The week when AI fears became reality and the United States began to question its preparedness for the future

The AI Disruption Arrives: From Speculation to Reality

For months, concerns about artificial intelligence (AI) displacing human jobs have loomed over the U.S. economy. This week, those anxieties became more tangible as widely shared essays warning of AI-driven upheaval seemed to come true.

Earlier this month, AI entrepreneur Matt Shumer sparked debate with a widely read post on X (formerly Twitter), later adapted for Fortune. Shumer urged white-collar professionals to take the threat of AI seriously, comparing the current moment to the eve of the pandemic in early 2020, when most Americans were unprepared for what was coming. His essay has amassed over 85 million views on social media.

Shumer was not alone in sounding the alarm. Citrini Research, a leading finance newsletter, published a similar warning on February 22, describing a looming “global intelligence crisis” triggered by rapid AI progress. Their essay envisioned a scenario where AI systems quickly replace roles like software engineers, financial advisors, and middle managers, leading to what they called a “ghost GDP”—economic output that benefits tech owners but never reaches ordinary consumers. In this bleak outlook, high earners lose their jobs, mortgage defaults surge, unemployment soars, and the stock market plunges, pushing the economy into a downward spiral. Unusually, the market seemed to react to this speculative scenario, highlighting how real the “AI scare” trade has become in the public imagination.

On Monday, the Dow Jones Industrial Average fell more than 800 points (1.66%), with software companies particularly affected. While many economists dismissed the dire predictions as flawed, the narrative gained traction when Jack Dorsey, co-founder of Twitter and CEO of Block, announced a major 40% reduction in his company’s workforce. Dorsey cited the transformative impact of AI tools on business operations, echoing themes from the Citrini report. Block’s stock jumped nearly 14% following the announcement.

“This is one of the first significant cases of AI leading to layoffs, but it won’t be the last,” Shumer commented on X. “If you think you’re immune, it’s time to reconsider. This could be the most important decision you make.”

While many on Wall Street, including top economists and AI leaders, argue that these fears are exaggerated and not supported by basic economic principles, others foresee a challenging but ultimately beneficial transition. However, the recent layoffs at Block suggest that, at least in the tech industry, the AI disruption is moving from theory to reality—and the country is unprepared.

The Overlooked Impact: White-Collar Workers at Risk

Renowned macroeconomic analyst Albert Edwards of Societe Generale is known for his unconventional perspectives, which the French bank emphasizes are his own. In 2023, he questioned whether “greedflation”—companies raising prices beyond necessity—signaled the possible decline of capitalism, as rising profits came at the expense of workers and the middle class.

Edwards recently argued that the AI-driven economic crisis is not a distant threat but a present reality. He pointed to data showing that American consumers are struggling as incomes stagnate. “If I were 18 today, I wouldn’t go to college just to graduate with debt and poor job prospects,” he wrote. “I’d choose a skilled trade instead.”

Image: Woman wearing a purple shirt.

Nicole James, a 42-year-old former creative executive who led Snapchat’s content team, is living proof of these challenges. After holding senior roles, including at the animation studio Invisible Universe, she lost her job in 2023 when the company shifted to AI and cut half its staff. Despite a long, uninterrupted career, James has struggled to find full-time work since, sending out hundreds of applications and facing repeated rejections. She now works in retail to get by and describes a profound loss of identity. “It was humiliating to put on a name tag for my new job,” she admitted. “It felt like I’d fallen off a cliff with no way to see what’s next.”

According to Laks Ganapathi, founder of Unicus, an independent investment research firm, many Americans feel similarly vulnerable. Ganapathi’s team published a report in January echoing the “ghost GDP” scenario, predicting persistent high unemployment and inflation. She expects companies to adopt AI aggressively, resulting in widespread job losses and even the disappearance of some businesses.

Ganapathi warns that while some will insist the economic data looks fine, many will continue to feel the effects of a recession. She believes the gap between official statistics and lived reality will only grow as AI advances, meaning the downturn will not be a single event but a prolonged decline for millions.

