BIS Warns $1 Trillion AI Boom Could Trigger Recession and Erase Middle-Class Jobs
Updated
Updated · Sydney Morning Herald · Jun 28
BIS Warns $1 Trillion AI Boom Could Trigger Recession and Erase Middle-Class Jobs
3 articles · Updated · Sydney Morning Herald · Jun 28
Summary
Five US tech companies are set to spend $1 trillion on AI infrastructure over the next 12 months, but the BIS says that boom now carries near-term recession risk if investment reverses.
The BIS likened the surge to past manias from 1830s canals to the dotcom era, warning weak returns could turn today’s capex wave into a prolonged bust and tighten financial conditions.
Labour risks are also rising: the BIS said AI could displace middle-class cognitive work more directly than past technologies, while AI-heavy US sectors already show stronger productivity but weaker job growth.
Chip shortages and data-centre demand are already lifting costs — Apple raised some prices by nearly 20% and Xbox also flagged increases — adding to inflation pressure.
That mix of exuberant spending, job displacement and higher prices could keep central banks tighter for longer, while private-credit funding channels add another financial-stability vulnerability.