The American economy is currently experiencing an odd split, which is most evident on a Wednesday morning when a memo reaches 8,000 inboxes at Meta and, by lunchtime, the company’s stock has increased. GDP is increasing. Profits for corporations are strong. Wall Street continues to rise. However, the headlines portray a different picture, one of pink slips at Coinbase, Amazon, Oracle, Nike, UPS, Cisco, and Cloudflare. The contradiction is difficult to ignore. Only one of the two economies that seem to be operating concurrently is represented in the official statistics.
Artificial intelligence is the first thing that comes to mind. Executives want you to, for sure. AI was referred to as “the most consequential technology of our lifetimes” by Mark Zuckerberg in the memo that announced the cuts. Chuck Robbins of Cisco wrote about “discipline, focus, and urgency.”” Cloudflare informed its employees that this was a redefinition of how a “world-class, high-growth company” functions in the “agentic AI era” rather than a cost-cutting measure. When you read enough of these letters, they begin to sound remarkably similar, almost like a shared playbook that communications chiefs and general counsels are using.
However, the figures convey a more subdued and intriguing message. Less than 5% of the 1.1 million job cuts announced this year are related to AI, according to Challenger, Gray & Christmas. Federal efficiency cuts linked to DOGE, more general economic recalibration, simple restructuring, and traditional cost discipline are the true heavyweights. Together those four categories explain more than two-thirds of the damage. Executives like to tell the story of AI. For the most part, it is not the story that is actually happening on the ground.
A Gartner finding that has been circulating and mostly disregarded merits greater attention than it has received. Because of AI’s increased efficiency, more than 80% of businesses surveyed said they were reducing their workforce. Statistically speaking, none of them could demonstrate that those improvements would result in higher financial returns. On earnings calls, that ought to raise awkward questions. Most of the time it hasn’t. When layoffs are announced, stock prices rise. The cycle keeps going. The market seems to be rewarding the gesture more than the outcome.
Hiring is the real issue with the American labor market, not layoffs. According to the Bureau of Labor Statistics, the number of layoffs per month in early 2026 was approximately 1.75 million, which is essentially the same as it was in March 2019. In short, poor hiring is the issue, not layoffs, according to Guy Berger of the Burning Glass Institute. Every month, three million Americans voluntarily leave their jobs, and many of them find that the path to a new position has become more difficult, more constricted, and, in certain sectors, nearly nonexistent. Recruiters are less likely to return calls. Postings persist.
Standing outside a tech campus in Mountain View or a fulfillment center in Tennessee, you can observe the same thing in different ways: a business that is doing well, growing its profit margins, and subtly failing to replace its departing employees from the previous quarter. The word “restructuring” was once associated with crises. It sounds almost commonplace in 2026, like a verb used by businesses to convey the idea that “we’re not really sure what’s coming, so we’re going to hold our breath.” According to the Washington Post, businesses are hesitant to grow when things might change again due to global uncertainty.
Above all, that might be the truthful solution to the paradox. What is produced and sold is measured by GDP. It doesn’t gauge how optimistic the producers are about the upcoming year. Before becoming what it is today, Tesla endured years of similar uncertainty. Perhaps some of these businesses will as well. The headcount may return in different forms if the AI bets are successful. It’s still not clear. For the time being, it’s evident that the American economy is expanding in a way that doesn’t quite feel like growth—not from the parking lot, not from the cubicle, and not from the inbox where the memo arrives at nine in the morning.