Wall Street’s Response and the Future of Work

Financial institutions are pushing back against the panic. Citadel Securities published a strong rebuttal of the Citrini essay, noting that demand for software engineers has actually risen 11% year-over-year. They argue that the “recursive technology fallacy”—the idea that AI will endlessly replace itself—ignores real-world limits like energy and computing resources. Historically, productivity gains have lowered costs, increased output, and raised incomes, benefiting workers as well as companies. Other critics include economist Tyler Cowen and Financial Times columnist Robert Armstrong.

Morgan Stanley has also urged calm, predicting that while AI will reshape the workforce, it won’t eliminate it. The firm expects new roles to emerge, such as “Chief AI Officer,” “computational geneticist,” and “predictive maintenance engineer.” They even foresee hybrid positions focused on “vibe coding”—using natural language to prototype ideas before technical implementation.

Bank of America Research dismissed the apocalyptic outlook, likening the recent market selloff to a bank run fueled by rumors rather than fundamentals. Other analysts, like those at UBS and Apollo Global Management, warn that retail investors’ influence makes markets more susceptible to sudden swings based on narrative rather than data.

Some caution remains: Citigroup acknowledges that AI could eventually lead to higher unemployment and deflation, while Goldman Sachs suggests the impact might come sooner than expected. Still, most expect a gradual and manageable transition.

A More Efficient Future: Technology and Human Roles

Several tech leaders told Fortune that fears of mass job loss are overblown. David Stout, CEO of webAI, which was valued at $2.5 billion in January, compared the future of employment to a tightly managed travel budget: companies will become more efficient, letting go of employees only when AI clearly outperforms them. “AI will highlight when someone isn’t adding value,” he said. “You’ll see companies make changes when AI accomplishes in days what used to take a year.”

Image: David Stout, founder of webAI.

Despite his position, Stout believes it’s unrealistic to think AI can fully replace people. “AI isn’t some independent force that does everything perfectly on its own,” he explained. “We’re not seeing that happen.”

Even in industries already being transformed by AI, such as insurance, leaders are skeptical about mass layoffs. Amrish Singh, CEO of Liberate, an AI-driven insurance startup, described how AI is automating millions of routine tasks each month, from handling calls to processing emails. Major insurers like Allianz and Travelers are already seeing significant cost savings. “There’s always a need for human judgment in insurance,” Singh said. “Every claim is unique and requires a personal touch.”

Image: Amrish Singh, CEO of Liberate.

Singh emphasized that fears of widespread job loss overlook the ongoing value of human expertise. In the $1.2 trillion insurance sector, reducing operating costs is a major benefit, but people remain essential for complex decisions. “Humans excel at evaluating unique situations,” he noted.

He also observed that people tend to swing between panic and denial about AI’s impact, but the truth is more nuanced. Singh expects AI adoption to follow the typical pattern of new technologies: slow progress at first, then rapid change.

The Rise of “New-Collar” Careers

Ultimately, the pace of AI adoption will be limited by physical constraints, such as the capacity of data centers. Mike Mathews, global digital infrastructure leader at Marsh, began his career as a fourth-generation plumber and now oversees digital infrastructure worldwide. He points out that with 12,000 data centers in operation and 3,000 more planned, both traditional white-collar and blue-collar jobs are evolving into what he calls the “new-collar” workforce.

“Blue-collar workers will command very high salaries,” Mathews predicts. He believes society needs to shift its mindset, encouraging young people to pursue technical and vocational training alongside or instead of college degrees. These roles won’t just be temporary construction jobs; most data centers will need ongoing upgrades to meet AI’s demanding requirements.

“It’s hard for parents with white-collar backgrounds to imagine their children thriving as electricians earning $250,000 or more in a data center, but that’s the direction we’re heading,” he said. Mathews encourages a blend of education, suggesting that young people gain both technical and practical skills before age 24 to maximize their opportunities.

This article was originally published on Fortune.com.