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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsThe Reason The Stock Market Is Booming
My daughter worked in corporate positions for 25 years and one thing she told me that companies do when they are struggling to make the bottom line, they fire people, Wall Street loves it.
Enter AI, the ultimate mechanism to allow companies to operate with less people. Companies aren't just firing people at the bottom, because of AI they are firing people at the upper tiers.
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Bernardo de La Paz
(60,320 posts)What the data, official before the shutdown and commercially since, shows is that this is a no-fire no-hire economy. There are some high profile layoffs occurring, such as at Paramount, but that is not because of AI, it is because of the merger and it ordinary for big mergers. The other high profile layoffs are among government workers, but some of those are delayed by the "deferred resignation" agreements and now the shutdown masks federal government employment stats in particular.
gab13by13
(30,974 posts)Deadline Whitehouse. Yesterday, Nicolle had one of her regular guests on her show, an economics professor from the University of Michigan,
sadly I forget his name, he is a regular guest. He clearly stated that AI was the major reason for the booming market.
Justin Wolfers: scroll to the 34:54 time frame and listen to Justin say that AI is supposed to be the future economically.
https://one-news.net/deadline-white-house-%e2%80%93-103025-5pm/
Bernardo de La Paz
(60,320 posts)But it is a bubble. It might deflate undramatically, but the chance exists for a dramatic collapse.
It is a bubble because the capex building of data centers is over 1% of the economic growth, maybe even close to 2%. Without it there might not be any growth: stagflation.
The bubble is different from 2000 because the Mag 7 spending on AI is generally funded by revenues. There is some circular financing and some astronomical PE ratios (PLTR for example), but this is not identical to late 1999 or March 2000.
Joinfortmill
(19,829 posts)flashman13
(1,920 posts)Bernardo de La Paz
(60,320 posts)
UpInArms
(53,903 posts)…
She also cited the prevalence of artificial intelligence, saying it is "enabling companies to innovate much faster than ever before."
…
Jassy said at the time that the company expected to reduce its corporate workforce "as we get efficiency gains from using AI extensively across the company."
…
The latest job cuts come days after The New York Times reported on Oct. 21 that Amazon is apparently pushing to add robotic automation to its workforce, which could prevent up to 600,000 new hires.
ProfessorGAC
(75,630 posts)They don't need BLS to be operating to release their numbers.
They lag BLS by a few weeks, but their data are independent of the government.
https://adpemploymentreport.com/
Happy Hoosier
(9,381 posts)I personally think we’re at the beginning of a pretty big “de-staffing” cycle. Amazon’s cuts include a lot of white-collar jobs.
gab13by13
(30,974 posts)One day AI will overtake Wall Street employees.
thought crime
(1,121 posts)
Rebl2
(17,292 posts)
sop
(17,228 posts)"One of the biggest costs of doing business is labor. Labor, which can account for as much as 70% of total business costs, include employee wages, benefits, payroll and other related taxes."
https://www.bizjournals.com/bizjournals/news/2022/05/01/the-biggest-cost-of-doing-business.html
BeyondGeography
(40,782 posts)Funny how that works.
https://www.theglobaleconomy.com/rankings/consumption_GDP/
gab13by13
(30,974 posts)that by 2030 our debt/GDP will be 140%.
thesquanderer
(12,876 posts)Last edited Fri Oct 31, 2025, 12:26 PM - Edit history (1)
FakeNoose
(39,895 posts)The one-per-centers never think of that ... whoever is laid off today means fewer "customers" buying stuff tomorrow.
