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American companies are approaching what one top economist is calling a \u201cCort\u00e9s moment\u201d on artificial intelligence\u2014a point of irreversible commitment that could reshape the U.S. labor market in ways not yet visible in the data, but coming fast.<\/p>\n
Mark Zandi, chief economist at Moody\u2019s Analytics, invoked the Spanish conquistador Hern\u00e1n Cort\u00e9s\u2014 who burned his boats upon arriving in Mexico in 1519, eliminating any possibility of retreat\u2014to describe the posture he believes corporate America is quietly assuming toward AI adoption. Companies are investing heavily, making structural bets, and cutting off their own escape routes. Whether that leads to conquest or catastrophe, Zandi suggests, may depend on timing. The analogy crystallized for Zandi after fintech company Block<\/a> announced it was slashing its workforce by 40%.<\/p>\n \u201cBusinesses appear to be nearing a Cortes moment with artificial intelligence,\u201d Zandi wrote on LinkedIn<\/a>. \u201cThat\u2019s my takeaway from fintech company Block\u2019s move to slash its workforce by 40%. While Block didn\u2019t explicitly pin the cuts on AI, it all but did.\u201d<\/p>\n Zandi acknowledged the possibility that AI could be serving as a convenient cover story. \u201cOf course, AI could be a smokescreen for other, less flattering reasons for the cuts,\u201d he wrote, \u201cbut I suspect not.\u201d And even if it were, he argued, the effect on the broader labor market may be the same, referring to Block\u2019s stock surge following the announcement.<\/p>\n \u201cEven so, it may not matter for the job market,\u201d Zandi wrote, \u201cas the jump in Block\u2019s stock price signals to other companies that they will be rewarded if they follow suit.\u201d<\/p>\n That dynamic\u2014where one firm\u2019s AI-driven restructuring is applauded by Wall Street, prompting peers to imitate it\u2014is precisely the mechanism Zandi fears most. It\u2019s not a single dramatic rupture, but a cascading series of rational corporate decisions, each one nudging the labor market closer to the edge.<\/p>\n \u201cWe\u2019re not creating any jobs now and there\u2019s no AI productivity gains,\u201d Zandi said<\/a> at a recent virtual event on AI and the economy joined by economists from Goldman Sachs and Yale. \u201cWhat happens when we get some productivity gains here? Doesn\u2019t that mean job loss?\u201d<\/p>\n His concern is a familiar one dressed in new urgency. For years, economists have debated whether AI would be a net creator or destroyer of jobs<\/a>\u2014a debate that has mostly played out in conference rooms and research papers while the macro data remained stubbornly stable. But Zandi argues that stability is masking a slow-motion transformation. The impact of AI is starting to \u201ckick in\u201d across the economy, he told Bloomberg<\/a> in February, and it\u2019s already visible in one place above all: hiring.\u200b<\/p>\n Tech jobs are falling. Hiring rates broadly are weak. And layoffs across the economy<\/a> recently hit their highest level since 2009\u2014although Zandi makes the distinction AI\u2019s weighing effect on the job market \u201cis due to weaker hiring, not layoffs.\u201d Meanwhile, the National Bureau of Economic Research reports<\/a> over 80% of firms in recent surveys say there is no impact from AI on employment or productivity over the past three years\u2014yet those same firms forecast AI will boost productivity by 1.4% over the\u00a0next<\/em>\u00a0three years. That disconnect between falling hiring numbers and rising productivity is precisely what worries Zandi and why he considers this a watershed Cort\u00e9s moment.<\/p>\n When productivity gains do arrive, companies won\u2019t ease into them. They\u2019ll act on them at scale\u2014like Block, cutting headcount, consolidating workflows, and deploying AI agents across functions that once required entire teams. That, in Zandi\u2019s framing, is the Cort\u00e9s moment: not when companies\u00a0start<\/em>\u00a0investing in AI, but when they\u00a0commit<\/em>\u00a0to it so fully that reverting to the old model becomes unthinkable.<\/p>\n The financial infrastructure of that commitment is already in place. The ten largest AI companies are on track to issue more than $120 billion in bonds<\/a>\u2014a record high that many are drawing parallels to the debt <\/a> big tech took on during the dot-com boom of the late 1990s. Unlike that era, when the Y2K bubble\u2019s collapse was largely absorbed by equity investors, today\u2019s AI buildout is being financed with debt, meaning a market correction would ripple well beyond stock portfolios.<\/p>\n In a Moody\u2019s report<\/a>, Zandi has laid out four possible futures for the AI economy in 2026: a smooth AI-empowered productivity-led expansion (40% probability), a jobs upheaval where adoption outpaces labor market adjustment (20%), a scenario where AI falls flat and triggers a correction (25%), and a 1990s-style productivity boom (15%). The most likely outcome, he believes, is navigable, but none of them are cost-free.\u200b<\/p>\n The labor market, for now, has one remaining buffer: healthcare, which has been the economy\u2019s primary job-creation engine. \u201cWithout healthcare,\u201d Zandi told Business Insider<\/a>, \u201cthe economy would be losing lots of jobs.\u201d\u200b<\/p>\n Cort\u00e9s won his gamble. His troops, with no ships to sail home on, had no choice but to fight forward. Corporate America, Zandi implies, may soon find itself in the same position\u2014committed not by decree, but by the sheer weight of investment, debt, and competitive pressure. The boats, in other words, are already smoldering.<\/p>\n<\/div>\n <\/p>\n","protected":false},"excerpt":{"rendered":" American companies are approaching what one top economist is calling a \u201cCort\u00e9s moment\u201d on artificial intelligence\u2014a point of irreversible commitment that could reshape the U.S. labor market in ways not yet visible in the data, but coming fast. Mark Zandi, chief economist at Moody\u2019s Analytics, invoked the Spanish conquistador Hern\u00e1n Cort\u00e9s\u2014 who burned his boats<\/p>\n","protected":false},"author":1,"featured_media":1405,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[251,204],"tags":[247,248,249,250],"class_list":["post-1404","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","category-finance","tag-hiring","tag-layoffs","tag-moodys","tag-u-s-economy"],"jetpack_publicize_connections":[],"_links":{"self":[{"href":"https:\/\/owspakistan.com\/index.php?rest_route=\/wp\/v2\/posts\/1404","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/owspakistan.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/owspakistan.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/owspakistan.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/owspakistan.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1404"}],"version-history":[{"count":0,"href":"https:\/\/owspakistan.com\/index.php?rest_route=\/wp\/v2\/posts\/1404\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/owspakistan.com\/index.php?rest_route=\/wp\/v2\/media\/1405"}],"wp:attachment":[{"href":"https:\/\/owspakistan.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1404"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/owspakistan.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1404"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/owspakistan.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1404"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}