Macro expert Luke Gromen says the rapid advance of artificial intelligence is creating job losses that could pose major risks to the US financial system.
In a new interview on Market Disruptors, the macro analyst argues that the speed of AI adoption could trigger a credit crunch as workers lose income faster than the system can absorb.
He says AI is already displacing American workers en masse, warning that the job loss cascade directly into the credit system because displaced workers carry debt that depends on stable wages.
“And all of those people presumably have consumer loans outstanding as they get laid off. They all have mortgages of some description or are renting in apartments who will see vacancy rates rise, whose landlords tend to be levered borrowers in commercial real estate.”
Last month, outplacement firm Challenger, Gray & Christmas said US firms announced 153,074 job cuts in October amid cooling demand, rising costs and AI productivity gains. Firms that announced job cuts recently include HP, Amazon, and Meta.
He warns that analysts praising AI’s productivity gains are overlooking the destabilizing side effects.
“And so what is right now being still espoused as a productivity miracle in AI, people are, in my opinion, right tail translating or sort of smoothing over all of the productivity gains without giving really any thought or appropriate weight, at least, to the disruptiveness of that productivity.”
Gromen says the issue becomes systemic once job losses spill into lending markets.
“If it does it too quickly, it starts to touch off a consumer credit and banking system problem where people who see their wages fall or lose their jobs because of this. They do not pay their mortgages on time. They do not pay their car loans on time, et cetera. That creates a credit problem.”
He notes that banks are required to hold Treasuries as loss buffers, which can become strained if too many borrowers fall behind at once.
“And banks have reserved treasuries per regulatory mandate as their liquid capital to sell to pay for over losses whenever this gets out of hand.”
Gromen closes by warning that disruption in white collar sectors could mirror earlier manufacturing shocks, with consequences for a monetary system that depends heavily on debt stability.
“And we had a productivity miracle when China came into the WTO, and we lost a third of manufacturing workers in this country in about four or five years. [If] something like that happened across certain white-collar sectors, Katie bar the door. And that is why I say it is fundamentally incompatible if it arrives too quickly, and it appears to be arriving too quickly.”
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