Take away SNAP, Medicaid and other humane benefits, and you multiply the disaster by a factor of 10.
gab13by13
(30,974 posts)It is demand that drives economies, and as someone already said, AI doesn't buy much or consume much.
sop
(17,228 posts)When we (the great unwashed) cease to be productive wage earners, and can no longer fulfill our primary roles as mindless consumers to boost corporate profits, we will all be eliminated. Starvation, disease and a few well-placed guided missiles will do the job, and those of us who survive will have our citizenship revoked and be deported to some third world shithole. Oligarch Utopia will the become an exclusive enclave for wealthy whites.
thought crime
(1,121 posts)UpInArms
(53,903 posts)We will rue the day …
chouchou
(2,715 posts)
doc03
(38,764 posts)before the 2008 Bush recession.
questionseverything
(11,507 posts)Because our dollar is tanking
Bernardo de La Paz
(60,320 posts)gab13by13
(30,974 posts)where Justin Wolfers says that Wall Street is betting that AI is the future of the economy.
https://one-news.net/deadline-white-house-%e2%80%93-103025-5pm/
Bernardo de La Paz
(60,320 posts)louis-t
(24,565 posts)to fix the robots when they break down. Too many Star Trek and Twilight Zone episodes have predicted this. It never ends well.
617Blue
(2,184 posts)He'll completely hemorrhage support if the markets head south, which is why I don't trust the numbers.
edhopper
(36,973 posts)of the current run up is in AI related companies. It's a bubble, Wall Street always ignores a bubble, or think they are smart enough to get out before it crashes, they are always wrong.
gab13by13
(30,974 posts)So says Justin Wolfers, economics professor from the University of Michigan. He gives that as one of the reasons that the market is booming.
mackdaddy
(1,929 posts)Millions of people out of a job will definitely not be purchasing even necessities much less luxury items.
Concentrating all of the wealth in a handful of billionaires and starving the masses of income to a barely subsistence level is a screwed up economic model.
Starving the masses literally is setting us up for the next french revolution.
The greed may have finally reached a breaking point.
Wednesdays
(21,520 posts)
edhopper
(36,973 posts)yet the dot com bubble was very really and crashed.
Joinfortmill
(19,829 posts)
Wounded Bear
(63,729 posts)It's just a casino now for the investor class.
Are we headed for an AI bubble? Seems likely, but I'm no expert. Tech stocks are the only ones that are really "booming" anyway. The rest of the market is either flat or struggling.
Bernardo de La Paz
(60,320 posts)Because people are making decisions about the market, there is a large element of chance on any minute or any day, but the market is NOT decoupled from the economy at large.
The tech stocks (Mag 7) are making record profits and investing in AI. The capex investment in AI is holding up the economy. Thus by the facts you cite, clearly the market is not decoupled.
Celerity
(53,462 posts)
NameAlreadyTaken
(2,195 posts)Prairie_Seagull
(4,587 posts)mostly corporate types. I believe the market is responding to future layoffs that will be caused once AI is fully implemented. Will hit most sectors. If you know some young person who of the correct aptitude. Point them in the direction of the trades and unions. Especially the electrical unions. AI needs wiring as do cities,counties, state and feds along with transmission and homes.
I pointed a young man in this direction years ago. He, after apprenticeship now makes about 150k
still see him once in a while and he thanks me every time.
Don't think i would want to be an accountant in the coming market.
IMO
iemanja
(57,295 posts)That’s why the market is doing well.
ToxMarz
(2,709 posts)Its in a huge growth stage now (but all are losing money hand over fist), fueled by investors fear of missing out. The operating cost of infrastructure and energy to operate make it impossible for dozens (or more) competing platforms all with the same information, just different (maybe slightly different) algorithms to survive. Alternatively the all eggs in one basket will eventually have a failure and bring EVERYTHING down at once. Right now it's a cute parlor trick compared to what it needs to become, it will be a long time before it is mature enough to rely on for our core critical infrastructure and economy.
It's like Full Self Driving in a Tesla.
FakeNoose
(39,895 posts)Everyone thinks THEY and only they will beat the odds, while everyone else goes down.
Sorta like crypto, you know?
ToxMarz
(2,709 posts)It's win-win for them. It they succeed, they hit the jackpot. If they fail it's one of the all time great grifts. They never do any of this stuff without making money on the upside and downside.
bucolic_frolic
(53,703 posts)Only 30% of it will be needed or used. The costs for the rest will be born by taxpayers and ratepayers.
