Capital Investment & Productivity Are Driving the Disconnect Between Jobs and GDP — Especially in Tech-Heavy Markets

Capital Investment and Productivity are Leading to a Disconnect Between Jobs and GDP — Particularly in Tech-Intensive Markets

A fundamental change is occurring in the U.S. economy: capital investment and productivity are boosting GDP without a corresponding increase in jobs, a trend most apparent in tech-heavy metropolitan areas.

CoStar Analytics indicates that labor productivity rose by an annualized 4.9% in Q3 2025 and has increased by 18% since 2017. Since 2020:

Equipment investment: +24%

Information-processing equipment: +55%

AI, software, and R&D spending: +44%

Payroll growth in 2025 slowed to 0.4%.

Where the gap is most evident

Tech metros with strong GDP and minimal job increases

San Jose

Seattle

San Francisco

Boston

Migration-driven markets with better job creation

Austin: 3.6% GDP | 1.3% job growth (nation’s highest)

Dallas: 3.1% GDP | 0.8% jobs

Charlotte: 3.1% GDP | 0.8% jobs

San Antonio: modest GDP | strong job gains

Reason: Migration and population growth continue to drive local demand, even in an AI-driven economy.

Why this is important for CRE

Rising demand for data centers, power, flexible industrial, and advanced manufacturing

Slower office absorption linked to reduced entry-level knowledge hiring

Ongoing resilience in housing and retail in population-growth markets

Strategic importance of infrastructure and land near tech corridors

The economy is becoming less dependent on employment.

 In this cycle, technology capacity—not workforce size—drives growth.