Sort of [1]. Labor-force participation stayed flat until federal lay-offs and tariffs hit [2].
The problem is it requires the economists to realise they've dedicated their education and professional careers to the economic equivalent of the heliocentric model.
Gross private domestic investment contributed more to output growth than personal consumption expenditure in two out of the last three quarters [1].
Reduce marginal investment, e.g. by raising the cost of borrowing for folks building datacenters, and you that demand goes away without any major shock to current employment.
[1] https://apps.bea.gov/iTable/?reqid=19&step=2&isuri=1&categor...
That's the point. They shift their investment into Treasuries instead of buying up land and turbines and power and GPUs. Also, as the rate goes up it gets harder to make the math math. So e.g. large construction projects get paused, et cetera.
Sometimes. Sometimes it shuffles them to other work, often less resource-intensive work. There is a lot of latent demand for construction.
We have precedence for supply shocks being cooled by rate hikes without causing an unemployment spike.
Cue companies like Microsoft and Oracle laying off even more workers to make room for the higher AI budgets.
We've seen a lot of the first in 2026 -- wage increases have dropped significantly below the rate of inflation.
In the private sector. The public sector (and what I'd call non-discretionary hiring, e.g. in healthcare) makes the response a bit more inelastic.
Rates can be raised, and demand cooled, without raising unemployment.