AI is already driving up unemployment among young tech workers, according to Goldman Sachs

Goldman Sachs analysis indicates AI is already impacting the US job market, notably among young tech workers, with the sector's employment share declining since ChatGPT's November 2022 launch. The firm projects AI will displace 6-7% of all US workers over the next decade, though the peak unemployment impact is expected to be a manageable 0.5 percentage point due to absorption by other industries. This assessment coincides with broader US labor market weakness and concerns about slowing US output growth, with Goldman attributing sluggish H1 GDP (1.2% annualized) partly to tariffs and forecasting a similar pace for H2, impacting consumer spending.

Analysis

Goldman Sachs analysis indicates that Artificial Intelligence is creating a tangible, negative impact on the US labor market, a trend now appearing clearly in economic data. The tech sector's share of US employment has notably declined from its peak in November 2022, coinciding with ChatGPT's public launch. This disruption is most acute for young tech workers, aged 20-30, whose unemployment rate has risen nearly 3 percentage points since early 2024, a rate over four times the increase in the overall jobless figure. Looking forward, Goldman projects that AI will displace 6-7% of all US workers over the next decade, though it forecasts a manageable peak unemployment impact of 0.5% as other industries absorb labor. This structural shift is occurring amid a broader, cyclical weakening of the US economy, which the firm describes as being near "stall speed." This view is substantiated by the July jobs report adding only 73,000 roles, far below the 106,000 consensus, and sharp downward revisions for May and June. Goldman attributes the sluggish 1.2% annualized GDP growth forecast for both halves of the year not just to labor weakness, but also to higher tariffs, which are expected to further suppress real disposable income and consumer spending.

Key Decisions for Investors

• Investors should scrutinize exposure to technology firms reliant on large-scale, entry-level white-collar hiring, as these are identified as most vulnerable to immediate AI-driven job displacement.
• A defensive portfolio tilt away from consumer discretionary sectors may be prudent, given the forecast for 'stall speed' GDP growth, weak job creation, and tariff-related pressures on consumer spending.
• Closely monitor high-frequency labor market and inflation data, as further deterioration could confirm a self-reinforcing economic downturn and justify a more risk-off positioning.
• Differentiate between the immediate risk from cyclical economic weakness and tariffs versus the more gradual, long-term structural displacement from AI when assessing sector allocations and timelines.