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<\/p>\n(Bloomberg) \u2014 A new worry is rippling across the stock market lately: entire businesses, not just their employees, may be thrown out of work. While most economists say fears of an AI job apocalypse are overblown, seismic shifts have happened in the past after big tech breakthroughs.<\/p>\n
The IT revolution of the 1990s led to a surge in productivity that sped up the US economy for several years. It also rendered companies or even industries largely redundant \u2014 from travel agents and stockbrokers to classified advertising and newspapers, or video rental stores.<\/p>\n
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Economists expect artificial intelligence will deliver higher productivity, which is key to raising growth rates in the long run. But investors are growing nervous about what damage might be done on the way, in capital markets as well as labor markets \u2013 especially because AI threatens disruptions on a broader scale than the internet boom.<\/p>\n
\u201cIs this time bigger? Yes,\u201d says Anton Korinek, an AI expert at the University of Virginia \u2013 perhaps by a factor of 10. \u201cThe key difference from the 1990s is that the internet only disrupted information distribution,\u201d says Korinek. \u201cAI disrupts cognitive production at large. That\u2019s a much bigger economic surface area.\u201d<\/p>\n
To be sure, all of this is early-days speculation over a fast-changing and largely untested technology, whose ultimate promise is to make workers more productive.<\/p>\n
Productivity is essentially a measure of how much output workers can deliver with the available tools, so it tends to surge upward when someone invents important new ones like the internet or AI.<\/p>\n
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Data for the last three months of 2025 is due out later Thursday. Economists typically don\u2019t read too much into one quarter, since the numbers tend to jump around. Still, the trend has been ticking up. After big swings in the pandemic period, productivity has grown at an average pace of 2.6% since the start of 2023. That\u2019s more than double the average for the decade through 2019.<\/p>\n
There\u2019s intense debate over how much of this acceleration is due to AI. But even analysts who reckon the new technology isn\u2019t yet making a big contribution mostly expect it will do so before long.<\/p>\n
A more productive workforce drives the kind of efficiency gains that can allow both corporations and their employees to boost earnings, without triggering inflation. Historically, economies adapt to big tech breakthroughs \u2013 creating new industries and professions that nobody could\u2019ve envisioned before \u2013 and living standards rise.<\/p>\n
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That\u2019s the long-run view \u2013 which smooths out lots of bumps on the road.<\/p>\n
\u201dHaving some boom-bust in a sector is normal,\u201d says Simon Johnson, the Nobel prizewinning economist at MIT. \u201cMaybe even how it has to be.\u201d But as companies go under, he says, it can create wider risks \u2013 especially if the failed businesses borrowed lots of money. \u201cWhat you don\u2019t want is to infect the credit, and you definitely don\u2019t want to get inside the banking system.\u201d<\/p>\n
As of now, on US capital markets, what\u2019s become known as the \u201cAI scare trade\u201d is barely a blip.<\/p>\n