"In all chaos there is a cosmos, in all disorder a secret order."
Economist Joseph Schumpeter described capitalism as a process of “creative destruction” — a force that “incessantly revolutionizes the economic structure from within, destroying the old one and creating a new one.” His words characterize much of what we are witnessing around the world today. Political discourse has grown toxic, trust in institutions is waning, and social cohesion seems frayed. Yet, in the midst of this turbulence, the market continues to climb, setting new all-time highs and defying conventional signals of instability.
Some of the forces that appear to be pulling society apart may be the very ones also driving transformation underneath. Artificial intelligence is rewriting business models while automation and reshoring are reshaping the labor market. Capital is being redeployed away from legacy sectors toward innovation, efficiency, and intellectual capital. These structural shifts, while unsettling, are also driving economic reinvention.
In that sense, what looks like chaos may be the latest phase of creative destruction. The market, as it often does, is looking past the dysfunction of the present and pricing in the evolution of the future.
So which segments of the economy are experiencing the greatest amount of creative destruction? Job cuts this year have been significant and have been concentrated in a few key industries.
In the third quarter, planned layoffs by US employers totaled 202,618, according to The Challenger Report. This is the highest Q3 total since 2020 and is up 16% from a year ago. Through the end of September, companies have announced 946,426 job cuts this year, the highest YTD since 2020 when over 2 million were announced.
The government sector has announced nearly 300k cuts, of which roughly 290k are federal workers impacted by DOGE.
The technology sector has announced around 108k cuts, which is actually an 8% decline from a year ago (~242k have been laid off since the beginning of 2024). AI is not only disrupting the industry and eliminating jobs but also making it more difficult for entry-level engineers to find roles.
Retailers have announced over 86k job cuts this year, which is up 203% from this time in 2024. The industry is facing a myriad of challenges: the closure brick-and-mortar stores continues to accelerate post-pandemic, tariffs and rising input costs are compressing margins, economic uncertainty and mixed macro sentiment has weakened consumer demand, and new powerful direct-to-consumer e-commerce brands are entering the marketplace and eating into market share for incumbents.
Just as the pain of disruption has been concentrated in a few key sectors, so too has been the flow of new investment.
Data centers and cloud infrastructure, in particular, have seen massive expansion. In fact, according to Harvard economist, Jason Furman, US GDP growth in the first half of 2025 was almost entirely driven by investment in data centers and information processing technology. Investment in this sector accounted for 92% of US GDP growth; excluding these categories, economic growth in H1 increased at meager 0.1% annual rate.
According to market research firm, Dell’Oro Group, global data center capex totaled $455 billion in 2024 with the top 10 hyperscalers accounting for more than half of the total. The company forecasts investment in this area to increase by 30% this year, which would approach $600 billion if realized. McKinsey & Company estimates that $6.7 trillion of investment will be deployed in data infrastructure between 2025 to 2030.
Additionally, despite rhetoric to, “Drill, baby, drill,” from the current White House administration, global investment growth into clean energy and climate technology is on pace for another record in 2025. US investment in renewables has declined this year but that has been more than offset by increased investment in Europe. Furthermore, BloombergNEF, a research group that analyzes technology shaping the energy transition, highlighted the following five key markets investing heavily in clean energy: Saudi Arabia, Germany, India, Turkey, and Indonesia.
Ultimately, industries that are capital-intensive, globally exposed, and undifferentiated are being unwound while high-margin, specialized, and scalable industries are rapidly being developed. This realignment, of course, is not merely economical in nature but has significant social implications. Workers, companies, and even communities may get uprooted as society adapts to new changes. On the other hand, periods of disruption have historically paved the way for reinvention. The ultimate question is, what will we be reinventing ourselves into?
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