exacerbating the labor market tension.
Artificial Intelligence: Boosting Productivity and Increasing Unemployment
Artificial Intelligence (AI) was expected to be promising, yet its impact on employment gradually became evident. Despite some optimistic economists predicting AI would enhance productivity, Harvard University Professor Jason Furman's forecast fell short of expectations, anticipating a mere 1.7% productivity growth in 2025. AI applications were largely concentrated in medium to large enterprises, but their impact on the labor market was not apparent. Surveys of executives in countries such as the U.S. and the UK indicated that 70% of companies were already using AI, yet its actual impact on productivity and employment was minimal.
Some large tech companies have made AI investment a core strategy for future development. By 2025, the total AI investment by the seven largest global tech companies reached $450 billion, with projections to surge further to $700 billion by 2026. However, the returns from these massive investments are uncertain and face the risk of financial bubble bursts.
Structural Crisis and Future Outlook
The biggest issue facing the U.S. economy is its structural decline. High debt, low growth, the AI bubble, and a weak employment market have created a vicious cycle, widening the wealth gap. According to PIMCO's forecast, one-third of U.S. jobs face the risk of being replaced by AI, with the displacement of just 2% of jobs potentially leading to the loss of nearly one million positions, increasing the unemployment rate by 0.5 percentage points.
If these structural issues are not addressed, the U.S. unemployment rate could rise significantly in 2026, with policy errors potentially exacting a heavy toll. Currently, the U.S. economy faces significant risks and challenges, particularly under the dual influence of AI and protectionism, further exacerbating the K-shaped economic divergence that could evolve into a social crisis.
