Reading the paper [1], I disagree, I think we are actually seeing an economic downturn due to the infinite spending during the COVID-19 pandemic. Borrowing was high, and now the interest on that borrowing is high.

> The patterns we observe in the data appear most acutely starting in late 2022, around the time of rapid proliferation of generative AI tools. They also hold for both occupations with a high share of college graduates and ones with a low college share, suggesting deteriorating education outcomes during COVID-19 do not drive our results.

The economic downturn was a delayed effect after high spending at low interest rates during COVID 19. In the UK [2], interest rates were as low as 0.1% (19 Mar 20). Whilst interest rates are low, it makes sense to invest heavily – and one of the largest investments most companies make is in employment. In late 2022 we saw interest rates raise above 1%, then 2%, and by mid-2023 they are above 5%. The largest cost to cut when borrowing is high is again, employment. For every employee, the overhead cost (at medium to large businesses) are 1.5x – 2x their wage. If you’re a big tech firm with 5 employees at $100k each, you could save $1mn a year cutting the right staff down. Apparently Microsoft have sacked some 15k employees this year [3], assuming an average of $100k a year wage, they may have just wiped up to $3bn off of their burn rate.

As the paper itself concedes:

> One possibility is that our results are explained by a general slowdown in technology hiring from 2022 to 2023 as firms recovered from the COVID-19 Pandemic.

AI is being trialled as an approach to maintaining growth despite significantly deep cuts. The Microsoft CEO is under the impression that up to 30% of their code is now written “by software” [4] (are we talking about automatically generated files at compilation, or LLMs?), apparently Google’s code is greater than 30%. I do not believe that AI has yet been linked with job losses convincingly.

[1] https://digitaleconomy.stanford.edu/wp-content/uploads/2025/...

[2] https://www.bankofengland.co.uk/boeapps/database/Bank-Rate.a...

[3] https://www.financialexpress.com/trending/microsoft-is-filte...

[4] https://techcrunch.com/2025/04/29/microsoft-ceo-says-up-to-3...