AI boosts U.S. productivity and profits; jobs remain steady

Nonfarm business productivity rose 2.9% year‑over‑year in Q1 2026, above its long‑term trend. Unit labor costs, which measure hourly compensation relative to output, increased by less than 2% over the past year. Corporate profits and cash flow reached record levels in the first quarter across public and private companies. The U.S. has added a net 304,000 payroll jobs so far this year, compared with 169,000 through April last year.

Productivity gains accelerated after the public release of advanced generative AI tools in late 2022. Job openings have held steady and the most recent Job Openings and Labor Turnover Survey shows layoffs and quits little changed.

The information sector has seen notable job cuts tied to AI. Challenger, Gray & Christmas tallied nearly 50,000 AI‑linked layoffs in the U.S. so far in 2026, about 17% of announced layoffs. At the same time, payrolls in the information industry appear to be moving back toward pre‑pandemic levels.

Academic and central‑bank analyses to date find limited evidence of broad employment or wage losses tied to AI exposure. A monthly econometric study from the Yale Budget Lab that compared AI‑exposed occupations with others found no statistically significant impact on employment or real hourly wages for AI‑exposed roles. Other institutional research has reported similar results.

Historically, slower growth in unit labor costs has correlated with lower core personal consumption expenditures inflation, a measure tracked by the Federal Reserve. Headline inflation this year has been pushed higher by disruptions related to the war in Iran.

Companies and investors report that AI is changing how work is organized and how firms invest in tools and skills. Some firms have cited AI in recent workforce reductions, while others report spending on technology and training. Continued monitoring of sectoral job flows, wage trends and firm investment will be used to assess future developments.