Recession will test whether AI fuels economy with ‘no-job growth’

Recently, Goldman Sachs published analysis It’s titled “Unemployment Growth,” a reference to the current strange pattern of the U.S. economy growing strongly while jobs increase only slowly. Goldman analysts are not as extreme as, say, legendary venture capitalist Vinod Khosla, who says AI will become automated 80% of all jobs By 2030. However, they see “worrying signs” in companies Increasingly using artificial intelligence.

They say a recession could largely clarify the big picture. That’s when workers in routine jobs tend to get laid off and not brought back when the recession ends. Take, for example, the recession that occurred in 2001 after the dot-com crash. CEOs have been trying their best to use the Internet in their businesses, reducing headcount in the process, but firing a lot of employees is unpleasant, and bosses often put it off. The recession forced them to figure out how many employees they no longer needed, and it was a lot. Economists call the consequences a “jobless recovery.”

The day after Goldman’s analysis appeared, Goldman itself sent a memo warning employees of the potential for job cuts and a hiring slowdown through the rest of the year, noting that “accelerating advances in artificial intelligence could unlock significant productivity gains.” A spokesman told Reuters that the company still expects total headcount to rise by the end of the year. On the same day, Citigroup CEO Jane Fraser told Wall Street analysts about the many ways the company is finding abundant efficiencies with artificial intelligence. Just one use, including software production, “saves significant time and creates about 100,000 hours of weekly capacity,” she said. “This is a very beneficial productivity lift.”

The next day: an analyst asked Bank of America CEO Brian Moynihan talks about AI as a driver of company efficiency. The company was using it that way, Moynihan said. “If we had 285,000 people 15 years ago, we will have 213,000 people (now),” he said. And these much smaller employees today produce much better performance: the bank’s net income 15 years ago was a loss of $2 billion. Last year, with headcount down 25%, the company made a profit of $27 billion.

History tells us not to worry. General-purpose technologies like AI don’t often exist, but when they do, they almost always eliminate large swaths of functionality. Panic ensues. Then unlimited human creativity invents new jobs that provide greater value overall, and living standards rise. This process may take many years, but it has never let us down. Now, with the promise of artificial intelligence to develop intelligence greater than our own, it forces us to confront a crucial question: Is this time different?

If you’re tempted to dig deeper into these questions, consider joining us for an upcoming session luck A digital event in partnership with Workday where we’ll explore how CFOs are approaching the age of AI. It will be Thursday, November 13, and you can register here.

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Contact the CEO daily via Diane Brady at diane.brady@fortune.com

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