Artificial Intelligence Transforms Global Economy, Fuels Job Displacement Concerns

Artificial intelligence (AI) represents the most significant technological upheaval to the world economy since the internet's rise a quarter-century ago. Panellists at the Reuters NEXT conference in New York focused on AI's transformative effects and its potential to disrupt work and job growth.

AI has attracted trillions of dollars of investment and generated impressive stock-market gains. It has also created a shortage of memory chips, increased regulatory scrutiny, and heightened anxiety about job displacement.

In the first half of 2025, AI-related capital expenditures contributed more to gross domestic product growth than the consumer, according to JP Morgan Asset Management. Investment advisory organisation Bespoke Investment Group estimated about one-third of the global market capitalisation rise since the introduction of AI assistant ChatGPT comes from 28 AI-related companies.

Corporate executives at Reuters NEXT largely discussed how AI would transform work, though some noted the threat to jobs. May Habib, CEO and co-founder of AI startup Writer, said, "All (of our customers) are focused on slowing headcount growth."

Habib added, "This has happened just in the last few weeks. You close a customer, you get on the phone with the CEO to kick off the project, and it's like, 'Great, how soon can I whack 30% of my team?'" SAP CEO Christian Klein reported that his employees' top question at a recent company town hall was how their jobs would be impacted by AI.

Klein stated, "We are rolling out AI across the company, even my general counsel, my legal department, is not secure, something that you can do more efficiently with AI." Fears about job displacement due to the AI boom are supported by a U.S. Federal Reserve report.

The report noted data and surveys indicating AI is already replacing entry-level positions and causing companies to trim hiring plans. An Aug. Reuters/Ipsos poll showed 71% of respondents were concerned AI would be "putting too many people out of work permanently."

Economist Joseph Lavorgna, counsellor to the U.S. Treasury secretary, offered a more optimistic perspective, suggesting the focus should be on how AI could enhance labour rather than replace it. Lavorgna commented, "AI is an an incredible tool that I think is complementary to the existing workforce."

He continued, "We need policies that are going to encourage businesses to invest, and AI is a complement to it." Nevertheless, employment data highlights significant challenges.

Recent college graduates have experienced a sharp rise in unemployment, with a current jobless rate of 9.5% for those between 20 and 24 years old with a bachelor's degree. This figure contrasts with the nation's 4.4% rate, according to the U.S. Labour Department.

Joe Depa, EY chief innovation officer, compared the changes to previous technological upheavals such as the internet's development, but noted, "the difference this time is that the disruption is faster." Depa said "adaptability is the new job security," expressing his biggest worry about the middle-management class.

Tracey Franklin, Moderna's chief people and digital technology officer, observed that companies are now evaluating employment needs in tandem with technological requirements. Franklin explained, "We're pooling teams together and really looking at, what is their IT portfolio, what is their human capital strategy, how do we pull that together to meet their business objectives."

She added, "So we're having these integrated conversations we didn't have before." Scepticism and worry extend to AI's energy consumption.

The Reuters/Ipsos poll also revealed 61% of respondents worried about increased electricity consumption from data centres, a figure projected to grow. Jeff Schultz, senior vice president of portfolio strategy at Cisco Systems, noted that the infrastructure and chips required to run AI already consume substantial power.

He added that network traffic for agentic AI is much higher and steadier than the sporadic demand from AI chatbots. Schultz, asked about AI bubble concerns, asserted that the massive investments into the technology were warranted given the opportunity.

However, backlash is mounting against energy-hogging data centre clusters that have contributed to rising utility prices. This is evident in places like Virginia and Pennsylvania.

There was notable trepidation among speakers at Reuters NEXT from the media and creative industries, stemming from concerns that AI-generated content could replace the creative work of writers or actors. Media executive Shari Redstone stated, "When it comes to talent, there is a lot of controversy whether it's acting, whether it's music, et cetera, and that's where I think we really need to be very aggressive in protecting creative talent and making sure that they are not replaced."

Sarah Jessica Parker, the longtime star of TV series “Sex and the City,” believes people still value the tactile human experience, citing the unpredictability and spontaneity of performance. Parker told Reuters editor-in-chief Alessandra Galloni, "We’re still - the majority of us - are relying on the human exchange."

She concluded, "Even on film, even though I know there's so much now that you can fix and make prettier or tighter or better, there's still this human element when we talk about the movies we love … I’m not sure that AI will be able to replicate that live nerve."

---

• AI is seen as the biggest technological upheaval since the internet, attracting trillions of dollars in investment.

• Concerns about job displacement are widespread, with some executives already focused on slowing headcount growth due to AI.

• Employment data shows a sharp rise in unemployment for recent college graduates.

Source: REUTERS