The U.S. economy grew robustly in the third quarter of 2025, with gross domestic product expanding at an annual rate of 4.3 percent, according to the Commerce Department. This growth defied bearish expectations amid ongoing consumer concerns and uncertainties tied to tariffs. Despite flat disposable personal income, consumer spending rose 3.5 percent at an annual rate, reflecting strong demand from affluent households. Military spending contributed significantly to this growth, while corporate profits rose sharply. Business investment showed signs of cooling. Analysts noted that the economy’s resilience, despite rising costs and a softening job market, indicates a solid foundation moving into 2026, though growth is expected to moderate.
In 2025, approximately 1.1 million jobs were cut, marking the largest number of layoffs since the COVID-19 pandemic. While 55,000 of these layoffs were attributed to artificial intelligence, this figure represents less than 1% of all job losses, according to data from Challenger, Gray & Christmas. The technology sector saw significant layoffs, with major companies, including Amazon, citing AI as a reason for workforce reductions. However, Amazon’s CEO later clarified that these layoffs were not primarily driven by AI. Moreover, many companies are now blocking new hires, particularly for entry-level positions, under the assumption that AI can replace these roles. A study from MIT revealed that 95% of organizations that implemented AI initiatives did not see a financial return on their investment. The real causes of job cuts appear to be linked to corporate restructuring, economic conditions, and the impact of government efficiency measures, rather than direct displacement by AI.
Small and Medium-sized Businesses (SMBs) are currently facing significant challenges in attracting talent, a situation exacerbated by various market conditions. According to recent surveys, over 70% of SMBs report difficulty in finding qualified candidates, primarily due to competition with larger companies that offer higher salaries and more extensive benefits. Additionally, a study by the National Federation of Independent Business indicates that nearly half of all small businesses are struggling to fill open positions, leading to stalled growth and reduced productivity.
Small business optimism has seen a slight increase, according to the National Federation of Independent Business (NFIB) Small Business Optimism Index, which rose by 0.8 points in November to a score of 99.0, surpassing the 52-year average of 98. This uptick is primarily driven by a 9-point increase in the percentage of owners expecting higher sales, now at 15%. However, challenges persist, particularly concerning labor quality, with 21% of owners citing it as their top issue, despite a recent decrease in that figure. Additionally, while small business owners are experiencing a reduction in average short-term loan rates—now at 7.9%, the lowest since May 2023—64% report facing supply chain disruptions, which complicate daily operations. As many as 33% of owners are struggling to fill job openings, highlighting ongoing labor shortages. Despite these obstacles, 19% of small business owners plan to expand their workforce in the coming months, demonstrating a willingness to grow amid uncertainty.
Why do we care?
Here’s the uncomfortable part.
A lot of SMBs are telling themselves a story that sounds like this: the economy’s holding up, AI will cover the gaps, and we can just pause hiring for a bit. On paper, that feels prudent. In practice, it’s how operational debt piles up.
When you freeze entry-level hiring, you’re not eliminating work—you’re deferring skill development. When you layer AI on top without governance, you’re not gaining leverage—you’re creating opaque failure points. And when those systems don’t deliver, the phone rings at the MSP.
This is where real harm happens. MSPs step in to “help,” take on undocumented processes, manage half-implemented automation, and absorb variability that used to live inside the client’s org chart. Margins erode, SLAs stretch, and suddenly the provider is underwriting the customer’s labor strategy without being paid for it. And too often, they do it without clearly assigning responsibility for data quality, process ownership, or outcome definition back to the customer.
What makes this moment dangerous is the optimism data. Owners feel slightly better, credit is a little cheaper, and that masks how fragile operations actually are. If growth slows in 2026—as expected—those hidden dependencies surface fast.
So this matters now because the wrong interpretation leads to the wrong behavior: overselling AI, underpricing support, and mistaking short-term confidence for structural health. MSPs don’t win by enabling that illusion. They win by insisting on clarity, controls, and realistic expectations—before the cost shows up on their own P&L.