Expert Warns: U.S. Economy at Risk—Could We See Zero Workforce Growth in the Next 5 Years?

As the U.S. labor market shows signs of slowing down, experts are raising alarms. David Kelly, chief global strategist at JPMorgan Asset Management, warns that the next five years may see no growth in the workforce. This could have serious implications for the Federal Reserve and investors alike.

In his “Notes on the Week Ahead,” Kelly highlighted some concerning data from a recent jobs report. It revealed that job growth was much slower than expected. In July, only 73,000 jobs were added, falling short of the anticipated 110,000. Over the past quarter, the average monthly growth rate dropped to just 35,000 jobs. The unemployment rate also increased slightly to 4.2%, indicating that fewer people are participating in the job market.

Kelly pointed out a troubling trend: the labor participation rate declined from 62.65% in July 2024 to 62.22% in July 2025. This change represents nearly 1.2 million fewer people aged 16 and over actively seeking work. While part of this decline is due to retirement, there are also fewer workers in the prime age group of 18 to 54.

The issues with the labor market aren’t just short-term. Kelly noted that projections show the working-age population will shrink over the coming years if immigration doesn’t bounce back. The Census Bureau predicts that between now and 2026, the population aged 18 to 64 could fall by over 300,000. This shrinking labor pool complicates efforts to grow the economy and manage inflation.

This situation poses a dilemma for the Federal Reserve. Many are pushing for interest rate cuts, especially as inflation has remained a concern. Yet, as Kelly pointed out, cutting rates in a tight labor market could lead to wage and price inflation rather than growth. Since 2000, the U.S. economy has averaged a growth rate of 2.1% per year, largely due to a 0.8% annual increase in the workforce. Without workers, economic growth may slow substantially.

Kelly has emphasized the need for caution regarding rate cuts. Investors, too, should manage their expectations. As he stated, we might not see the same level of economic gains in the near future. The idea of American economic “exceptionalism”—the belief that the U.S. economy will always outperform others—could be challenged in the coming years.

In summary, both policymakers and investors need to navigate these turbulent waters carefully. The labor market is facing significant challenges, and adapting to them will take time and thoughtful strategies. For more detailed projections on labor and economic trends, check out this report from the Census Bureau.



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Fortune Intelligence,Inflation,U.S. jobs report