Economist Blames Economic Uncertainty Not AI for Grad Job Struggles

Recent college graduates are grappling with a challenging job market, yet top economist Brad DeLong argues that artificial intelligence is not the primary culprit. According to DeLong, the struggles faced by young job-seekers stem from broader economic factors such as policy uncertainty and a sluggish economy [1]. In a recent essay, DeLong emphasized that uncertainty over trade, immigration, and inflation has led to a risk-averse business environment, resulting in hiring freezes and delayed decisions [1].

The impact of this uncertainty is particularly pronounced for new graduates. DeLong noted that while overall unemployment remains low, the gap between graduate unemployment and general unemployment rates has reached record highs [1]. This trend contradicts historical patterns where higher education typically led to lower unemployment rates [1]. Goldman Sachs’ research supports this, indicating that the labor market for recent college graduates has weakened despite the broader labor market appearing robust [1].

Gary Cohn, IBM Vice Chair and former Trump advisor, highlighted warning signs in the economy before the July jobs report, underscoring the significance of policy uncertainty [1]. The economist’s analysis aligns with recent findings from Goldman Sachs, which showed that unemployment rates for AI-exposed occupations have reconciled with the wider economy [1]. This suggests that fears of mass displacement due to AI may be overstated [1].

DeLong further explained that companies are investing heavily in AI infrastructure, particularly in high-performance chips from companies like Nvidia, rather than hiring junior staff [1]. This shift prioritizes capital investment for future competitiveness over immediate labor needs [1]. The result is a cycle where new entrants to the job market find it increasingly difficult to secure entry-level positions [1].

The declining value of a college degree is also evident in the data. Goldman Sachs’ analysis revealed a drop in the college wage premium, indicating that a degree is no longer the guaranteed pathway to higher earnings it once was [1]. University of Connecticut professor emeritus Peter Turchin echoed this sentiment, noting that the overproduction of university degrees has led to a decline in their value [1].

In conclusion, DeLong’s message to recent graduates is clear: the current job market challenges are more attributable to a risk-averse economic climate than to the rise of AI [1]. As the July jobs report confirmed the economy's weaker performance, DeLong’s warnings serve as a timely reminder of the complex forces at play in the labor market [1].

Source: [1]https://fortune.com/2025/08/02/dont-blame-ai-college-graduates-cant-find-jobs-blame-economy/