- JPMorgan's economic outlook for 2026 points to a continued surge in capex spending by companies.
- The bank notes, though, that it may be causing investors to overlook problems in the labor market.
- JPMorgan's data shows that the AI expansion hasn't had much impact on labor dynamics.
Corporate capital expenditures have surged in 2025, led by AI hyperscalers' sprawling infrastructure buildout, but JPMorgan says something odd is happening under the surface of the economy.
As companies across industries continue a spate of layoffs in 2025, some business leaders have continued to argue that AI will ultimately create new jobs.
However, a recent JPMorgan analysis challenges this narrative. The bank's data reveals that tech companies' big capex isn't having much of an impact on the labor market.
Hiring and spending have decoupled
Spending and hiring are often correlated, as companies grow and require a larger labor force. Yet, as JPMorgan's outlook notes, 2025's capex boom has led to a "decoupling effect," in which the two have come apart.
The bank's 2026 economic outlook looks at why this "decoupling" is unfolding in developed markets and highlights why investors should be concerned.
"Across the DM hiring has weakened broadly and is tracking a 0.4%ar during 3Q25," the report said. "Outside COVID lockdowns, this pace is the slowest since the early phase of the post GFC recovery. A deceleration in labor demand of this magnitude is normally a warning signal."
The report includes even more data that may be troubling for investors. US payroll growth has fallen to 0.6% on an annualized basis. In previous years, whenever it has fallen to such a low level, a recession has followed.
JPMorgan
JPMorgan's analysts said that the kind of economic decoupling they're tracking is extremely unusual, making it hard to account for in a full-year outlook.
"Accelerating capex amid a stall in job growth is hard to incorporate into the outlook. Such a juxtaposition is not evident over any US expansion in the past 60 years," the report added.
The bank added that while they expect the economy to demonstrate a continued resilience, its analysts have had to scale back their baseline forecast because historical precedent makes points to this kind of job-growth decline historically leading to a recession.
"This fear has shifted the Fed's risk bias toward labor market weakness and prompted the restart of its easing cycle," the report said.
The tempered outlook suggests that JPMorgan's analysts see recession signals flashing red, even as tech companies continue to spend heavily on AI.
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