Consumerism will flounder. The only way to make money will be to sell to corporations, who only need technical products and computer-based expertise.
Layoffs are due to AI efficiencies.
Best advice: learn container gardening and a trade skill. AI won't do plumbing or auto mechanics, and it can't pound nails.
wcollar
(212 posts)As long as we have reasonable employment 401ks prop up the market. Every 2 weeks or once a month (pick your own interval), all the folks running 401Ks meet with the stock brokers carrying a bag of money to invest. Rinse and repeat. It's like the movie Groundhog Day.
3825-87867
(1,773 posts)With so many white collars possibly becoming unemployed and no one to pick food on the farms, the solution is easy...Soylent White!
We eat the unemployed White Collars!
Robots and AI can't pick food or repair machinery...yet...but AI can replace people that type reports, provide coffee for bosses, etc.
Now where'd I put that Upper Middle Class Cookbook?
kimbutgar
(26,642 posts)Can eventually hurt their bottom lines. 6 months frim now we”” see.
Yesterday I met with my investment adviser and I expressed my concern over the market in upcoming months and put my money in a conservative fund that I won’t lose my original investment.
Melon
(977 posts)Especially when you look at versus the historical. The S&P is up just under 20%.
Sector
YTD Return
Energy
~ +4.5%
Materials
~ +7.5%
Industrials
~ +17.0%
Consumer Discretionary
~ +3.5%
Consumer Staples
~ +4.8%
Health Care
~ +1.5%
Financials
~ +11.2%
Information Technology
~ +22.9%
Communication Services
~ +22.4%
Utilities
~ +18.9%
Real Estate
~ +1.9%
Bernardo de La Paz
(60,320 posts)You need to cite your basis date or your term of time you are using. This is a fundamental point to pay attention to.
Melon
(977 posts)I thought that’s what everyone was talking about here…this year. It literally said year to date….
Bernardo de La Paz
(60,320 posts)Technically, YTD is not "literally" year to day, it's an abbreviation. I scanned your post several times before asking and I missed that.
legallyblondeNYC
(137 posts)I am hearing that one of the use cases for AI that's driving the market is the ability to analyze data, update models, and make investment decisions. That is, the ability to assess more data points with greater speed is driving some of the gains.l
gulliver
(13,691 posts)As Buttigieg has remarked, Dems need to make sure the rising tide of AI lifts all boats. Rank "hit bad thing with stick" type leadership is not needed. It misses opportunity for all and is futile anyway. We need people who know what they're doing.
Current AI can help us get a lot more done with fewer hours of human effort. That doesn't have to be "fewer people." It can be the same number of people working fewer hours, working cleaner, repairing and beautifying, having more time for family.
al bupp
(2,538 posts)The next year and a half will tell the tale.
lapfog_1
(31,548 posts)Bernado De la Paz is correct on almost all counts. He must also be a Heinlein fan...
AI will disrupt the workforce... the workforce will adapt.
Not all companies in the Mag 7 are laying off people... some are hiring like crazy.
legallyblondeNYC
(137 posts)Meaningful discussion.
It seems that there are different trains here.
One is that AI companies are booming, which is lifting the market. And, if there's overcapacity that cannot be sold or utilized -- turned into revenue -- then it is indeed a red flag of a bubble.
The second train is that the use of AI is resulting in layoffs, but frankly, I'm still a bit skeptical. From my observation, many companies are still figuring out use cases for AI. Lot's of talk, experimentation. But, companies would not be laying off massive amounts of people until the new systems are designed, programmed, and implemented so that there is minimal disruption to operations. Not saying that AI isn't a risk to employment levels. But, something like "AI is here" is a great reason to offer shareholders and the market to deflect from more troubling signs in the fundamentals -- like slowdowns in demand, tariffs, risks and uncertainties. Remember, this is the time of year that companies are planning their budgets for next year. And with so much uncertainty, they'll cut expenses to try to appear able to withstand the storm.
Of course, this is all just an assessment.
