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What if an AI bubble bursts - and that accelerates AI job losses?

Economists warn that if the AI investment bubble bursts and triggers a recession, businesses may speed up replacing workers with AI, creating a painful double hit for jobs.

Research on past recessions suggests downturns can accelerate automation. That raises the specter of a double whammy for workers.

The Long Sip
What happened

Economic researchers are warning that a potential AI investment bubble could burst, trigger a recession, and then accelerate the very job automation workers fear.

The detail

A J.P. Morgan analysis found just 42 AI-related companies are now essentially propping up the entire US stock market, echoing classic bubble patterns.

What it means

History shows revolutionary technologies like railways still caused devastating crashes, and economists say AI carries the same risk of a boom turning to bust.

For you

Research on past recessions suggests downturns push businesses to automate faster, so workers in routine roles may face extra pressure if an AI-driven slowdown hits.

Full story at NPR

What readers are saying

trev1986
The J.P. Morgan analysis mentioned that just 42 AI-related companies drove about two-thirds of the S&P 500 gains since early 2024. That concentration plus the hundreds of billions being borrowed for data centres and power makes the debt build-up look like a classic Minsky moment where over-excitement turns into a real problem when revenue does not match the spending.
FootscrayChris
If recessions really do trigger most of the job losses from automation like the Jaimovich and Siu study found, then waiting for the next downturn might be the exact time companies quietly roll out the AI replacements.
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